local salary survey methodology workshop
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Local salary survey methodology workshop. Compensation and Classification Section Human Resources Policy Service Office of Human Resources Management United Nations Secretariat. Local Salary Survey Workshop. 9:30 – 12.30 1. Compensation at the UN: - The Flemming Principle - PowerPoint PPT PresentationTRANSCRIPT
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!