GA/AB/3255

UNITED NATIONS STAFF CONDITIONS OF SERVICE CONTINUE TO DETERIORATE, FIFTH COMMITTEE TOLD

President of Coordinating Committee Also Says Short-Term And Fixed-Term Appointments Limit Staff Capacity To Live Normal Life

The Secretary-General and Member States had said staff were the most valuable resource of the United Nations, but actions spoke louder than words, and staff conditions of service continued to deteriorate, the Fifth Committee (Administrative and Budgetary) was told this afternoon during its discussion of the United Nations common system.

Short-term and fixed-term appointments limited the capacity of staff to live a normal life, the President of the Coordinating Committee for the International Staff Unions and Associations, Lisanne Losier, continued. Recently, the Secretary-General had said that there were more resignations from the United Nations than retirements, notably at junior Professional levels. The ability to retain staff was based, in part, on having appropriate salaries, benefits and working conditions.

In the United Nations system, women accounted for only 30 per cent of Professional level staff, the Chairman of the International Civil Service Commission (ICSC), Mohsen Bel Hadj Amor, said as he introduced that body's annual report. While that was an increase over previous years, the goal of 50/50 parity between men and women was still a long way off. The picture with respect to women at the P-5 level and above was even less encouraging.

The President of the Federation of International Civil Servants' Associations (FICSA), Margaret Eldon, said that for the last six years staff had refused to participate in the deliberations of the ICSC, which showed the extent of the rift between the parties and the extent of alienation of the staff.

The Federation had participated in the joint working group on the consultative process that had met twice this year, she continued. The amendments to the rules and procedures agreed upon by that group represented a compromise by FICSA. It had originally advocated that the Commission be replaced by another body. The process by which members of the Commission were selected and elected must be updated.

Fifth Committee - 1a - Press Release GA/AB/3255 18th Meeting (PM) 2 November 1998

Also this afternoon, the Fifth Committee concluded general discussion of the thematic reports of the Office of Internal Oversight Services without further statements.

The representatives of the United States, Cuba, Algeria, Syria and the Under-Secretary-General for Internal Oversight Services, Karl Paschke, spoke on the review of the Oversight Office, as the Committee concluded discussing implementation of General Assembly resolution 48/218B.

Also this afternoon, the Committee concluded its discussion of the Joint Inspection Unit (JIU). Indonesia's representative spoke.

In other business, the Fifth Committee began its consideration of the United Nations pension system. The Chairman of the United Nations Joint Staff Pension Board, Dieter Goethel, introduced that body's report on its forty-eighth session, held from 7 to 16 July 1998 in Vienna. The report provides information on the Pension Fund's global operations, its administrative and financial status and its benefit provisions, among other matters.

The Under-Secretary-General for Management, Joseph Connor, introduced the Secretary-General's report on the Pension Fund investments, and the Chairman of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), C.S.M. Mselle, introduced that body's views on proposals contained in the Pension Fund Board report.

The representative of Austria spoke on that matter for the European Union and associated States.

The Fifth Committee will meet again at 10 a.m. on Wednesday, 4 November, to continue discussing the United Nations common and pension systems.

(page 2 follows) Committee Work Programme

The Fifth Committee (Administrative and Budgetary) met this afternoon to conclude its general discussion on thematic reports of the Office of Internal Oversight Services and its review of implementation of General Assembly resolution 48/218B, by which that body was established. It was also to conclude discussing the Joint Inspection Unit (JIU).

Also, the Committee was scheduled to begin discussing the United Nations common system, as well as the United Nations pension system.

(For background on reports related to the Oversight Office and to the JIU, see Press Releases GA/AB/3252 and 3253 of 29 October.

Reports on Common System

The Fifth Committee had before it two reports on the International Civil Service Commission (ICSC), established by the General Assembly in 1972. The ICSC is responsible for the regulation and coordination of conditions of service within the United Nations, the agencies and other participating organizations (called the common system). It comprises 15 independent experts appointed in their individual capacities by, and answerable to, the General Assembly. Its decisions affect the staff remuneration of the United Nations common system, which accounts for over 70 per cent of the costs of the system. Additionally, the ICSC is responsible for coordinating personnel policy planning in those organizations.

The 1998 annual report of the ICSC (documents A/53/30 and A/53/30/Corr.1) contains recommendations on the remuneration of Professional and higher categories staff, on conditions of service applicable to both categories of staff and on the recognition of language knowledge in the United Nations system.

Salary levels of Professional and higher-level staff are established according to the Noblemaire Principle by reference to the highest paid national civil service. The United States federal civil service has been used as a comparator since the formation of the Organization. Conditions of service of the General Service and other locally recruited staff are based on the Flemming Principle, by which such staff are to be compensated based on best prevailing local conditions.

The report includes an account of the ICSC discussion on a range of matters, in addition to a number of recommendations to the General Assembly. On remuneration matters, the ICSC recommends to the General Assembly that current base/floor salary scale -- the amount of salary prior to the application of cost-of-living adjustments (called post adjustments) -- for Professional and higher categories of staff be increased by 2.48 per cent through consolidation of post adjustment, effective March 1999. The financial implications to the common system would be approximately $1.99 million. A revised scale for staff assessment (amounts deducted analogous to taxes on salaries) was also recommended. Proposed new base/floor salary and staff assessment scales are annexed to the report.

The report recommends that the current level of children's allowance and secondary dependant's allowance be increased, effective 1 January 1999, to reflect 14.6 per cent increases in the value of local tax abatements at the seven headquarters locations. It also recommends that the present local currency entitlement systems for hard currency duty stations be maintained, and that dependency allowances should be reduced by the amount of any direct payment for dependants by governments.

With regard to conditions of service, the report says the ICSC recommends to the General Assembly that new maximum admissible levels for education expenses and maximum education grants should be instituted for seven currencies where more than 5 per cent of claims exceeded current maximum expenditure limits. The currencies and the proposed levels are tabled in an annex to the report. It also proposes: that flat rate boarding costs where boarding is not provided at the institution be altered according to a table annexed to the report; that the special education grant for disabled children be 100 per cent of the revised maximum allowable expenses for the education grant; and that all these measures would be applicable from the school year in progress on 1 January 1999.

The report states the ICSC recommends that the language incentive scheme for Professional and higher categories of staff be discontinued and replaced by a non-pensionable bonus. It also states that language allowance should also be paid to General Service and relate categories staff as a non-pensionable bonus in alignment with Professional staff, that the bonus only be paid to both sets of staff if the language was used in the relevant organization, and that periodic retesting should be introduced.

