Colleagues and friends:

This somber occasion has special significance for me. As some of you know, I will be retiring in a little over two months and this might be the last time I take part in an OAS Staff Assembly. I regret that the reason we are meeting is so serious.

I would like to talk about the proposed freezing of remunerations (wages in the case of general services staff, and salaries plus post adjustments for professionals) and trust I will not try your patience for too long. In order to measure my words carefully, I wrote down what I wish to say prior to this meeting.

The current administration has announced that, as part of a number of measures to deal with the critical financial and budgetary situation of the General Secretariat, it wishes to freeze our remunerations at their current levels for two years. As mentioned by those who spoke before me, that would be very dangerous because it could lead to a prolonged period of instability in our labor relations. At the behest of member countries (precipitated by Judgment No. 124 of our Administrative Tribunal in May, 1994), the administration and staff held a referendum, on terms and conditions previously approved by the member states, which restored parity of remunerations and of job classification standards with those of the United Nations.

It is certainly worth pointing out, once again, that member states had already decided, back in 1968, that the OAS should use the salary and classification scales of the United Nations, and did in fact apply them until 1976. When the countries unilaterally declared an end to parity, on the grounds that it was very expensive, the Administrative Tribunal ruled, in Judgment No. 37, that parity of remunerations with the UN was a contractual stipulation that could not be modified unilaterally. Judgment No. 64 reiterated the point that parity could be replaced by a new system, but that the implementation of any new system required the approval of the staff via referendum and that it had to be a system that was not clearly inferior for the staff to the one being replaced.

That new system (known as the “comparator”) only took effect in 1983. Once the approval of a majority of the staff had been obtained via referendum, the Secretary General and the President of the Staff Association signed the agreement whereby the comparator system became our own system, replacing parity with the United Nations. Did it work? No. It was difficult to administer. The General Secretariat devoted considerable time and resources every year to preparing studies prior to making its annual recommendation to the Permanent Council on what the cost of living adjustment for the following year should be, while the countries every year devoted most of the time in CAAP meetings to efforts to reach a consensus on the cost of living adjustment to the following year's remunerations. The decisions they reached were unpredictable, subjective, and, as the Administrative Tribunal found in 1994, biased against the staff. Staff were uneasy and demoralized by a remuneration system they perceived to be whimsical and unfair. How much did the member states save by having their own system? Nothing, or very little, as became clear in 1994, when a decision was made to return to parity.

The resumption of parity was due to a generalized conviction (by staff, the administration, and member states) that the comparator system left nobody happy and that, given its high cost (in terms of litigation and management), it should be replaced by another, less politicized system. As had been the case almost 30 years earlier, the obvious way to overcome these shortcomings was to use the same scales as the United Nations, whose International Civil Service Commission (ICSC) spends, literally, millions of dollars a year on the research and studies that have shaped the UN’s remunerations system. Trying to reinvent the wheel is a costly exercise and, for lack of sufficient funding, invariably leads to a more imperfect system that that of the United Nations. In fact, our Association had already reached an agreement with the Administration back in 1982 to recommend to member states a return to the UN salary scales.

I am reiterating this brief sketch of the history of parity with UN salary scales to remind you that the adoption (for the second time) of UN salary scales in 1994 was the culmination of a difficult process marked, for over a quarter of a century, by difficult periods, arduous negotiations, and at least four collective actions culminating in judgments of the Administrative Tribunal.

Now we are being asked to freeze remunerations at their current level for two years. Apart from the many practical problems of implementing such a measure (which I trust the Administration will address when it presents its detailed proposal on how it wishes to freeze remunerations to our Committee), let us not lose sight of the fundamental issue: the Agreement signed in 1994 clearly sets forth two conditions: our remunerations must be the same as those of the United Nations in each post, and fair application of this principle requires that the levels of OAS positions be established in accordance with UN classification standards.

Therefore, it would be a violation of our labor contracts, in a matter as fundamental as the determination of the level of our remunerations, if those remunerations are not the same as those paid by the United Nations for the same job in the same post. One way in which a compromise might be sought on this point would be maintaining use of UN scales, but freezing the amount handed over to the staff member at its current (or other intermediate) level and recording the difference as hours of leave that each staff member could take, if he or she pleases, or collect in cash upon separation from service.

Even so, there would be numerous practical problems (for instance: how would a new employee’s initial salary be calculated? What would happen if a person is promoted to a higher position? How would “freezing” function away from headquarters, in countries in which the dollar value of remunerations can rise or fall from one month to another? What would happen to retirees’ pensions, which are adjusted according to the wage increases granted to the staff in active service?) Even more worrying, in my opinion, is the likelihood that, in two years’ time, the countries say they cannot pay the adjustment needed to restore parity in 2007. What guarantees can the Administration provide that an initially two-year freeze does not become indefinite?

The proposed freeze is, moreover, discriminatory, because it would cause harm to people with fewer savings and less capacity to save; those who have fewer years of service at the OAS; those in lower grades; those who have to look after a sick relative; those who have just bought or rented real estate at today’s inflated prices and therefore have to pay an inflated mortgage or rent. This type of discrimination is, by its very nature, inevitable when everyone’s remunerations are frozen.

