CL 121/4


Council

Hundred and Twenty-first Session

Rome, 30 October - 1 November 2001

REPORT OF THE NINETY-SEVENTH SESSION OF THE FINANCE COMMITTEE
Rome, 17 - 22 September 2001

Table of Contents



 


MATTERS REQUIRING ATTENTION BY THE COUNCIL

Report of the Ninety-seventh Session of the Finance Committee

Paragraphs

BUDGETARY MATTERS

- Programme of Work and Budget 2002-2003
- Protection of the Programme of Work and Budget against Exchange Rate Fluctuations

 

5 - 13
18 - 20

FINANCIAL MATTERS

- Financial Highlights
- Collection of Current Assessments and Arrears
- Liabilities for After Service Medical Coverage
- Scale of Contributions 2002-2003

PERSONNEL MATTERS

- Report on Human Resources Management Issues
- Recommendations and Decisions of the ICSC and UN Joint Staff Pension Board

OTHER MATTERS

- Strenghening of FAO's Response to Emergency

 

24 - 29
30 - 32
39 - 48
57 - 60

 

61 - 71
72 - 74

 

89 - 90



INTRODUCTION

1. The Committee submitted to the Council the following report of its Ninety-seventh Session.

2. The following representatives were present:

Chairperson: Mr. Aziz Mekouar (Morocco)
Vice-chairperson: Mr. Anthony Beattie (United Kingdom)
Ms. Doa Hilda G. Gabardini (Argentina)
Ms. Neela Gangadharan (India)
Mr. Kim Kyeong-kyu (Republic of Korea)
Ms. Ekhlas Fouad Eltom (Sudan)
Mr. Rolf Gerber (Switzerland)
Ms. Perpetua M.S. Hingi (Tanzania)
Ms. Carolee Heileman (United States of America)

3. The Chairperson informed the Committee that Ms. di Giovan Battista (Argentina) would regretfully be unable to attend this session. The Committee noted that Ms. Gabardini had been designated to substitute for Ms. di Giovan Battista.

4. The Finance Committee observed a moment of silence to honour the memory of the victims of the recent terrorist attacks in the United States of America.

BUDGETARY MATTERS

PROGRAMME OF WORK AND BUDGET 2002-20031

5. The Committee considered the Director-General's proposals for the Programme of Work and Budget (PWB) 2002-03, contained in document C 2001/3 paying particular attention to the Budgetary Framework and the proposals for Chapters 5 (Support Services) and 6 (Common Services).

6. It congratulated the secretariat on the high quality of the document and appreciated the inclusion of additional information on the regional dimensions. It urged the secretariat to continue in its efforts at making the document shorter in the future.

7. The Committee acknowledged the presentation of the Director-General's Real Growth (RG) proposals of a real increase of US$35 million or 5.4% to US$688.7 million including cost increases, with information on a Zero Real Growth (ZRG) scenario (i.e. US$651.8 million including cost increases) highlighted separately. Some members regretted the fact that a Zero Nominal Growth (ZNG) scenario (i.e. US$650 million) had not been presented despite previous requests, although it was noted that the difference in budgetary terms was minimal (i.e. US$1.8 million). The secretariat replied that the Director-General felt that he had not received sufficient information regarding where budget cuts should be made to produce that result.

8. The Committee welcomed the substantial favourable impact of the rate of  €1 = 0.880 US Dollars used for the calculation of cost increases and acknowledged the anticipated forward purchase of the Organization's Euro requirements (i.e. US$300 million equal to 302,293,688.86) as a way of protecting the Programme of Work 2002-2003 from further currency fluctuations before the Conference approved the budget in November 2001.

9. The Committee reviewed the methodology adopted by the secretariat for calculating cost increases. It noted that a new forecasting model had been used for this purpose. The secretariat explained that the impact of salary cost increases awarded by the International Civil Service Commission (ICSC) had been largely offset by the increase in purchasing power of the US dollar as guaranteed by the forward purchase contract. The Committee endorsed the level of the cost increases as well as the assumptions on which they were based.

10. The Committee appreciated the secretariat's inclusion of information on efficiency savings in the Programme of Work and Budget 2002-2003. It was noted that future efficiency savings had not been projected in the PWB 2002-2003. It looked forward to a comprehensive treatment of the subject in the next Programme of Work and Budget. Some members felt that a potential source of additional efficiency savings lay in the streamlining of administrative procedures. Other members were of the view that the scope for identifying further efficiency savings had been significantly reduced. Several members were concerned that the downgrading of the Organization's post structure could become counter-productive if pursued too far. The Committee also cautioned that by definition efficiency savings only accrue when the reductions in resource levels did not have a negative effect upon the level and quality of the outputs.