Also before the Committee was a note by the Secretary-General transmitting the report of the Board of Auditors on the secretariat of the ICSC (document A/52/811). The report presents the Board's findings and recommendations stemming from its review of the secretariat's management, and covers methods used to compile data for determining staff compensation packages, post adjustments, personnel policy issues and the secretariat's resources and responsibilities. The staff costs of the secretariat is responsible for over 70 per cent of the ICSC's budget, which, for 1996-1997, was close to $11 million.

The Board found that when assessing the competitiveness of United Nations common system salaries for Professional level and above, the secretariat did not include the health and pension benefits in their comparisons with the comparator. It recommends that the secretariat make proposals to the Commission and the General Assembly to establish a total compensation methodology. It should compare and quantify the difference in pension and other social benefits of the United Nations common system and the comparator employers for determining salaries, and should also consider factoring in the "cost-to-employer approach" into the salaries, as is being done in the case of non-cash and fringe benefits, such as low interest loans.

Regarding the General Service and locally recruited staff, the Board recommends reviewing and modifying the statistical method currently employed -- referred to as the "regression technique for determining the 75th percentile" -- so that it does not produce pay anomalies. The secretariat should compare and quantify the differences in pension and other social benefits of the United Nations common system and the comparator employers for determination of salaries, and examine the use of the "cost-to-employer" approach.

The Board also found that the present salary structures rewarded length of service and seniority rather than merit, the report states. The ICSC secretariat agreed that the present salary structure seemed to inhibit career development and provided little incentive for better performance. While the secretariat says that all its work impacts on the careers of international civil servants, the Board recommends that it reactivate its work towards an overall approach to career development.

In addition, the report covers the Board's findings and recommendations on post adjustments, which is a system to ensure that the take-home pay of United Nations staff worldwide has a purchasing power equivalent to that in New York. It is established by means of periodic comparisons through place-to-place surveys, housing surveys, or price surveys. The Board recommends developing a strategy to determine more accurately the common expenditure weights, including using interviews rather than self-administered questionnaires, using data from national statistical offices and perhaps obtaining data from other international employers.

Finding that there were frequent changes in the criteria for determining out-of-area weights for headquarters duty stations, the Board recommends establishing a clear and durable policy for fixing the out-of-area weights. It further recommends examining recent changes made by comparable international organizations and, if feasible, developing a methodology to equalize the purchasing power more accurately and more frequently with the base city. The secretariat should put in place procedures for local coordinators to collect, collate and transmit survey data, and to ensure that survey results are implemented within a prescribed time-frame.

The Board recommends establishing a personnel database for United Nations common system bodies, containing data on staff deployment, salary and allowances in respective grades, and introducing a computerized integrated management information system -- in coordination with organizations of the common system -- with a view to improving the current procedures for data collection, transmission and processing. This system would also be used for periodic review of the mobility and hardship allowance, daily subsistence allowance and education grants. Its introduction should be preceded by identification of savings that would result from reduced staff and other results of automation.

In view of the fact that between 1994 and 1996 the secretariat neither followed up nor enabled ICSC to monitor and report on the status of women in the common system, the Board recommends the completion and submission of a report on the status of women without further delay. Also, it recommends that the secretariat re-establish workload indicators and prepare well-defined staff norms directly related to the workload of each item of work so that resources requirements can be established.

The Committee also had before it a summary of the views of the Federation of International Civil Servants' Association (FICSA) on the recommendations and decisions of the ICSC and the Board of Auditors' review, annexed to a note by the Secretary-General (document A/C.5/53/27). Attached to the report is a position paper on the report of the ICSC for 1998. The report says that the Association is convinced that restoration of full confidence in the Commission would require a review of that body's working arrangements and its composition. It notes with appreciation the Secretary-General's initiative in asking a small group to examine the Commission's mandate, membership and functioning, but states that this review group should not delay consideration of joint staff/administration proposals on the selection of commissioners.

The report says that the audit review of the ICSC confirmed FICSA's view that the ICSC is not functioning in the most efficient or effective way. Technical comments would be detailed in FICSA's position paper to be distributed to the Committee separately.

On safety and security of staff, the report says that the Association is requesting that the distinction between locally and internationally recruited staff -- for the purposes of protection -- be removed. This request is in accordance with article 7 of the Universal Declaration of Human Rights, which calls for equal protection of law and protection against discrimination. On the matter of reform, the report lists a number of concerns that FICSA has, including that of the independence of the international civil service as it moves towards closer partnership with the private sector. Change should be guided by principles, including the equitable treatment of staff and the principles of the Charter, and it should be based on essential humanitarian aims.

On conditions of service, the Professional-level salaries should be increased in real terms by 25 per cent to compensate for loss of purchasing power over the past 15 years. Regarding the General Service staff, FICSA insists that the Flemming Principle be fully implemented.

Reports on Pension Board

The Committee had before it the report of the United Nations Joint Staff Pension Board (document A/53/9). The major issues covered by the Board in the period covered by this report were actuarial matters, notably the twenty-fourth actuarial valuation of the Pension Fund as at 31 December 1997; management of investments of the Fund, including the report of the Secretary-Generals' representative; a concept paper on future long-term administrative arrangements between the Fund and member organizations; proposed revised administrative arrangements between the 1998-1999 biennium; the status of a proposed agreement between the Fund and the Russian Federation concerning pension-related claims of former Fund participants from the former Soviet Union; entitlement to survivors' benefits for spouses and former spouses; and reviews of various aspects of the pension adjustment system.

According to the report, during the biennium ending 31 December 1997, the number of participants contributing to the Fund decreased from 68,708 to 67,740, and the number of periodic benefits in award increased by 10.9 per cent to 43,149. More that 11,500 lump sum withdrawals and other settlements were paid. The principal of the fund increased from approximately $12.6 billion to about $14 billion, or 11.1 per cent. Net investment income was some $1.6 billion after some $29.9 million was deducted for investment management costs. A summary of the investments is annexed to the report.

An actuarial revaluation of the Fund was conducted in accordance with its regulations, which revealed a small actuarial surplus of 2.66 per cent of pensionable remuneration, according to the report. However, the Fund Board agrees with the Committee of Actuaries conclusion that the present contribution rate of 23.7 per cent of pensionable remuneration be retained pending the next valuation. The Board decided to change the rate on lump sum commutations to 6 per cent with respect to service performed after 1 January 2001, pending a favourable actuarial review as of 31 December 1999. The Board also took note of the Auditors' report which reflected satisfactory operations of the Fund. It concurred that the Office of Internal Oversight Services should continue to act as internal auditors of the fund through the 2000-2001 biennium, but that it may be more appropriate long term for auditing to occur within the office of the Fund secretariat. Arrangements for internal audits should form part of a study of long-term administrative requirements.

