local salary survey methodology workshop

Local salary survey methodology workshop

Compensation and Classification SectionHuman Resources Policy Service

Office of Human Resources ManagementUnited Nations Secretariat

Local Salary Survey Workshop

9:30 – 12.30

1. Compensation at the UN:

- The Flemming Principle- Key actors in Local Salary Administration

2. Overview of local salary survey methodology- Defining the Market

- Categories of duty stations- Four phases of the comprehensive salary survey

13.30 – 16.30

3. Phase I: Preparation- Selection of employers- Job inventory- Gathering local information

Day 1

Local Salary Survey Workshop

9:00 – 12.30

4. Phase II: Data Collection

- Interview preparation- Questionnaire and

Interview DOs and DON’Ts- Job matching

13.30 – 16.00

- Data on salaries, allowances, and benefits- Data quantification- Determination of net income

Day 2

Local Salary Survey Workshop

9:00 – 12.30

5. Phase III: Data Analysis- Individual employers- All employers- Selection of best employers/jobs

6. Phase IV: Salary Scale Construction- Labour market profile- Local UN Community values- Balanced salary scale

7. Computation of UN allowances

- Dependency and other allowances

8. Interim adjustments

9. Employer Report

10. Special measures

Day 3

13.30 – 16.00

Introductions

Our learning objectives

• Key principles of the methodology

• Roles of survey participants • 4 Survey phases

– Preparation– Data collection– Data analysis– Construction of salary scale

• Interim survey process

Compensation is…

• For management:…a powerful tool to influence employees’ behavior.

• For employees:…a source of economic and sometimes psychological income.

Task of the Administration

“…To develop policies and procedures that will attain maximum return on investment, in terms of attracting, satisfying, retaining and perhaps

motivating employees…”

Factors impacting compensation policies

• Government laws• Labour agreements• Labour market trends• Cost (ability vs. inability to pay) • Etc..

Forms of compensation

• Direct• wages and salaries (“pay”)• benefits

• Indirect• pension• insurance• paid time-off, etc.• benefits (in kind)

• What pay-based system to use? a) Job-based

b) Seniority c) Merit d) Mixed

• What pay policy to use?

a) equal to market ? b) above or below the market ?

Issues faced by management

Compensation - example

• How would you compensate for these services?

Compensation in the United Nations

Noblemaire vs Flemming

• International staff

- worldwide recruitment- serve in different countries- system of remuneration

able to recruit from all member states, including highest paid

- Noblemaire principle is based on highest civil service

- maintaining purchasing power parity (post adjustment system)

- base pay set in US$

• Local staff

- local recruitment- serve at the same duty

station throughout the career

- system of remuneration able to recruit from the local market

- Flemming principle is based on the best prevailing local conditions found in the locality

- salary surveys conducted to establish salaries based on the best employers

- pay set (mostly) in local currency.

Compensation in the United Nations

Original definition

• Compensation for locally recruited staff should reflect the best prevailing conditions found in the labour market for similar work.”

Subsequent ICSC refinement

• “The conditions of service, including both paid remuneration and other basic elements of compensation, are to be among the best in the locality, without being the absolute best.”

THE FLEMMI NG PRI NCI PLE

THE THE FLEMMI NG FLEMMI NG PRI NCI PLEPRI NCI PLE

Compensation in the UN system

Achieving the goal of best prevailing conditions by means of

Conducting salary survey with employers in the same labor market who recruit staff of equally high caliber and qualifications for work which is similar in nature and equal in value.

Survey of :

- salaries- allowances- fringe benefits- other conditions of employment

UN Salary Survey Methodology

• Methodology endorsed by the General Assembly

• The methodology: - Defines the labour market relevant to the

category of staff; - Provides technical guidelines for:

• Evaluating local market conditions;• Identifying leading employers;• Comparing UN salaries vs employers salaries

To ensure that UN salaries reflect best prevailing conditions of employment.

Key Actors in Local Salary Survey

• The International Civil Service Commission (ICSC);• The Responsible agencies (UN, WHO);• The Coordinating agencies (UNDP, UNICEF, WHO,

etc);• The Compensation Officer (survey

officer/specialist);• The Local Salary Survey Committees (LSSC);• The UNHQ Steering Committee.