Finally, we are told that the problem prompting the proposal to freeze remunerations is a budgetary issue, not a cash flow problem. If that is the case, then a freezing of “take-home pay,” in which the debt would be recorded as annual leave, would not solve the budgetary issue. The expenditure would be the same as if remunerations were not frozen, except that part of it would be recorded as a growing debt to the staff.

Wouldn’t it be easier and more expeditious to admit that the Organization will go on shrinking so long as there continues to be a freeze on the nominal amount of countries’ payment quotas to the Regular Fund, which has remained fixed since the 1995 budget at US$73.7 million? Due to inflation, the 2005 level constitutes a loss of almost one quarter of the purchasing power of the quotas in ten years. Going a little further back, the quotas assigned to member states in 1978 were the equivalent, at today’s prices, of US$127.8 million, or 73 percent more than what they pay today. If quotas are supposed to be based on each country’s capacity to pay and that capacity has increased (because of the marked average growth of our countries’ economies over the past quarter century), the unwillingness to maintain, at least, the purchasing power of the budget cannot be blamed on lack of capacity to pay. This is the root problem underlying the Organization’s perennial budgetary crisis.

I personally find it hard to understand exactly why the countries cannot contribute the money needed to maintain the Organization's level of expenditure, including the funds needed to pay OAS remunerations at a level comparable with those of sister institutions. If they pay us as second-rate officials and the Regular Fund's resources continue to dwindle in real terms, the OAS will inevitably be perceived as a third-rate Organization. Is that the image of the OAS that member states wish to project?

The OAS is an organization of the sovereign states of the Hemisphere. As in any association, the partners must decide how much to contribute and what for. An effort is being made to portray the freezing of remunerations as a well-intentioned alternative to further staff cutbacks. However, if we are objective and realistic, we have to admit that such cutbacks will also be inevitable if the budget remains frozen and the mandates are not reduced. Let us not deceive ourselves: in December 1975, before parity was abandoned, the General Secretariat had a staff of 1,536. In December 1982, before the comparator system entered into force, that number had fallen to 1,061. By December 1994, prior to the resumption of parity, it had fallen again, to 678, a level that has been more or less maintained since then. In that cutback involving four out of every seven jobs, the member states achieved savings and obviously were (and continue to be) fully entitled to determine the size of the General Secretariat they wish to have and what specific goals it should focus on.

The reorganization introduced last month is a good example: numerous D-1 and D-2 posts have been eliminated and a more focused organizational structure has been forged by grouping together related programs and activities. We were told that those cuts (and the reduction of the grade for others positions) would save US$2.5 million a year. To the extent that those reductions in grade do not contravene UN classification standards, they represent the kind of measures that do not run counter to the system of parity with UN salary scales.

Nevertheless, it is one thing to make cuts because they are warranted for administrative efficiency reasons; and quite another thing to do so out of financial necessity. If a post is superfluous, or there are four people doing a job that only needs three, it is incumbent upon the Secretary General to take the decision to cut those superfluous positions, because the administration has to safeguard the interests of the Organization. This is irrespective of the existence or nonexistence of a financial crisis.

But when the intention is to cut personnel costs because the countries say that they cannot increase the budget and, at the same time, they aspire to maintain (or increase) mandates, I conclude that they are unwilling to increase their quotas, because it cannot be said for any of our countries that their contribution to the financing of the OAS Regular Fund represents a significant outlay.

If they are unwilling to provide the financing needed to cover the cost of the mandates, member states must reach a consensus on what activities are priorities, and trim or eliminate those that are not, while making sure that the priority activities do get the funding they need to be carried out successfully. Freezing remunerations is not an efficient solution, much less a fair one.

The return to parity in 1994 already entailed a series of staff sacrifices, for the sake of reducing costs. As part of the transition, all positions were audited and over half were downgraded; payment of the debt resulting from Judgment No. 124 was made in hours of annual leave, but on condition that staff members took their leave over a period of five years (later stretched to seven); and, as regards benefits, the so-called “intelligent parity” principle was applied, which in reality meant a cut in benefits (such as the reduction of the per diem for home leave from two days to one day and the reduction in the number of hours of annual leave granted during the first five years of service). At the same time, “intelligent parity” left other benefits at levels way below those of the United Nations: the institution’s contributions to the Retirement and Pensions Fund remained at 14 percent (instead of 15.6 percent at the UN); OAS staff in Washington continued to be excluded from the rental subsidy (which the UN pays in all posts, including New York and Washington, to professional staff who, for market reasons, have to spend more than the average for that post in the first few years); and education subsidies for staff and their dependents continued at levels far below those paid to its staff by PAHO.

Calculations made in 1994 found that the additional annual cost of those three factors (increasing the institution’s contribution to the Retirement and Pension Fund to 15.8 percent; expanding eligibility for the rental subsidy to staff at headquarters; and putting education subsidies on a par with those at PAHO) would have amounted to several million dollars a year.

Parity in remunerations and classification standards with the United Nations is like pregnancy: either a woman is pregnant or she isn’t, there are no half-way houses. Because these sacrifices have already been made; because a freezing of remunerations would be discriminatory; in view of the long years of frustration and labor conflict prior to 1995; and because I do not wish the OAS to be regarded as a third-rate international organization, I suggest that the reply to the proposal to freeze remunerations should be a robust NO.

Thank you.

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