The Board requests more involvement of local pension secretariats in follow-up of non-returns of certificates of entitlement, according to the report. Control measures were a tool for limiting fraud, but any procedures should be cost-effective. On administrative arrangements between the Fund and the United Nations, the United Nations and the Fund concluded that the existing cost-sharing formula was fair and that it should, therefore, be used for other costs, such as computer, office space and audit costs, not currently shared, to take effect from 1 January 1999.

Under administrative expenses, the Board recommends the General Assembly approve additional expenses amounting to about $4.2 million net over the initial appropriation of some $50.1 million for the 1998-1999 biennium, chargeable directly to the Fund, for staffing and other administrative proposals set out in the report. On the status of the proposed agreement between the Fund Board and the Government of the Russian Federation, the Board requests the Secretary- General to intensify efforts to gain approval of the agreement and protocol negotiated in 1996, and authorized him to allow for certain modifications in the proposed agreement.

Regarding spouses and former spouses benefits, the report states that the Board recommends an amendment to article 45 of the regulations of the Fund to provide facility to pay in respect of former spouses, and to eliminate the "remarriage penalty". It also commented on a number of matters related to cost-of-living adjustments, on aspects of the ICSC review of the scale of assessments, and on the provisions governing the suspension of benefits in the case of re-employment of retirees.

The Committee had also before it the report of the Secretary-General on United Nations Joint Staff Pension Fund investments (document A/C.5/53/18), which covers the period from 1 April 1996 to 31 March 1998. The investments are the fiduciary responsibility of the Secretary-General, in consultation with the Investments Committee. All investments must meet the criteria of safety, profitability, liquidity and convertibility.

According to the report, the market value of the Fund's assets increased to some $20.2 million on 31 March 1998 from about $15.5 million on 31 March 1996, an increase of around $4.6 million, or 29.8 per cent. The total investment return for the year to 31 March 1997 was 8.9 per cent and for the year to 31 March 1998 was 20.4 per cent. After adjustment by the United States consumer price index, these represent positive real rates of return of 5.9 per cent and 18.9 per cent, respectively.

The rates of return shown in the report were calculated by a consultant, using a method explained in the report on the management of the investments submitted to the Board at its thirty-fourth session. The calculation includes actual income received from dividends and interest, as well as realized capital gains and losses. It also takes into account changes in the market value of the investments and the timing of cash flows.

For the year ended 31 March 1997, the highest return was provided by the equity portfolio, which had a total return of 11.6 per cent, followed by the real estate portfolio with 8.6 per cent. For the year ended 31 March 1998, the equity portfolio again provided the highest total return, which at 27.3 per cent was significantly higher than the 7 per cent provided by the bond portfolio. Real estate was again the second-best performing asset class, with a total return of 18.9 per cent. In 1996, 1997 and 1998, United States equities outperformed non-United States equities and United States bonds outperformed non-United States bonds.

The value of the Fund on 8 September 1998 was $19.4 billion; the equity portion declined by 10 per cent, while the asset allocation consisted of 62 per cent equities, 28 per cent bonds, 6 per cent short-term investments and 5 per cent real estate. This compares with $20.1 billion as at 31 March 1998 and represents a decline of about 3 per cent. The benchmark declined by about the same percentage during the period. The equity portion of the portfolio declined while the bond and cash positions increased. The strategy of the Fund requires a focus on returns that cover periods longer than one year, the report states. The highest total annualized return of 22.3 per cent occurred during the five-year period 1983-1987, owing mostly to the strong performance of the financial markets during that period. For the past three years, 1996, 1997 and 1998, the returns were 14.6 per cent, 8.9 per cent and 20.4 per cent, respectively. The cumulative annualized total returns for the past five, 10, 15, 20 and 25 years were approximately 12.4 per cent, 10.8 per cent, 12.9 per cent, 12.5 per cent and 10 per cent, respectively. The cumulative annualized total rate of return over the 38-year period for which data are available was 9 per cent, representing a yearly real rate of return of 3.8 per cent after adjustment by the United States consumer price index.

The proportion of the Fund invested in North America rose to 46 per cent from 38 per cent, according to the report. Investments in Europe were increased to 36 per cent from 32 per cent. In Asia and the Pacific, the proportion of investments fell significantly to 13 per cent from 24 per cent. The sharp decrease was caused by a reduction of the exposure to the region by selling some of the holdings and by the sharp decline in the market from November 1997 to date. Direct and indirect investments in developing countries amounted to some $1.7 million at cost on 30 June 1998, a decrease of 1.2 per cent since 30 June 1996. Most of the decrease resulted from the sale of bonds issued by regional banks, some of which were sold at a profit while others had matured during the period. The proceeds were invested in various developing countries as opportunities became available in both equities and bonds. Investments were initiated in Egypt, Qatar, Saudi Arabia and Zimbabwe.

Development-related investments accounted for 12 per cent of the Fund's assets at book value, according to the report. About 26 per cent of these holdings were denominated in currencies other than the United States dollar. The current investment environment is favourable for emerging market debt instruments, which have high yields and relatively low default risk, and the Fund is seeking to increase its exposure through various instruments, while taking into account the investment criteria of the Fund.

The Committee also had before it the report of the Advisory Committee on Administrative and Budgetary Questions (ACABQ) on the United Nations pension system (document A/53/511).

The Advisory Committee agrees with the conclusion of the Committee of Actuaries that the present contribution rate of 23.7 per cent of pensionable remuneration be retained. The Pension Board should continue to monitor the evolution of the actuarial valuation and not attempt to reduce the current rate of contributions or any other feature until a pattern of surpluses emerges. Noting that the Board decided to change the interest for lump sum commutations to 6 per cent on service performed as from 1 January 2001, subject to a favourable actuarial valuation at 31 December 1999, the ACABQ, agrees with Consulting Actuary's comments that the matter be left under review in the light of future valuations.

According to the report, the ACABQ has written to the Secretary-General stating it concurs with the three candidates he intended proposing for membership of the Investments Committee. It also agreed with the Secretary-General's advice that there was no need to insure the entire value of assets held by the Fund's custodians.

Regarding the new proposals for cost-sharing between the Board, the United Nations, and the other agencies involved in the Fund, the Advisory Committee agrees that administrative expenses should be included in valuations, on the understanding that administrative cost restraint would continue, according to the report. On a proposal to establish small regional offices to service the pension operation worldwide, the Advisory Committee recommends caution, seeing no compelling reason to establish such offices. It has no objection to the Board's proposal that the General Assembly approve some $4.2 million additionally to the initial appropriation of some $50.1 million.