– Establishes methodology– Reviews methodology after each survey round (5-

7 yrs)– Monitors the implementation of the methodology – Participates in reviews/approvals of surveys in HQ

Salary Steering Committee

Roles of key survey actors

ICSC

- Overall responsibility for approving local salary scales- Appoints survey specialist- Overviews application of methodology- Guides LSSC on survey matters- Supervises data collection- Performs analysis of survey data - Approves outcome of surveys- Provides written reports (preparatory, survey, employers)

Roles of key survey actors

ResponsibleAgencies (UN, WHO)

- Usually the agency with the largest number of staff members

- Establishes the Local Salary Survey Committee (LSSC)

- May provide comments for review by the responsible agency

Roles of key survey actors

Coordinating Agency

- Guides the LSSC in the conduct of salary surveys, especially at data collection, data analysis, and scale construction phase

- Has delegated authority to make on-the-spot decisions about survey technical matters

- Participates in data collection as team leader- Reviews preparations by LSSC- Presents survey results to the UNHQ Steering

Committee

Roles of key survey actors

Compensation Officer/Survey Specialist

- Chairperson must be internationally recruited

- Collects and provides staff statistics- Proposes employers- Reviews social, labour and tax laws- Selects survey team members- Contacts employers & sets interviews- Should have a balanced representation of

management and staff- Provides comments on survey findings for UNHQ

Steering Committee

Roles of key survey actors

Local Salary Survey Committee (LSSC)

- Reviews issues & findings of the survey

Roles of key survey actors

UNHQ Steering Committee (UN, UNDP, UNICEF, ICSC)

Overview of the methodology

The UN salary survey methodology

• UN methodologies reviewed in 1993, 1997, 2003 and in 2011 to:

- Harmonize the HQ and non-HQ methodologies

- Harmonize treatment of UN staff across duty stations

- Strengthen the credibility and competitiveness of national staff salaries

The non-HQ salary survey methodologyMajor changes:

Differentiation of labour markets

• Prior to 1992: Five Best employers• 1992: Seven Best employers• 1997: 3 categories (5, 7, and 12) • 2004: 4 categories (5, 7, 10, and 15,

depending on degree of dynamism and level of sophistication of the labour market)

• 2011: same as 2003 though have introduced the “non survey” as a 5th category for those duty stations with less than 30 General Service staff

The non-HQ salary survey methodology

Major changes (cont.):

- Para-statal organizations must have their conditions of employment established by the Government, otherwise considered “private” sector

- National Civil Service (NCS) defined as Ministry of Foreign Affairs . NCS must be retained as comparators for certain duty stations.

- Periodicity of comprehensive survey is now every 5 years

- Minor in-kind benefits are no longer quantified as they cannot be considered “basic” elements of compensation, eg. beverages

The non-HQ salary survey methodology

Major changes (cont.):

- Meal benefit should be quantified on the basis of cost to the employer

- Revised benchmark job descriptions, including IT jobs and benchmarks for National Officer category

- The management representative in the interview team must be internationally recruited, otherwise this role is not occupied

- Re-enforced requirements for public/private sector, sector representation, number of employers to be surveyed

The non-HQ salary survey methodology

Major changes (cont.):

- NO-D grade level no longer surveyed . NO-D salary levels extrapolated.

- Relaxed criteria for retention of employers in the NO category when also surveyed for GS category

- Salary data from employers to be weighted on the basis of size of the employer

- Possibility to purchase external data to complete a survey when insufficient employer participation (applicable to cat 10 & 15 employers retention only)

The non-HQ salary survey methodology

Major changes (cont.):

- Cars should only be quantified when the car is available substantially for personal use . The benefit should be treated as taxable and non-pensionable

- Six duty stations previously under the non-HQ methodology will now be surveyed under the HQ methodology though approved by the Responsible agency (Bonn, Brussels, Copenhagen, the Hague, Tokyo, Washington DC)

External data

• Data purchased from 2 external vendors

• Type of data• Market salary movement data as a

residual to complete a survey

Purchasing external data -conditions

• To be used as a residual source when cannot secure the participation of the required number of employers

