U.N. compensation costs soar by $1 billion

The business of ending wars, keeping the peace and solving hunger and poverty apparently has its privileges, at least when it comes to pay.

A Government Accountability Office report finds that the compensation costs for U.N. personnel have soared by $1 billion over the past decade, prompting the investigative arm of Congress to press the United Nations to find more cost savings or less-generous pay packages.

According to the GAO’s analysis, expenditures related to U.N. staff rose steadily from $1.95 billion in 2002-2003 to $2.98 billion in 2010-2011, at an average rate of about 7 percent per two-year budget, and the United States contributes approximately 22 percent of the U.N. budget.

“The UN Board of Auditors reported that staff costs for the 2010-2011 biennium were the UN’s single largest item of expenditure, with costs rising because of higher salaries and related staff benefits,” auditors wrote in the GAO report. “The UN Secretary-General and the General Assembly have also raised concerns about the long-term sustainability of compensation costs.”

To slow the rising costs, the United Nations raised its retirement age from 62 to 65 for new hires and rates paid for allowances for at least one year. Additionally, the U.N. International Civil Service Commission began a review of U.N. compensation and will compile a report by next year.

However, the civil service commission is able to examine costs only within its area of administrative jurisdiction, which does not include costs for pensions and retiree health insurance.

Investigators fear that without a full report, including information outside the civil service commission’s scope, member states will not have a complete record to help make decisions about cutting cots.

In a response letter to the GAO, officials at the State Department explained a key factor of the disproportionate compensation increases over the years: the Noblemaire principle.

“The Noblemaire Principle requires compensation for UN professional staff to be set in comparison to the highest compensated national civil service, and since 1945, the UN has considered this to be the U.S. Federal civil service,” State Department officials said.

In other words, the principle requires compensation for U.N. workers to be at least as high as the pay for civil service workers in any member country. When the rule was established by the European Union, Britain was the standard for salary calculation. Now it’s the U.S.

However, this principle leads to a “cherry-picking” process in which members can argue for U.S. base salaries, Italian vacation benefits, German education benefits and other perks, according to a report by David Judson for the Turkish news source Hurriyet Daily News.

U.N. professional categories do not line up exactly with U.S. civil service compensation, so adjustments have to be made.

“The ICSC calculate equivalencies between the two as a basis for determining compensation. According to the ICSC, U.N. Compensation significantly exceeds that of the U.S. Equivalent,” Brett Schaefer, a fellow in international regulatory affairs, explained in a post for the Heritage Foundation.

GAO investigators found that U.N. staff with 30 years of service who retire at age 62 have salaries ranging from $65,272 to $176,274 while U.S. federal civilian employees with the same qualifications make $47,413 to $120,347.

These compensation discrepancies were apparent across the board, including special allowance benefits issued to U.N. employees.

“We compared the costs of health care plans for UN staff based in New York City, New York, and U.S. civil service employees, and found that the average organizational cost per employee in 2012 was 5 percent higher for U.S. employees than for UN staff,” GAO investigators wrote.

The watchdog’s report listed specific salary data for U.N. workers serving in various circumstances versus U.S. government employees in the same situations and found that on average U.N. employees were compensated far more generously.

Out of 5,299 U.N. employees receiving compensation for service in a hardship duty station, they received on average $10,294, while 11,858 U.S. employees qualifying for the same allowance benefits received only $9,248 on average.

Additionally, U.N. employees were given more money for relocation and moving expenses and to take care of their families while they were stationed at separate locations, while U.S. employees were allocated far less in allowances.

“In addition to these lavish salaries, U.N. employees enjoy generous benefits and allowances, including a rental subsidy of up to 80 percent above a specified threshold; education grants for staff serving outside their home country amounting to 75 percent of tuition (up to $32,255 per annum), payable through the fourth year of college up to the age of 25; and annual vacation of 30 days, 10 official holidays, 16 weeks of paid maternity leave, and four to eight weeks of paid paternity leave,” Mr. Schaefer said.

The U.N. General Assembly has raised serious concerns over the sustainability of its compensation programs. Last year, Secretary-General Ban Ki-moon reported the unfunded liability for its after-service health insurance program to be almost $4 billion.

“The General Assembly expressed ’deep concern’ over these costs, and the Secretary-General noted that the UN lacks the assets to settle this liability,” the watchdog’s report states, adding that the General Assembly agreed that a long-term funding strategy is needed.

In some areas, however, U.S. federal service employees received more compensation than their U.N. counterparts. For example, U.S. federal employees are eligible for supplemental repayment of student loans, an allowance that is not granted to U.N. employees.

The GAO recommended that the secretary of state work with officials of other member states to ensure that the costs of compensation are reviewed thoroughly and completely to address sustainability concerns and cut costs.

In its response, the State Department agreed with the findings and recommendations and agreed with the findings on the exclusion of pension benefits and retirement health care benefits from the U.N. International Civil Service Commission’s investigation.