The report states that the ACABQ also agrees with the proposed reclassification of the Chief of Service post from D-1 to D-2, as part of an improved operational management structure. Regarding the Board's proposal that the Board Secretary post be reclassified to a half-way point between D-2 and Assistant-Secretary-General, the Advisory Committee recommends against this, but says the expanded responsibilities of the post justify its upgrading to Assistant-Secretary-General. It endorsed the proposal to change the title of this post to Chief Executive Officer and proposes changes to the regulations of the Joint Staff Pension Fund to reflect this, but sees no reason to change to a functional title of Executive Secretary of the Board.

The ACABQ agrees with the Pension Board's recommendations regrading survivors' benefits for spouses and former spouses, according to the report, and shared the Board's view on the review of the common scale of staff assessment for pensionable remuneration purposes. Regarding the possible withdrawal of the World Trade Organization (WTO) predecessors, it notes that methodologies have been discussed, and that the withdrawing organization must bear the cost of the necessary special sessions of the Committee on Actuaries and Pension Board.

Reports of Office of Internal Oversight Services

The Fifth Committee formally concluded general discussion of the thematic reports of the Office of Internal Oversight Services without further statements.

DULCE BUERGO-RODRIGUEZ (Cuba) said that Cuba would comment on those reports in the discussion under the agenda item on the review of the General Assembly resolution 48/218B.

Statements on Review of Assembly Resolution 48/218B

THOMAS REPASCH (United States) said the United States viewed the creation of the Office of Internal Oversight Services as an historic moment in the history of the Organization. Member States had decided there was a need for a new mechanism for oversight. That had proved a sound decision, as the Office had proved a valuable component of the oversight structures of the United Nations. It had provided a full array of oversight functions, all aimed at making the Organization more efficient and effective while complying with relevant mandates and regulations. Its reports showed it had progressed from a skeletal form to a full-service office helping to nurture the new management culture of efficiency, effectiveness and accountability. The Secretary-General had written that internal oversight had matured and was now part of the management culture of the United Nations, as well as a valuable source of reference and guidance in institutional reform.

While the United States had a positive view of the Oversight Office, not everything was perfect. In hindsight, it would have been good to have made some aspects of the resolution clearer. On balance, the Office of Internal Oversight Services had implemented its responsibilities well, and the United States applauded all those who had a part in it.

Ms. BUERGO-RODRIGUEZ (Cuba) thanked Under-Secretary-General for Internal Oversight Services Karl Paschke for his previous introduction of the Office's thematic reports. Those contained recommendations which deserved decisions and recommendations from the General Assembly. The decision by the Assembly to review the functions of the Oversight Office was an essential part of the political negotiation that had led to the establishment of the Office. The concerns expressed in the negotiations were justified, since the resolution had introduced functions such as investigations which were foreign to the Organization.

During the time since its establishment, the Office had issued important reports and had improved management, she said. In some cases, however, it had gone beyond its sphere of competence and that had caused concern to Member States. The Office should abide by its mandate, which was the result of a delicate political balance. According to resolution 48/218B, this session must rule on that issue and others, such as its extension into the area of human resources, the scope of its operational independence including its terms of reference, and procedures for submission of its reports. The relationship between the Oversight Office and United Nations agencies and programmes should be reviewed, as should the relevance of the function of evaluation remaining in the Office. Specific proposals from Cuba would be made in informal consultations on the issue.

KARL PASCHKE, Under-Secretary-General for Internal Oversight Services, responded to points raised by Committee members during their discussion last week. The report of the Secretary-General on programme performance had been prepared by the Office after a thorough review, including analysis of the final submissions received from individual departments. The Oversight Office was in the process of modifying its monitoring instruments which would enable the measurement of the qualitative aspects of all implemented programmes. The Office had demonstrated the expertise needed to continue to prepare the Secretary-General's report on programme performance.

On the suggestion for an update of the Oversight Office's guidelines for investigations, he said the Office, unlike most departments, had produced in 1996 a public manual of its operating procedures. It was not in need of updating. Also, he clarified that the Oversight Office was a "recommendatory" body, not a law enforcement agency. When the manual had been prepared, great care had been taken to provide for the rights of accused persons.

Regarding the United Nations Disengagement Observer Force (UNDOF), he said the case had been investigated in March and April 1996. The Office's report had been completed and submitted to the relevant programme manager in the middle of 1996. In it, the Office had provided evidence that two United Nations staff members had violated the financial and procurement rules of the United Nations and, accordingly, had recommended that they be disciplined. The disciplinary case had been completed by the United Nations disciplinary committee in October 1998. It would have been inappropriate for the Office to produce a public report on the case earlier, in respect for due process.

He then turned to comments made regarding an investigation matter mentioned in the Office's most recent annual report. The Investigations Section had first been notified of the matter in January 1998, with a clear mandate to conduct an investigation to ascertain who had forged certain documents which imputed a false position with respect to the Secretary-General's position on the Committee of 24. Prior to the Office receiving that complaint, the Secretary-General had already established a stand-alone Decolonization Unit within the Department of Political Affairs. To suggest that the investigation, which had begun in February 1998 -- after Member States had completed their debate -- had caused or led to the transfer of the Decolonization Unit from the Department of Political Affairs to the Department of General Assembly Affairs and Conference Services was factually incorrect. To suggest that the Oversight Office's investigation had interfered with the political process on the question of decolonization was also factually incorrect.

The investigation had proved that the documents were created by two staff members from the Department of Political Affairs, he said. The content of those documents were contrary to the Secretary-General's reform plan. The two staff members had caused those documents to be issued through official documents. That was why the statement in the annual report that "the action of the two staff members had a negative impact on the Secretary-General's plan of reforms with respect to the Decolonization programme" was correct.

The Secretary-General's report on the composition of the Secretariat stated that out of the 13,543 Secretariat staff members, the number of staff subject to the principle of geographical distribution was 2,400, he said. The report spelled out those categories of posts which were included in and excluded from that designation. In the Oversight Office, out of 56 regular budget posts, 48 were held by regular staff, five were vacant, and three were temporarily filled. Drawing attention to a list of the Office's staffing distributed to the Committee members, he said the list only contained 116 current staff. The others were not subject to geographical distribution for various reasons. Still, the Oversight Office had sought to recruit only those staff who would enhance the geographical and gender balance and it no longer used gratis personnel, he added.