• Only applies to category I and II duty stations• All employers surveyed must be retained (i.e no

selection of the “best”)• The employers surveyed must still comply with

requirements concerning public/private sector and economic sub-sector (25% limitation)

• Survey result is weighted average of the result of internal comparison using usual basis and the external movement data

Criteria for the Differentiation of Labour Markets

• Overall labour market size• Presence of suitable employers• Conduciveness to start and operate business• Overall socio-economic climate• Size of UN population at the duty station

(greater or less than 30 General Service staff)

Categories of Duty Stations

• Category I: 15 employers retained • e.g. China(*), Malaysia(*), South Africa(*), Thailand,

Indonesia •

Category II: 10 employers retained• e.g. Bulgaria(*), Jordan, Senegal, Vietnam(*)

•Category III: 7 employers retained• e.g. Angola(*), Benin, Ethiopia(*), Peru(**), Sudan (*),

Yemen(*)•

Category IV: 5 employers retained• e.g. Afghanistan, Chad, Haiti, Mongolia, Zimbabwe (**)

•Category V: No survey• e.g. Mauritius, Malta, Australia, Oman

• (*) and (**) revised from 2003

Life cycle of salary surveys

• Comprehensive surveys are now at 5 year intervals.

• 5-6 months prior to the comprehensive survey: authorization package sent, time to establish the LSSC, identify comparators, collect requested data

• 1-2 months prior the established date of the survey: time to make appointments with potential comparators

Life cycle of salary surveys (cont.)

• Ideally, data collection is completed prior to the specialist departing from the duty station. Data analysis will take place at UNHQ.

• The Steering Committee reviews and approves the findings approx. 1-2 months after completion of survey

• The 1st interim survey is initiated 11 months after the comprehensive survey.

Comprehensive salary survey

• Preparation phase• Data collection phase• Data analysis phase

• Salary scale construction phase

Preparation Phase

Responsibilities of the LSSC

The preparation phase

• Selection of potential comparators• Post inventory • Current information on tax laws and regulations

– Tax rates– Exemptions/Deductions– Credits/Rebates/Allowances– Taxability of benefits

• Sample tax calculation• Information on Social security• Country-wide common rates

• Submission to Responsible agency

The Local Salary Survey Committee (LSSC)

• Ideally equal number of staff and admin reps

• Chaired by a senior official of designated agency, must be internationally recruited

• Maximum 12 members• Time commitment: release from regular

duties• Can have subcommittees• Emphasizes confidentiality

Confidentiality

Written confidentiality pledge of members:

“… I pledge to respect and preserve the confidentiality of employer-specific survey-related data obtained as a result of my participation in the survey…

“… I further understand that a breach of confidentiality, such as by divulging any employer-specific survey-related data, including judgmental statements pertaining to such data, to a party outside the secretariat of ICSC, the Local Salary Survey Committee and data collectors can lead to a major disruption of the current, as well as future surveys and should be considered as sufficient reason for my replacement in the survey process and, additionally, may render me liable to face appropriate disciplinary procedures by my organization… “

Documents to review by the LSSC

• The ICSC Salary Survey Methodology (ICSC/72/R.11)

• The Salary Survey Manual (on OHRM website): http://www.un.org/depts/OHRM/salary_survey/resource_centre.htm

Sources for Identification of Potential Comparators

• Local Chamber of Commerce• Trade and Industry Association• Leading Employers• Previously surveyed Comparators• Headquarters information on multinational

employers found to be highly competitive • Personal networking• Internet, professional recruiters • etc..

Key Criteria for Comparator Selection

• Broad cross-section of competitive economic sectors (including public service or parastatal institutions)

• Established in the locality for approx. 5 years.• Employees engaged in office work:

– 15,10 or 7 comparator retention duty stations: at least 50 employees

– 5 comparator retention duty stations: at least 20 employees

• Must be within commuting distance of duty station

Key Criteria for Comparator Selection

• Retention of majority of employers from the previous survey

• Exclusion of employers setting salaries based on UN salaries only.