11. The Committee recalled previous discussions where it was emphasized that the areas of Finance, Personnel and Information Technology under Major Programme 5.2, Administration, be allocated adequate resources to ensure a satisfactory administrative infrastructure, and received further clarification from the respective programme managers about the content of their programme of work at the proposed budget level.

12. The Committee welcomed the additional details in the document on extra-budgetary resources at the programme level. While recognizing that the related financial forecasts were difficult to develop so far in advance, it noted that the distribution of these budgetary resources was skewed, between both regions and programmes. The estimates did not solely reflect demand from Members alone but also the secretariat's perception of the likely supply of extra-budgetary funding by donors. It recognized that distortions also resulted from the inclusion of forecasts for emergency projects (for example, the Iraq "Oil for Food" Programme) based upon current experience. The Committee noted the continuing decline of UNDP as a source of extra-budgetary resources and recognized that the trends and projections highlighted the increasing importance of TCP as a source for technical assistance that responded directly to demand from Member Nations.

13. The Committee members expressed differing views on the budget level, with several members supporting a RG budget, and others a ZRG or ZNG budget level. Members also supported various actions either to reduce the proposed increases or to strengthen the programmes of the Organization.

PROGRAMME AND BUDGETARY TRANSFERS IN THE 2000-2001 BIENNIUM

14. The Committee considered the request of the Director-General contained in document FC 97/3 for authorization of budgetary transfers under Financial Regulation 4.5.

15. The Committee recalled its deliberations on the Annual Report of Budgetary Performance2 at its Ninety-sixth Session in May 2001 and its position that resource transfers from the technical programmes (Chapter 2), which then amounted to US$6.1 million, should be minimized to the extent possible. It therefore welcomed the reduction in the transfer which was now proposed to be US$5.0 million out of Chapter 2.

16. The Committee noted that the favourable staff cost variance, which would be distributed across all chapters in proportion to the staff costs incurred at standard rates, would also affect the transfers by Chapter. It also requested clarification on the forecasted shifts in Oracle expenditure that had occurred since September 2000 when the Joint Meeting had considered the document on FAO's New Financial System and Procedures3.

17. Recognizing that the substance of the transfers had already been discussed in previous sessions, the Committee approved the transfer of up to US$5.2 million from Chapter 1, General Policy and Direction, and Chapter 2, Technical and Economic Programmes, to Chapter 3, Cooperation and Partnerships (US$2.7 million) and Chapter 5, Support Services (US$2.5 million). It noted that there could be some variation to the figures proposed and recognized that the exact amounts would be reported to the Finance Committee at its first session in 2002.

PROTECTION OF THE PROGRAMME OF WORK AND BUDGET AGAINST EXCHANGE RATE FLUCTUATIONS

18. The Committee was informed of the decision taken by the Director-General to enter into a forward purchase contract in July 2001 to cover the Organization's Euro requirements at current expenditure rates for the entire biennium 2002-03. It took note of the nature of the contractual arrangements and the legal authority of the Director-General under Financial Regulation 4.1(b)4 to undertake the forward purchase. It noted that the available members of the Advisory Committee on Investments were consulted before the decision was made. It was informed that the forward contract was completed at an average blended rate of 1 = US$0.880 (i.e. Lire 2200 = 1 US$).

19. It noted that this action was taken to protect the Programme of Work for the next biennium, and welcomed the fact that this had resulted in the estimated cost increases in the PWB 2002-03 (C 2001/3) being adjusted downwards from US$50.4 to US$3.2 million and in eliminating the uncertainty which would otherwise have been present during the consideration of the proposed budget at this time.

20. In view of the above, the Committee noted the action taken by the Director-General to protect the programme of work for 2002-03 together with the implication that the budget rate of exchange should be set at 1 = US$0.880.

REPORT ON SUPPORT COST EXPENDITURE AND RECOVERIES

21. The Committee reviewed the Report on Support Costs (document FC 97/5), which was the first report following the Council's endorsement of the new policy on support cost reimbursement in November 2000.