On the matter of cooperation between oversight bodies, he said that the Oversight Office met with the Board of Auditors every two months to adjust work programmes and exchange information. The Office and the Joint Inspection Unit (JIU) conducted a regular but less structured dialogue. On 3 November, the second formal tripartite meeting of the three oversight bodies would be held at Headquarters.

To questions posed regarding follow-up to recommendations, he said the Oversight Office provided written recommendations in draft form to management, generally with a three-week period for comments. Recommendations were either formulated together with management or submitted in a preliminary stage to find out if management would be inclined to implement them. As follow-up, the Office informed the Secretary-General on the status of implementation of its recommendations on a semi-annual basis. The Oversight Office maintained a computerized compliance-monitoring database of all recommendations issued since 1994. That database was updated twice a year.

DJAMEL MOKTEFI (Algeria) said he appreciated the positive work done by the Office of Internal Oversight Services. In the context of Assembly resolution 48/218B, however, certain problems still existed, and Algeria would like things to be clearer and more effective. Regarding the programme performance report drawn up by the Oversight Office, the representatives of the Office had shown the limits of their competence, because they had given no answers to certain questions. The representatives had said that the work questioned had come from other areas of the Secretariat, but that meant the answers were still not available. Cooperation should be increased so that full answers could be received for Member States' questions.

The Under-Secretary-General had only answered part of Algeria's questions, he said, so he would repeat them. They were conceptual, not descriptive. Algeria would like a report on how the conduct of managers had adapted so quickly to the Office. On the Office's reports to the General Assembly, Algeria wished to know what the reaction of the Office was when reports were not adopted, or there was no general reaction from the Assembly. He also called for a report on whether the Office had stayed within its context or had evolved into a broader dimension.

TAMMAM SULAIMAN (Syria) thanked the Under-Secretary-General for his prompt replies to questions, and stated that Syria had additional questions. He thanked Mr. Paschke for the list circulated of staff of the Office of Internal Oversight Services. However, Member States had not requested a list of staff by name, but by nationality; therefore, they had received more than asked for. He asked if the list contained the nationalities of current staff, or of all staff since the Office had been established. The review required that Member States have a list of nationalities since the Office's establishment, and he would like to receive such a list.

Regarding UNDOF, Mr. Paschke had said the Force was "called" UNDOF, which was not a very fortunate use of words, he said. In the year and a half since 1996, a number of events had occurred and it was only natural to ask questions about that. The matter was now settled, according to Mr. Paschke. Syria hoped he would share with Member States the recommendations he mentioned. He asked what recommendations concerned UNDOF.

He said that, regarding the Decolonization Unit, Mr. Paschke had given a very detailed reply, but had not really answered the question. He had asked how the Office had concluded that Member States, and Syria in particular, had been prompted by certain staff to make its statements on the Decolonization Unit. At the time, it had been Syria's constant position to support the Unit. Where the Office's report indicated that the Syrian statement had been made under the influence of certain staff members, the Office went beyond its competence, by passing judgement on actions taken by a delegation or State. Delegations spoke on behalf of their governments. The position of Syria on the Unit were the same in the "Committee of 24" and in the Fourth Committee (Special Political and Decolonization), whenever the subject of the Decolonization Unit came up. The Oversight Office had made a mistake. Also, Mr. Paschke had said that Syria had stated that the Oversight Office investigation had led to the transfer of the Decolonization Unit. The transfer of the Unit had been carried out by an agreement between the

Secretary-General and the General Assembly's Fourth Committee. Syria had not said that the Oversight Office was involved in that.

He asked Mr. Paschke to make certain of questions before he responded to them. Syria was against the Oversight Office reporting that a statement from Syria had been made under pressure from a staff member.

Mr. PASCHKE said he would return with more detail to some of the questions. The representative of Algeria had observed that in discussions on the programme performance report, representatives of the Oversight Office had shown the limit of their competence. However, he took strong exception to that statement. They had not shown any lack of professional competence. Rather, questions had been asked of them that should have been directed to management representatives, since the report conveyed data and information that reflected management actions. The high rate of implementation of the Office's recommendations was due to several facts, including that they were precise, realistic and well-measured. Further, they were developed in close cooperation with management, and the Oversight Office followed up on their implementation.

To comments made by the delegate of Syria, he said that if all questions had not been responded to, that was due in part to the fact that that delegate had not provided written copies of his intervention. The Oversight Office had not, in any way, commented on statements made by Member States and had not intervened in the very political discussion on the Decolonization Unit.

Mr. MOKTEFI (Algeria) said his delegation supported the work of the Oversight Office. On the performance report, he had said that during informal consultations the representative of the Office had recognized that he could only give limited answers. However, in his earlier intervention, he had not said that the representatives of the Oversight Office displayed a lack of competence or professionalism. He wanted to make sure that was understood. The drafting of the performance report implied full involvement of the other structures with the Oversight Office, which remained fully competent in that area. His delegation would work constructively in the debate on the implementation of resolution 48/218B, which had been drafted by Member States and which, if needed, would be revised by Member States.

Mr. SULAIMAN (Syria) said it might be appropriate to have coordination between the Committee and the Organization's interpretation and translation services. When delegations posed questions in languages other than English, it was often difficult to follow them. Perhaps, it would be appropriate to coordinate with translation services so that statements made in languages other than English could be prepared for representatives of the Secretary-General. He would help in that at a later stage.

The Committee concluded its general discussion of the item.

Statement on JIU

PRAYONO ATIYANTO (Indonesia) expressed strong support for the work of the JIU. His delegation was ready to support any efforts that could facilitate that body's implementing its functions and mandates. The work of the JIU, and the necessary funding for it, required the Committee's due attention.

The Committee concluded its general discussion of the item.

Statements on United Nations Common System

MOHSEN BEL HADJ AMOR, Chairman, ICSC, introduced that body's annual report. The Commission had responded on an urgent basis to a last-minute request from the General Assembly regarding a United Nations Code of Conduct. Also, it had completed its consideration of the report of the Working Group on the consultative process and working arrangements for the ICSC and provided its comments on the management audit of its secretariat. The report of the Working Group -- annexed to the Commission's annual report -- contained recommendations for amendments to the ICSC rules of procedures.

On the matter of the post adjustment system at the base, New York, he recalled that in recent years concerns had been voiced that post adjustment increases at the base were automatic, that the Assembly had no direct role in their implementation, and that adjustments at the base might be generating automatic increases in post adjustments at all other duty stations. Those concerns had led to the Assembly requesting the ICSC to consider eliminating post adjustment at the base of the system. The current report provided technical explanations which the ICSC deemed necessary to allay the Assembly's misgivings. Post adjustments were not automatically passed on to other duty stations. The Assembly exerted control on remuneration at the base, and at other duty stations, through margin management within the defined range. Further, the Commission cautioned that the issue had broader implications, relating to the entire system of salaries, allowances and benefits. The Commission would revert to evolution of the margin at its spring session.

