Cost variation index
What about wages eroded by inflation?
For several weeks now we have been receiving more frequent messages than in recent years combined about the erosion of our purchasing power by inflation and the expectation that it will be compensated as soon as possible. Rest assured: Compensation will be forthcoming, even if it will not be until January 2023. Here is what you need to know about it. But first, some good news on this issue deserves your attention.
Annex A1 of the SRR maintained - Good news!
At its meeting last Thursday, the CERN Council decided not to change the procedures governing the five-yearly and annual reviews of staff members' financial and social conditions (these procedures are described in Annex A1 of the Staff Regulations and Rules, the S&RP). This decision was taken on the basis of a management proposal which had been the subject of a full convergence of views with the Association, following discussions in the Standing concertation Committee (SCC). We therefore welcome both the process that led to this decision by the CERN Council and the decision itself.
We are reporting on this decision today because it will influence an important decision for us and for many staff in a few months' time: the annual adjustment of salaries to inflation in January. This is important because inflation is now higher than it has been in the last twenty years and many of you are expecting compensation for the erosion of your purchasing power.
What compensation for inflation?
At CERN, since 1 January 2001, the adjustment of salaries to inflation is made considering two elements: inflation in Geneva and the extent of inflation compensation granted in the Member States to national civil servants. While the first factor is easily understandable, the second is explained by the desire of Member States to consider their economic and social situation. This second factor is composed of half the data for Switzerland and half for the other Member States.
Prior to 2001, the lack of such consideration almost always led some Member States to argue that "at home" inflation compensation was only partial or even non-existent and that therefore at CERN it could not be otherwise. This led to arbitrary decisions which were very much criticised by the staff and often affected social peace and therefore the smooth running of the Laboratory. Clearly, this had to be avoided and this is what led to the development of a method, a formula, during the five-yearly review in 2000 to take due account of the situation in the Member States.
In concrete terms, the wage index is currently calculated using the following formula:
The Member States that are considered in addition to Switzerland are those that contribute more than 2% to the Organisation's budget, i.e.: Austria, Belgium, France, Germany, Italy, the Netherlands, Poland, Spain, Sweden, and the United Kingdom (2021 list).
Calculation = Decision?
While this formula automatically considered the situation in the Member States, which met their expectations, the staff's expectation that arbitrariness should be removed from the corresponding annual decisions remained to be met. This was all the more important because at the same time as this formula was being proposed, a new career structure including a much more flexible promotion was also being proposed. The increased uncertainty on the promotion side could not be added to a continued uncertainty about inflation compensation. It was to avoid this and arrive at a 'win-win' package that it was proposed to the Council:
- A commitment to "do its utmost" to grant the calculated index
- And that the Council of the Organisation not only accepted this but also enshrined it by adopting a Resolution to this effect (see CERN/2352). The importance of this commitment was underlined at the time and subsequently. More importantly, for more than 20 years the CERN Council has fully respected this commitment.
And this is only normal, as during these same years, progress has been significantly slowed down following the last five-yearly reviews (which also impacts on future pensions). It is even more normal when one remembers that the last five-yearly reviews showed that our salaries were globally lower than those of the comparators but that nothing was done to reduce the observed gap. And if we needed a reason for this, here it is the introduction in 2010 of a mechanism that leads to an automatic under-indexation of pensions as long as the pension fund is not in actuarial balance (which has been the case for a very long time and is likely to remain so for many years to come, even if balance is fortunately now in sight).
What happens now?
So, rest assured! In January 2023, there will be inflation compensation via the annual adjustment of the CERN salary grid, and it should be in line with inflation in Geneva and the inflation compensation granted in the Member States to national civil servants. The SA will follow very closely the index granted in January 2023 in the interest of the staff.
Translated from the French original version
 The TREF had also considered this issue and supported the proposal after hearing explanations from both the Management and the Association
 The inflation adjustment of national civil servants' salaries reflects all of these parameters and is therefore a simple way to take them into account in determining the adjustment of salaries at CERN.
 State where the headquarters of the Organization is located.
 fc-4353.e.pdf (cern.ch) ‘The Council declares that, with a view to maintaining the competitiveness of CERN salaries and in parallel to increasing flexibility of the career structure, the Council will use its best efforts to adjust annually the salary scale in accordance with the guide provided for in Annex 1 of the Staff Rules.’
 See, for example, the statement to the Council by Mr. Jan Bezemer, President of the TREF at the time, in CERN/2364
 Chapter 35: Current financial position of the Fund (cern.ch) ‘As an extraordinary measure, there shall be a partial derogation of the annual adjustment of pensions procedure and method as laid down in Article II 1.15 of the Rules of the Fund and Annex C thereto, as a result of which no annual adjustment of pensions will be granted to recipients of a pension as at 31 December 2011 until their individual cumulated loss of purchasing power reaches 8%.’