Criteria for Distribution of

Comparators by Economic Sectors

• Public Sector: Min of 25% of comparators retained when National Civil Service included; 33% when not included

• Private Sector: Maximum of 25% of employers from the same sub-sector

Global Comparators

• International Organizations: embassies (e.g. US, UK, Canada, The Netherlands), EU, World Bank, EBRD

• Banking Sector: HSBC, Citibank• IT Sector: IBM• Oil Sector: ExxonMobil, Shell, BP

Contacting Comparators

• Send initial letter with information on UN survey process (included in package sent by OHRM)

• Contact more than required number for employer retention and establish a reserve list of employers

• Assess whether employer should be included in the list of employers to be surveyed.

• Explain to employers the type of information that will be required – job matching, copies of salary scales, specific details on other conditions of employment – allowances, bonuses, loans below market interest rates

Contacting Comparators

• LSSC should identify the specific contact person within the comparator responsible for providing detailed info

• Confirm date/time of interview in a follow-up letter

Exercise 1.Selection of employers

- Each group should identify 20 employers for submission to HQ for approval

- Review the criteria for selection of employers

Public Sector

• Local Government• Parastatal Enterprises (e.g. Central Bank,

electricity & water companies), which salaries established by the government.

• Embassy Community (e.g. US, UK, Germany, Canada, The Netherlands)

• NGOs (e.g. Save the Children, Red Cross)• International/Regional Organizations (e.g.

EU, World Bank)

Private SectorBanking • ANZ Bank• Bank of America• Barclays Bank• Chase Manhattan• Citibank• HSBC• Standard CharteredManufacturingConsumer Products• 3M• Colgate Palmolive• Proctor & Gamble• Unilever

Pharmaceuticals• Glaxo Smith Kline• Merck• PfizerFood & Tobacco• Coca Cola• Pepsi Cola• Nestle• British American• Tobacco • Phillip MorrisPetroleum• British Petroleum• Exxon Mobile• Shell• Schlumberger

Transport, storage & communicationsAirlines• British Airways• KLM• Lufthansa• SwissInformation Technology• Ericsson• IBM• Motorola• Nokia • SiemensWholesale & retail tradeMiscellaneous

Selection of employers

• One approach:

• Identify best sectors (e.g. banking, manufacturing, etc.)

• Then identify best employers within each of the best sectors

Job Inventory

• First, each agency should count the number of posts in each benchmark job. A notional weight of 0.5 for each job with no incumbent is applied

• Then, each agency should count the number of classified posts at each grade including all benchmark and non benchmark jobs

Note: Survey data analysis based upon a weighted average reflecting the distribution of local posts against benchmark jobs

Exercise 2.Job Inventory

Income Tax Data Submission

• summary tax legislation • sample tax calculation• rates of income taxes• deductions/tax credits applicable, may need

to obtain data from taxation authorities• income tax related to dependency

allowances • amount of allowances provided by the law• any other relevant info related to income

taxes

Income Tax Information

• Provide English translation of important tax provisions

• Consult a tax expert, if necessary

• Understand tax treatment of benefits

• Work through sample tax calculation

Tax calculation (cont.)

We also take into account:

• Tax deductions• Tax credit• Elements of remuneration: taxable vs. non-

taxable

Tax Calculation

Example of typical income tax brackets:

Taxable Income add–on Tax rate

0 to 270 - 0% 271 to 375 0 10 % 376 to 600 11 14% 601 to 900 42 18% 901 to 1,500 96 22% greater than 1,500 228 26%

Exercise 3.Tax calculation

Social Security and Other Information

• Determine taxability of employee contribution to social security

• Check labour laws on conditions of service (minimum wages, workweek hours, leave, termination indemnity, etc.)

• Find out which benefits, if any, are mandated by law (13 month salary, bonus, transport etc.)

Submission to HQ

• List of employers, main and reserve lists; upon approval of the list by HQ, kindly confirm interview dates/times

• Completed job inventory form

• Completed tax info + supporting documents + sample calculations

• Social security information

• See annexes (from OHRM)

From OHRM Materials and Guidance

• OHRM cover letter initiating survey• Annex 1: job inventory• Annex 2: most frequently surveyed employers• Annex 3: sectoral representation• Annex 4: tax info (PDF)• Annex 5: sample letter for employers• Employer reference: info on how the UN conducts

surveys, on the duty station, sample questionnaire, sample employer report page

Data Collection phase

Recap on yesterday

• In small groups make a list of the subjects covered yesterday.