[Post adjustment is a supplement to base pay to ensure that the purchasing power of "take-home" pay for United Nations staff worldwide is equal to that in New York. It is designed to deal with relative differences in cost of living and is established by means of periodic comparisons through place-to-place surveys, housing surveys, or price surveys. The margin is the average percentage difference between the remuneration of United Nations staff in New York and that of the United States federal civil service.]

The Commission had continued its review of the total compensation comparison between the United States and the German civil services to identify the highest paid national civil services, he said. The ICSC would revisit the

issue in the year 2001, at the time of the next study of the identification of the highest paid national civil service.

Regarding the Geneva post adjustment, he said the Commission had been considering the possibility of establishing a single post adjustment index for Geneva that reflected prices of goods and services both in Geneva and in the neighbouring areas. The Assembly had requested that to ensure that place-to-place surveys conducted in duty stations were fully representative of the cost of living of all staff working in the duty stations. The Commission concluded, in light of the technical, legal and administrative complexities, that there was no benefit to be derived from pursuing the matter further.

On the matter of hazard pay, the Commission had decided to increase the amount with effect from 1 June 1998, he said. The amount would be reviewed again in the year 2002, when hazard pay for locally recruited staff would also be reviewed.

He then turned to gender balance. System-wide, women accounted for some 30 per cent of Professional level staff, he said. While that figure represented an increase over previous years, the goal of 50/50 parity between men and women was still a long way off. The picture with respect to women at the P-5 level and above was even less encouraging.

Regarding the Board of Auditors' recommendation that the data processing systems be transferred into a state-of-the-art integrated management information system, the Commission was receiving professional advice on how to overhaul the existing computerized systems, he said. The complete overhaul of current systems would benefit the Commission, its secretariat, Member States and the common system. The estimated cost of a state-of-the-art system was between $1.5 million to $2 million. A detailed request for those resources would be submitted to the Assembly as part of the ICSC's budget for the 2000-2001 biennium.

ULRIKE BUTSCHEK (Austria), speaking on behalf of the European Union, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia and Cyprus, said she wished to underline the Union's conviction that staff were the most valuable and important asset of the Organization. Therefore, matters relating to staff were of great concern to the Union. Member States must ensure that the United Nations attracted the best and brightest. The common system was the best instrument to achieve that. The European Union supported the United Nations common system as it provided consistency throughout the system, and thus coherence and equality. It also provided efficiency, as individual agencies did not have to investigate conditions individually. It was crucial to maintain the Commission's independence.

Conditions of service must be able to measure up to competition and worldwide comparison, while recognizing the unique nature of the United Nations, she said. The Noblemaire Principle was a useful tool to that end, and it seemed important to consider ways to increase flexibility within the system by using specialist pay. She awaited the specific report by the ICSC on that with great interest. The European Union concurred with the ICSC on maintaining the current comparator, and on a study on using a basket of comparators. On the Flemming Principle, she was concerned that it resulted in distortions of the relationship between the scales of Professional and General Service staff in some locations.

The Union agreed with the ICSC proposals concerning remuneration, a moderate base salary increase, a revised staff assessment and a slight increase in dependency allowance, she said. It also concurred with the ICSC on conditions of service, and welcomed progress by the Working Group on the consultative process and the working arrangements of the Commission. It took note of the ICSC comments on a review of the ICSC, and welcomed the positive response from the ICSC secretariat. That review formed part of the Secretary-General's reform package, and would be an essential part of the modernization of the Organization's staff management process.

ULADZIMIR VANTSEVICH (Belarus) said that the recognition of the status of the ICSC by 12 organizations along with the United Nations was a source of satisfaction. A study of the 1998 report showed that it was preserving the balance of the interests of staff and the United Nations system as a whole. He commended analysis and recommendations carried out by the ICSC. Additional work was needed by the ICSC and the Fifth Committee to resolve problems of the relations of adjacent grades in the Professional category.

In 1996, the Commission had set up a working group to study human resources management and to report on strategies, he said. Proposals on the composition of the working group testified to support for it. However its first session was set for February 1999. Belarus regretted that the decision to report in 1998 on certain matters remained unimplemented. He supported decisions of the Commission to review the position of women in the Secretariat, and welcomed statistics on that, and the creation of a statistical database on geographic balance. Those would target fair approaches to resolving problems of recruitment. Belarus was satisfied with the ICSC report. Future informal consultations would make it possible to consider the substance of the proposals it contained.

LISANNE LOSIER, President of the Coordinating Committee for the International Staff Unions and Associations, said that Coordinating Committee believed that recruitment objectives under the Noblemaire Principle could only be achieved if salaries were based on the highest paying national civil service. Recently, the Secretary-General had said that there were, for the first time, more resignations from the Organization than retirements, notably at the P-2 and P-3 levels. The ability to retain staff was based, in part, on having appropriate salaries, benefits and working conditions. Short-term and fixed-term appointments limited the capacity of staff to live a normal life.

The Coordinating Committee was concerned that the ICSC had recommended no change in the comparator, she said. It had been clearly demonstrated that the United States civil service was no longer the highest paid. For purely political reasons, the ICSC did not recommend change. The Coordinating Committee would like to request the General Assembly change comparators to fully implement the Noblemaire Principle.

Both the Secretary-General and Member States had said staff were the most valuable resource of the United Nations, she said. She reminded them that action spoke louder than words. Conditions continued to deteriorate. The salary methodology for General Service staff made it very difficult to use the best comparators.

The Coordinating Committee was paying attention to the increasing number of civilian casualties in the field, she said. There had been improvements in security, but there was still room for more. The Coordinating Committee congratulated the United Nations Security Coordinator for producing a handbook for field staff. Stress counselling and first aid education were needed for field staff. Lack of funding was the key stumbling block to addressing that need. Administrative threats to field staff also needed addressing. Series 300 contracts were designed to cover short-term specific assignments, but if used more broadly, they exploited individuals. The Coordinating Committee was also concerned that the contactual status of some local staff was being threatened by government decisions in the field. While recognizing national sovereignty, it was important that the United Nations negotiate headquarters agreements to protect local staff. It was also important that, once an individual accepted work for the United Nations, their commitment should be to internationalism, not nationalism.