22. The Committee appreciated the information provided regarding the experience in the application of the new policy on support cost reimbursement rates. It endorsed the following policy amendments:

23. The Committee was also informed of the ongoing negotiations between FAO and the Global Environment Facility and took note of the flexible arrangements pending the finalization of an agreement between the two institutions.

FINANCIAL MATTERS

FINANCIAL HIGHLIGHTS

24. The secretariat introduced the Financial Highlights paper covering the first eighteen months of this biennium and incorporating the improvements that were discussed in the previous Finance Committee session. The document showed that the current financial situation was reasonably good.

25. The Committee noted the usefulness of the information provided by the Financial Highlights paper and welcomed the inclusion of cashflow forecasts for both the General and Related Funds and Extra-budgetary funds.

26. The Committee expressed its concern at the slow delivery of TCP and noted that this had the effect of acting as a source of liquidity to cover periods of cashflow shortfall due to the timing and delays of current assessments and arrears of contributions. The Committee took this up in greater detail subsequently in its review of document FC 97/INF/2, Utilization of the Unspent Contribution of TCP for Other Purposes (ref. para 88).

27. In response to questions from members regarding TCP delivery the secretariat explained that the TCP appropriation is a 4 year programme and since the average TCP project cycle is about 18 months, significant delivery is incurred in the final 2 years of the cycle. The secretariat also explained that the slowdown in TCP delivery was due partly to the general decline of the field programme, difficulties and delays in recruiting experts, the decentralisation process and changes to the financial systems. However, this should be a temporary issue as the secretariat had already identified causes of the problem and was taking action to resolve them.

28. The secretariat further explained to the Committee the limited reserves available to deal with delays in receipt of contributions. As TCP disbursements increased, the TCP source of liquidity would diminish. The only other possibilities for improving the current cashflow situation would be either for member nations to pay their assessments promptly, to increase the Working Capital Fund which would not be popular since it required member nations to make additional contributions or to resort to external borrowing.

29. The Committee agreed upon improving the Financial Highlights paper including the possibility to have more information on the TCP appropriation and delivery, Working Capital Fund reserves and timeliness of contributions due.

COLLECTION OF CURRENT ASSESSMENTS AND ARREARS

30. The Committee considered the financial position of the Organization at 12 September 2001 and noted that 57.61 percent of current assessments had been received. Sixty-three Member Nations had paid their current assessments in full while a further 30 Members had made partial payment and 86 had made no payment as yet towards their 2001 assessment.

31. The Committee noted that the rate of receipt of contributions was generally consistent with the same period over the past four years.

32. The Committee further noted that 86 Member Nations still had arrears outstanding from 2000 and previous years and 53 owed arrears in such amounts as would prejudice their right to vote in accordance with Article III.4 of the Constitution.

REPORT ON INVESTMENTS

33. The Committee noted that the benchmark for long-term investments, which had been established to meet the long-term liabilities of the Staff Compensation Plan, the Separation Payments Scheme and After Service Medical Liabilities, was 65% of the Morgan Stanley Capital International Inc. all country index and 35% of the J.P. Morgan Government Bond Index as approved by the FAO Investments Committee and endorsed by the Advisory Committee on Investments. The Committee further noted that at 31 December 2000 the FAO one-year benchmark return was -8.61% while the long-term portfolio return was -10.71% and it was down further over the 18-month period to June 2001. While the Committee noted that the long-term portfolio for the past 3 and 5 years was well above the benchmark, they wished to see an action plan on the strategy for managing the long-term portfolio.

34. The Committee also noted that short-term investments consisted largely of Trust Fund deposits pending disbursement and that the benchmark used to measure the performance was the Northern Trust Government Select Portfolio which invested in US Government and Government Agency Securities with the objectives of capital protection, income and liquidity. Furthermore the return for 2000 was 6.32% versus a benchmark of 6.78% whereas the annual rate of return for the first six months of 2001 corresponded to the benchmark of 5.02%. The income realized from these investments was allocated to the donor accounts in accordance with their relative share of the portfolio balance.

35. Members of the Committee recognized the difficult performance issues in the current market, and they asked the secretariat what could be done to improve monitoring mechanisms. The secretariat clarified the difficulties that had been encountered in filling the Senior Treasury Officer post due to a lack of financial experience on the part of potential candidates. The secretariat explained however that the post had been advertised and the advertisement would shortly close enabling the Organization to select the best-qualified candidate.