• Questions?

Data Collection Team

• Things to keep in mind:

• Four points: appreciation, reason for selection, confidentiality, provision of summary results of the survey

• The salary specialist leads the interview, members can ask relevant follow up questions

• All members take notes during the interview

• Management representative must be international recruited, otherwise this role is not represented

Data Collection Team

• Things to keep in mind (cont.):

• Any disagreements should be settled after the interview

• Do not try to expect the employer to understand the United Nations terminology

• Do not criticise employers

Data Collection• The Employer Interview

• General employer information

• Comparing UN benchmark jobs

• Data on salaries, allowances and benefits

• Other conditions of service and taxation

General Employer Information

• Size of company in terms of number of staff in jobs similar to the GS and NO in the duty station

• Years established in the locality• Structure of salary system• Mechanism for establishing/updating

salaries• Economic sector

Data collection

• The questionnaire

United Nations Benchmark Jobs

• Job 1 GS-1 Messenger/Mail Clerk• Job 2 GS-2 Driver• Job 3 GS-3 Sr. Driver• Job 4 GS-3 Clerk/Office Assistant• Job 5 GS-4 Team Assistant• Job 6 GS-4 Admin. Assistant• Job 7 GS-4 Finance Assistant• Job 8 GS-5 IT Support Assistant• Job 9 GS-5 Staff Assistant• Job 10 GS-5 Admin Assistant• Job 11 GS-5 Finance Assistant

United Nations Benchmark Jobs• Job 12 GS-6 IT Support

Assistant• Job 13 GS-6 Office Assistant• Job 14 GS-6 Admin. Assistant• Job 15 GS-6 Finance Assistant• Job 16 GS-7 Sr. IT Support

Assistant • Job 17 GS-7 Sr. Admin. Assistant• Job 18 GS-7 Sr. Finance Assistant• Job 19 NO A Programme/Admin• Job 20 NO B Programme/Admin• Job 21 NO C Programme• NO D excluded

United Nations Benchmark Jobs

Note that the admin jobs can cover human resources, procurement and inventory, project support, logistics, travel, visa and immigration support, or conference support

Four Step Approach to Job Matching

• Structure: Details on organisation structure

• Content: Grade-determining content for each level and the relationship of jobs

• Progression: Career progression within the company for jobs within an occupation

• Qualification: Minimum educational and experience requirements

Job Matching

• Refer to job summaries for the General Service within the classification standard and National Officer categories

• Refer to sample job profiles in the methodology

• Review jobs and indicate grade levels

Organizational settingSecretary A• Drafts/types

correspondence; reviews for completeness & grammatical accuracy prior to supervisor’s signature;

• Maintains supervisor’s calendar & schedules appointments;

• Organizes & maintains files;

• Screens callers & incoming mails;

• Responds to queries about the office activities.

Secretary B• Drafts/types

correspondence; reviews for completeness & grammatical accuracy prior to supervisor’s signature;

• Maintains supervisor’s calendar & schedules appointments;

• Organizes & maintains files;

• Screens callers & incoming mails;

• Responds to queries about the office activities.

Organizational setting

Head of Department

Division Director Division Director Division Director

Chief of Branch Chief of Branch

Unit Head

Secretary B

Secretary A

Unit Head

Organizational setting

Head of Department

Division Director Division Director Division Director

Chief of Branch Chief of Branch

Unit Head

Secretary B

Secretary A

Unit Head

Personal Assistant

Sample Job Profiles

Clerk/Office Assistant (G-3)1. Structural counterpart: junior clerical level2. Primary content feature: basic document

production and filing, general office support3. Progression: entry level clerical post4. Qualifications: secondary school, proficiency in

office systems

Sample Job Profiles

Team Assistant (G-4)

1. Structural counterpart: admin support to non-managerial or junior supervisory professionals

2. Primary content feature: manages information flow for an individual professional or small unit

3. Progression: 1st level of team support/secretarial occupation

4. Qualifications: some administrative or secretarial experience, proficiency in automated systems

Sample Job Profiles

Staff Assistant/Secretary (G-5)