The Coordinating Committee noted with pleasure that there were now 21 signatories to the 1994 Convention on the Safety of United Nations and Associated Personnel, and appealed to Member States to sign and ratify the Convention, she said. It supported the Secretary-General's Staff Day statement that the primary responsibility for security of staff rested with host governments.

On ICSC reform, she said the Coordinating Committee participated in the ICSC working group and that, while it had some reservations, it was satisfied with the recommendations, which were a step in the right direction. The adoption process by the ICSC of the working group's report had been unnecessarily lengthy. The ICSC would have to implement the agreement for the consultative process to work. In 1995, the Coordinating Committee had taken a decision to withdraw from the ICSC. It still believed there was a real need for the reform of the ICSC.

She said the Committee was concerned at the increasing politicization of the ICSC, which put aside sound technical methods to meet political concerns. The ICSC was not an appropriate forum to discuss its own reform. It was up to the Fifth Committee and the General Assembly to provide leadership on that. The ICSC had a serious role to play, but if it was to become the technical expert body that its statute described, it would need serious changes. The Coordinating Committee would participate and provide input into the review.

MARGARET ELDON, President of the Federation of International Civil Servants' Associations (FICSA), reaffirmed that body's commitment to contribute constructively to the United Nations reform process. The staff wanted to ensure that their work was respected throughout the world and wanted mandates to be carried out in the service of Member States. A principal concern of the staff was the consultative process at the level of the common system. The forum for consultation on conditions of service and human resources issues was the ICSC. For the last six years, the staff had refused to participate in the deliberations of the ICSC, which testified to the depth of the rift between the parties concerned and the extent of alienation of the staff.

But staff had not been alone in pointing to the need for reform of the ICSC, she said. Administrations of specialized agencies had also voiced concerns. Organizations were now seeking the establishment of a legal advisory body to protect them from the costly consequences of implementing flawed decisions of the Commission. Attempting to solve the situation, the Federation had participated in the joint working group on the consultative process that had met twice this year. The amendments to the rules and procedures that had been agreed upon by the working group represented an appreciable compromise by FICSA compared to its original position advocating abolition of the Commission and replacement by another body. The process of selection and election of members of the Commission must be updated. While it would be appropriate to review the Commission's Statute, proposals put forward by that working group could be adopted without statutory changes.

Regarding the ICSC's recommendation on how to strengthen the United Nations cultural diversity through, among other things, recognition of language knowledge, she said that the proposal to transform existing langauge recognition schemes into a lump-sum bonus offered less incentive to staff to increase their knowledge of languages. The recommendation did not address the issue of facilitating cultural diversity, but restricted itself to finding a cheaper way to recognize an essential skill. It would work against staff whose mother tongue was not an official language of the United Nations. Also, it would not help in establishing better balance in the working languages in staff recruitment, and would be difficult to implement since it implied the cessation of an acquired right that would be legally contested.

Any approach to strengthening multiculturalism within the United Nations should build on and not undermine systems that were already in existence and working well, she said. The way forward was through training and career development in the context of an organizational work environment that truly valued and encouraged language competence in staff.

She then turned to the need to improve protection for humanitarian workers in the field, which was of particular importance in view of the deterioration in compliance with rules of international law in conflict situations, she said. The United Nations Field Security Handbook should be changed. It distinguished between internationally and locally recruited staff who were nationals of the duty station and offered each different degrees of protection. According to an independent legal study the Federation had commissioned, such distinctions, for the purposes of protection, should not exist because the danger to which the United Nations staff were subject did not differ according to recruitment status. Member States which had not done so should ratify the 1994 Convention on the Safety of United Nations and Associated Personnel. To date, 21 Member States had ratified the Convention, while 22 ratifications were required for it to come into force.

The Secretary-General had more than once said that reform did not mean budget and staff cuts, she said. Member States had agreed that staff were the most important resource of the United Nations system and that reform should mean a more effective and efficient use of that resource. However, the conditions of service of staff continued to deteriorate. Professional salaries were no longer comparable with the best paid national civil service, and successive modifications of the salary survey methodologies for General Service made it increasingly more difficult to capture the best prevailing rates of the locality. The Noblemaire and Flemming Principles must be respected and applied.

Change should introduce real improvements and respect the principles and international character of the United Nations system, she said. Delegation of authority, flexibility and streamlining should not lead to a loss of transparency and of controls necessary to ensure equality of treatment and safeguard the Organization's image. Effective consultation with elected staff representatives was crucial to the concept of partnership, since it was only through continuous dialogue that common vision and understanding was achieved. The Federation suggested the holding of an informal question and answer session between representatives of Member States and staff on issues under review.

Statements on United Nations Joint Staff Pension Board

DIETER GOETHEL, Chairman of the United Nations Joint Staff Pension Board, introduced that body's report, which summarized its consideration of a wide range of issues during its forty-eighth session, held from 7 to 16 July 1998 in Vienna. The Board had reviewed the Fund's long-term administrative arrangements, given the institutional and operational development of the Pension Fund as a major autonomous inter-agency entity in the United Nations system. The Fund was administered through a Pension Board which reported directly to the General Assembly. The report provided information on the Fund's global operations, which currently consisted of 20 member organizations, its administrative and financial status and its benefit provisions, among other matters. Annexed to the report was an eight-part draft resolution.

The draft is divided into the following sections: actuarial matters; pension adjustment system; status of the proposed agreement between the Pension Board and the Government of the Russian Federation; financial statements of the Fund and the report of the Board of Auditors; administrative arrangements between the Fund and other member organizations; entitlement to survivors' benefits for spouses and former spouses; other matters; and investments of the Fund. Among the provisions, the Assembly would approve the staffing arrangements and other resources recommended by the Board, involving additional expenses amounting to some $4.1 million net for the 1998-1999 biennium.

The General Assembly had approved expenses totalling $50.1 million for the 1998-1999 biennium. The proposed revised estimates amount to $54.2 million.

The comments made in the audit report reflected the complexities and sensitivities that were involved in determining control procedures for a global pension system that served more than 110,000 participants and beneficiaries in 187 countries, he said. The monthly pay-outs for benefits exceeded $78 million, in 26 currency beneficiaries. For those reasons, the Board attached considerable importance to the internal and external audit arrangements of the Fund.

Under "regular valuation" assumptions, the required rate of contribution for actuarial balance would be 23.34 per cent of pensionable remuneration, as against the present contribution rate of 23.7 per cent, he said. Therefore, as of 31 December 1997, there had been an actuarial surplus of 0.36 per cent of pensionable remuneration as against an actuarial deficit of 1.46 per cent of pensionable remuneration as of 31 December 1995. Whether an actuarial deficit would reappear depended upon future economic and demographic developments, particulary as regarded investment returns and exchange rates. A significant portion of the actuarial gain was attributable to the strengthening of the United States dollar since the last valuation; if the change in exchange rates had not occurred, the Fund would probably have remained in actuarial deficit. The Committee of Actuaries was of the view that the present contribution rate should be retained.