1. Structural counterpart: secretary to senior manager

2. Primary content feature: manages information flow, including provision of instructions to subordinate levels

3. Progression: promotion from subordinate secretarial level

4. Qualifications: prior experience in company procedures, full proficiency in automated systems

Sample Job Profiles

Office Assistant/ Secretary (G-6)

1. Structural counterpart: provides support to an Executive who has responsibility for a broad spectrum of functions within the company or organization

2. Primary content feature: manages information flow, including confidential issues, supervises other staff assistants

3. Progression: highest level of secretarial position

4. Qualifications: prior experience in company procedures, full proficiency in automated systems

Exercise 4.Grade level determination

Review the standard benchmark job descriptions (see methodology ICSC/R72/R11 (p.48-70)

Identify differences in functions within job series.

Job Matching Global Comparator Programme

• Establishes standard matching points between UN jobs and those of employers most frequently surveyed and retained– US Embassy, British Embassy, Canadian Embassy,

EU, Dutch Embassy, World Bank– Exxon Mobile, Citibank, Shell, IBM

• Objectives– To increase accuracy and consistency of job matching– To reduce interview time and increase efficiency of

survey process– Apply matches per grades confirmed with HQ of

these organizations

Data on Salaries

• Minimum salaries: Minimum or actual hiring rates for the majority of employees

• Maximum salaries: Actual salary achievable by the majority of employees in the job

Data on Allowances and Benefits

Types:• Bonuses & profit sharing (moving average

over 3 years)• Transportation (cash / in-kind): allowances,

company transport, company-provided vehicles

• Housing: allowances, company-provided residences

• Meals (actual cost to the employer)• Company products (actual cost to the

employer, not retail value)• Credit: low interest/subsidised loans

Data on Allowances and Benefits

Eligibility for quantification:• Be offered across-the-board to all

employees or to an identifiable group of jobs (e.g. Finance Assistants)

• Be provided by the employer on a regular and recurring basis

• Benefits must be taken advantage of by, or given to 75% of the employees in the company

• Not provided explicitly for work related purposes

Data on Allowances and Benefits

Keep in mind• Taxable elements vs non-taxable

elements

• Salary and benefits expressed as % of salary – workweek adjusted

• Flat rate allowances – no workweek adjustment

Quantification of Allowances &

Benefits

• Benefits quantified at cost to the employer

• Benefits, offered on daily basis, quantified on basis of 222 days per year

Most Common Allowances and

Benefits • General cash allowances (bonuses, profit

sharing plans etc)

• Transportation (cash or in-kind services)

• Allowances/benefits related to meals

• Allowances/benefits related to housing

• Provision of credit through low interest or subsidized loans

EXCLUDED Allowances & Benefits

• Individual performance bonus of an exceptional nature

• Illegal benefits or payments

• Training courses provided to staff for work related reasons

• Airline tickets provided by airlines companies

• Termination indemnities; severance payments

• Supplementary payments based on seniority or longevity

• Leave days, pensions, health insurances etc.; social security benefits and after-service payments

X

Company Provided Car• Normally for executive positions

• Quantified on basis of personal use

– Formula: Purchase price less Eventual resale value– Difference divided by: years of usage– Must be extensively available for private use, and

provided predominantly for work related requirements

– Is now taxable and considered non-pensionable

Beverages (tea, coffee etc), corporate events and meals

• Beverages and refreshments are no longer quantified as they are not considered basic elements of compensation (New!)

• Meals are only quantified on the basis of the cost to the employer, not by reference to the difference in cost difference between commercial meal and subsidized meal

Low Interest Loans

• Housing loan quantification

– Average loan: Maximum allowance amount/2

– Multiplied by: years of repayment/30 years*– Multiplied by: savings in interest– Multiplied by: utilization rate

* assumed as the average UN career

Low Interest – Other Loans

• Loan for car purchase, equipment, personal loan quantification

• Average loan: Max allowable amount /2• Multiplied by: savings in interest (market

vs employer rate)• Multiplied by: utilization rate• Total value benefit for all “other loans” is

subject to a max (cap) of 3% of Taxable Gross Income of the surveyed job

Other benefits

• Vacation bonus (in % or fixed amount)

• Discount sales programme - quantified at cost to employer x utilization rate- benefit quantified separately for family members (if applicable)

• Travel fare (air ticket)- not applicable to employers in travel business (travel agencies, airlines etc..)