The Board had decided to lower the interest rate applicable in determining lump-sum commutations of periodic benefits -- from 6.5 per cent to 6 per cent -- with respect to contributory service as from 1 January 2001, subject to a favourable actuarial valuation as at 31 December 1999, he said. Also, the Board decided to recommend to the General Assembly that the threshold be reduced from 3 to 2 per cent, commencing with the adjustments due on 1 April 2001, and subject to a favourable actuarial valuation as at 31 December 1999.

The Board had been able to reach agreement on delineating operational and managerial responsibilities for the Fund's activities, he said. There was pressing need for a new accounting system for the Fund, which was currently implementing a computerization process, initiated in the early 1990s, aimed at modernizing, streamlining and integrating the Fund's computer systems and applications. The new accounting system should provide linkages between all transactions and data elements and must be fully operational by July 1999.

On the matter of a proposed agreement between the Russian Federation and the Pension Board, on which the General Assembly had concurred in its fifty-first session, he said that implementation was to have taken place following approval by the Government of the Russian Federation and payment of the first instalment of the actuarial costs. Discussions were then to commence on the situation of the former participants from the former Soviet Union who were not covered by the proposed agreement.

However, he said, despite repeated communications, the Russian Government had not responded formally until 1 July 1998, explaining that work on the issue had taken longer than expected because of the country's difficult financial situation and competing priorities. In a subsequent communication, that Government had invited experts from the Secretariat and the Pension Fund to visit Moscow in early 1999 to discuss matters of mutual interest. The officials stood ready for such a visit. It would be regrettable if the efforts expended by so many to find a reasonable and fair solution to the long-standing grievances of former participants in the Fund should be for naught, he said.

On entitlements for surviving spouses and former spouses, he said the Board recommended an amendment of article 45 of the Fund's regulations, to provide for a payment facility in respect of former spouses. Other recommended amendments would provide benefits to surviving divorced spouses under strictly defined conditions, would permit beneficiaries who marry after separation to purchase a survivor's benefit for their spouses, and would eliminate the "re-marriage penalty" by continuing the survivor's benefit after re-marriage. Those changes would constitute a fair response to long-standing representations, he added.

JOSEPH E. CONNOR, Under-Secretary General for Management, representing the Secretary-General, introduced the report on the investments of the Joint Staff Pension Fund, which covered the period 1 April 1996 to 31 March 1998. On 31 March 1998, the market value of the Fund's assets was $20.170 billion compared to $15.539 billion on 31 March 1996. The strong performance of the equity portfolio, which had a total return of 27.3 per cent, was driven by good economic conditions in the United States. Bond yields had fallen in nearly all markets because inflation was low worldwide. The Fund's bond portfolio had a return of 3.6 per cent for the year ending 31 March 1997, and 7 per cent for the year ending 31 March 1998.

Mr. Connor cautioned against focusing too much on short-term results and urged that investments be looked at over a longer term. The investment management aimed at medium- and long-term returns, with a balance of risk and return expectations, rather than high risk for high short-term gains. The management relied on broad diversification in terms of currency, types of assets and geographical areas as the most reliable method of reducing risk and maximizing returns long-term. Comparisons with benchmarks could be misleading, but an appropriate benchmark had been established in January 1997. During the year ending 31 March 1998, the Fund had slightly underperformed the benchmark by 0.9 per cent, mainly due to bond and stock selection.

After an extensive worldwide search, four advisers were offered contracts as of 1 January 1997, he said. Fiduciary Trust Company International had been retained to advise the Fund on North America, Latin America, Middle Eastern and African equities and on global fixed income; Paribas Asset Management had been hired to advise on European equities, and Nikko International Capital Asset Management Co., Ltd. had been hired to advise on Asian and Pacific equities. The Pension Consulting Alliance was selected as the new adviser for the real estate portfolio.

As the Fund's assets were growing larger, its management was becoming more complex, he said. Management of the Fund would continue to be guided by the principles of safety, profitability, liquidity and convertibility.

C.S.M. MSELLE, Chairman of the ACABQ, introduced the ACABQ report on the United Nations Joint Staff Pension Fund (document A/53/511). On the actuarial revaluation, the ACABQ believed that no change should be made to reduce the current contribution rate unless a pattern of surpluses were found in future revaluations. It also agreed with the Pension Board proposals for revised expenses for 1998-1999. In the future, the administrative expenses for the purpose of actuarial valuation should be based on the level of resources required to administer the Fund, rather than a predetermined ration.

The ACABQ agreed with the proposal to reclassify the post of the head of the Investment Service from D-1 to D-2, he said. On the proposal to reclassify the Secretary of the Board's post, the ACABQ regarded the proposed level as similar to the creation of a D-3 level. There might be repercussions if that proposal was adopted, including pressure to move more D-2 posts to D-3.

One must never underestimate the capacity and imagination of any bureaucracy to exploit any tiny opening, he said. Those who made proposals were never around to witness the effect those proposals had. The ACABQ had said the post of Secretary should be reclassified to Assistant Secretary-General. That was not a matter of monetary value, as the cost difference between D-2 and Assistant Secretary-General was minor. The ACABQ also agreed with the recommended restructuring of the title to Chief Executive Officer of Fund, and the adjustment of the relevant regulations accordingly.

Ms. BUTSCHEK (Austria), speaking for the European Union, Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia and Cyprus, said the Union noted with satisfaction that, for the first time since 1978, the actuarial valuation of the Fund was positive. The Union agreed with the ACABQ that the surplus should be retained for a number of years before consideration was given to redistribution. The Union also noted the investment performance, welcomed the creation of a benchmark for comparison with other funds, and congratulated those concerned with fund investments.

She welcomed newly developed changes for entitlements to survivors' benefits for spouses and former spouses. Those were a step in the right direction, although improvements were still needed. The European Union also welcomed progress on administrative arrangements and considered that the concept paper on the review of cost-sharing arrangements and a revised cost-sharing formula provided a useful basis for further deliberations. Regarding the level of the post of Secretary of the Board, that post required special qualification commensurate with its responsibilities, and was, therefore, a prime candidate for specialist pay. Regarding the World Trade Organization (WTO) application for termination of its membership, she trusted that due attention would be given to concluding satisfactory transfer arrangements.

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