• Hotel accommodation - not applicable to employers in hotel business

Other benefits

• Uniform• Secretary’s day gift (applicable to secretaries

only)• Laundry• Club membership• Etc.

Exercise 5.Data quantification

Data Analysis

• But first the crossword

Data Analysis

• Individual employer data analysis• Determining total net incomes for jobs

matched

• All employer data analysis• Retaining the best employers (5, 7, 10

and 15 best employers)

Determining total net income

Establish Annual Base (at Min & Max)Multiplied by: Workweek ratioEquals: Adjusted basePlus: Taxable allowances /benefitsEquals: TOTAL GROSS INCOMEMinus: (Tax deductions) Equals: TAXABLE GROSS INCOMEMinus: (Income taxes)Equals: NET INCOMEPlus: Non-Taxable benefits

Equals: TOTAL NET INCOME

Data Analysis / Quantification

General rules

• Daily allowance (x 222 days)• Bonus/Profit sharing (3 years average)• Non cash value benefits (quantified at cost to

employer)• Benefits should be utilized by at least 75% of

employees• If equivalent benefits exist at UN, benefits

should not normally be quantified, for example overtime

Data Analysis / Quantification

General rules• Social benefits (pension, health, life insurance

etc.. ) should not be quantified

• Taxable or non-taxable benefits

• Application of local taxes at single person rate

• Tax levels used should be applicable at reference month

Data Analysis

• Consolidate individual employer total net salary data

• Enter employer, job and grade weights from job inventory

• Enter current UN minima and maxima

Data Analysis Retention of comparators

• Eliminate employers with insufficient matches Criteria:

•For GS category: employers should have at least 1/3 job matches across 1/2 grades

•For NO category: at least 2 job matches out of the 3 surveyed jobs (*)

Note (*) an employer can be retained in the NO category with just one match, if also retained in the GS category and that match is within the same job family as jobs matched in the GS category

Data AnalysisRetention of jobs

• Eliminate jobs with insufficient matchesCriteria:

Retention

Min # of comparators with data for each job

retained

15 5

10 5

7 3

5 3

Data Analysis OWAI calculationAnalysis of Minima• 1. Calculate job averages at the minimum

weighted by employer size• 2. Calculate averages per grade weighted

by incumbents per benchmark job• 3. Calculate job averages at the maximum

and determine the span per job• 4. Calculate the weighted average span by

grade• 5. Compare survey minimum salaries by

grade with UN minimum salaries

Data Analysis

Analysis of Maxima• 6. Compute survey maxima salaries using

overall average weighted span• 7. Compare survey maxima salaries by

grade to UN maximum salaries• 8. Compute average increase by grade• 9. Calculate overall weighted average

increase (OWAI)• 10. Iterate above steps to identify best

combination of comparators

Salary Scale Construction

Salary Scale Construction

• The importance of a balanced salary scale• Local Labour Market Trends

• Recruitment and retention considerations

• Perceived equity

• Competitiveness for various jobs

• Local UN community values

Salary Scale Construction

• Characteristics of a balanced salary scale• Uniform grade spans

• A smooth pattern of inter-grade differentials

• An overall weighted average increase which varies no more than + 1% from the final raw data survey result of the best group of retained employers

• The G-4 pivot point

Salary Scale Construction

SPAN (INTER-STEP 3-5%)

INTER-GRADE

DIFFERENTIAL (10-35%)

3%INTER-GRADE

DIFFERENTIAL (10-35%)

5%

3% 3% 3%

5% 5% 5%

SPAN (INTER-STEP 3-5%)

Non-Pensionable Component

• Gross pensionable remuneration is derived from the net pensionable salary

• It is not appropriate for a significant number of non-taxable, i.e. non-pensionable employer benefits (e.g. company products, reduced interest rate loans) to be used in the determination of UN pensionable remuneration

Non-Pensionable Component (cont.)

• Taxable (usually cash) allowances such as additional month salaries, profit sharing, housing-related allowances, bonuses, cost-of-living allowances etc., should be treated as pensionable

• Non-taxable allowances and benefits provided (usually in-kind benefits) should be treated as non-pensionable

• Refer to Annex X for detailed listing

Allowances and Charges

Allowances and Charges

• Child allowance: 2.5% of mid-point salary (G-1 step1 + salary of G-7 longevity step) / 2], or local practice and tax abatement

• Language allowance: 5% of G-5, step I level, for first language, 2.5% for second

• Spouse allowance: based on local practice (most often tax abatements + government subsidies + allowances by employers)

• Funeral Allowance: based on local practice• Charge for UN provided Transport determined by

UN Country Team

Interim Adjustments

Objective of interim survey

“… to ensure that United Nations salaries continue to reflect the salary movements of the retained employers and, consequently, of the best prevailing conditions in the locality…”

ICSC/72/R.11 pp30

Interim adjustment measures

Types of interim measure, based on local conditions:

• Mini-survey: updates on average percentage movement of minimum salaries and allowances, applied across-the-board

• Indexation (e.g. consumer-price index, labour-wage index, or movement of a particular employer)

Interim adjustment• Method is recommended at time of comp survey

by LSSC and specialist and considered for approval by Responsible Agency

• Carried out between comp surveys• Not intended to track rates of inflation and/or

local currency devaluation• Not designed as mechanism for maintaining

purchasing power of salaries or their value in terms of convertible currency

• Intended to reflect movement of minimum salaries and allowances of retained employers

• Intended to ensure UN salaries are adjusted with the same frequency as that of the majority of retained employers

Mini surveys

• Mini survey has fuller coverage and is more precise than indexation

• Data analysis should be conducted according to the same procedures as in the comprehensive survey

• Generally conducted on annual basis; effective date should be the reference month of data collection

Mini surveys

• LSSC responsible for requesting authorization from Responsible agency to initiate and collect data for mini-surveys

• Must obtain and submit updated tax code and fully documented movement in retained employers’ minimum salaries and benefits, as were captured during comp survey

During mini-surveys

It is not possible to:

• Introduce new comparator employers• Change job matches• Introduce new benefits (in cash or in kind)• Change quantification formula for benefits• Change values of in-kind benefits• Change for reference points for minima

salaries• Modify established span or grade

differentials• Alter UN job or grade weights

During mini-surveys

Employer retention• Where a previously retained employer does not

participate in the interim survey, their salary data should still remain in the analysis (possibility that they will participate again in the future)

• Where a previously retained employer no longer has a presence or has significantly restructured its grading levels, that employer’s data should be removed from the analysis

Indexation• Can be used as an interim adjustment measure where

valid, reliable and relevant indices are available, though there must be a strong correlation between past salary movements and the index

• If majority of employers retained for majority of past comprehensive surveys adjust salaries by means of an index, we can consider using this method as a basis for adjustment

• Once selected, adjustment mechanism should remain consistent until the next comp survey

Tax rates and social security

• Fundamental adjustments to tax rates and social security conditions should be monitored and reported by the LSSC to the Responsible Agency

• National wage legislation, high inflationary situations, should also be monitored and reported in a timely manner

Submission to Responsible Agency

• Data collected by the LSSC in view of an interim salary adjustment exercise should be fully documented (salary scales, all pertinent information incl. tax) and validated/signed, and as such, submitted to the Responsible Agency for data analysis in a timely manner

• Employer templates or other material to facilitate data collection is usually provided at the time of granting an authorization to initiate data collection

Interim survey results

• Usually applied as an across-the-board increase

• In case of negative results from comp survey, necessary to have “gap closure” between local UN salaries and the local labour market

Other survey issues

Employer Reports

• How the UN conducts salary surveys• How we analyzed your information• Labour market profile• Summary of employer benefits• Revised UN salary scales• We do not provide employer reports after interim

surveys• Can provide employer follow-up with outcome

and copy of revised UN scale• CONFIDENTIAL

Special Measures

• Conditions where special measures can be considered– Extreme/Immediate Economic Volatility– Extended periods of social

unrest/economic collapse• Parallel and supplemental process to

standard survey methodology• Objective is to promote partial stability• UN staff are not immune from local

conditions• Refer to comparator employers in the first

instance

Exercise 6.Situational questions

The end

• Questions?

• THANK YOU!