36. The Committee also requested the External Auditor's representative to provide suggestions on the management of the investments. The representative of the External Auditor made suggestions including the need for the Investments Committee and the Advisory Committee on investments to meet more frequently, especially given the market conditions.

37. In response to the concerns of the Committee, the secretariat outlined an action plan with respect to improvements in investment and cash management which the Committee discussed and endorsed. In endorsing the plan the Committee recommended that the secretariat should move decisively and flexibly (if need be) on the recruitment of the Senior Treasury Officer.

38. The Committee also requested that the secretariat report to it on the status of implementation of the action plan at its next session.

LIABILITIES FOR AFTER SERVICE MEDICAL COVERAGE

39. The Committee recalled the After Service Medical (ASM) paper submitted at the previous session of the Finance Committee in May 2001 to provide information on after service benefits and further measures on accounting and funding arrangements of such liabilities.

40. The secretariat, to facilitate the review of the above proposals, presented a draft Conference Resolution extending the ASM funding mechanism to the Termination Payments liability.

41. The Committee noted the satisfactory situation of the ASM funding as at 31 December 2000 whereby of the estimated actuarial valuation of ASM liabilities of US$187.7 million, US$85.2 million was funded in accordance to the funding mechanism of Conference Resolution 10/99 adopted for the first time in the 1998/99 biennial accounts. It was also recognised that the magnitude of the funding in 1998/99 was made possible by the very favourable market conditions prevailing in that period.

42. The Committee expressed concern over the deteriorating investment climate and difficult market conditions experienced this year. The higher than expected investment returns yielded in the last few years were not expected to materialize in the near future (the Committee was informed of the status of FAO investment as at 30 June 2001). However, it was noted that the After Service Medical and other staff plans were long-term in nature.

43. Of the three options presented by the secretariat as future strategy for ASM funding, the Committee recognized that the first option of selling and repurchasing the portfolio had been superseded by the current negative market conditions and therefore was no longer a viable option. Similarly, the second option of using market value was also superseded.

44. Therefore, the Committee agreed with the Director-General's proposal to continue with the present ASM arrangements (option iii). Although it did not accelerate the resolution of the ASM unfunded liability it was a proven arrangement that had achieved a measure of success.

45. The Committee discussed the merits of extending the ASM funding arrangements to the Termination Payments Fund (TPF). Some members preferred to receive more information on the TPF since they felt there was not sufficient basis to make a decision at this stage. They also wanted to know the urgency of the TPF decision and the impact it might have if the decision was postponed to a later Committee session.

46. The External Auditor was requested by the Committee to advise on the nature and urgency of the proposed Conference Resolution. The External Auditor explained that they had recommended that the TPF be included in the overall accounting and funding of staff liabilities in both their 1996/97 and 1998/99 biennial audit reports. While it would provide no immediate funding solution to the TPF, it was imperative that a consolidated mechanism to provide funding for all recognized staff termination liabilities be established.

47. The Committee was also advised by the secretariat that it would be more efficient to endorse the draft Conference Resolution now and that postponement of the decision would not result in any change to the circumstances involving the TPF.

48. The Committee accepted the proposal of the secretariat and endorsed the following draft resolution for transmittal to Council and Conference:

THE CONFERENCE

Having considered the report of the Hundred and Twenty-first Session of the Council,

Having noted the unfunded liability for past services,

Having noted the progress made to date in funding the liability for After-Service Medical Coverage (ASMC) since the application of the Conference resolution 10/99,

Approves to extend the application of Conference Resolution 10/99 to cover the Termination Payments liability in the event that the liability for ASMC becomes fully funded, so that

  1. any income generated from the investments held in respect of the Separation Payments Scheme, Staff Compensation Plan and ASMC shall be applied as originally foreseen to ensure the adequacy of those funds to extinguish the respective liabilities;
  2. should there be an excess in the investment income of the Separation Payments Scheme, Staff Compensation Plan and ASMC over the requirements for these funds then this should in principle be earmarked for the unfunded Termination Payments liability; and
  3. following the past practice to establish separate funds for after service benefits, the investments in the Separation Payments Scheme, Staff compensation Plan and ASMC exceeding the liabilities shall be earmarked for Termination Payments Fund.

INCENTIVE SCHEME TO ENCOURAGE PROMPT PAYMENT OF CONTRIBUTIONS - DETERMINATION OF DISCOUNT RATE

49. The Committee reviewed the results of the Scheme in 2001 and confirmed the rate of 1.40 percent suggested by the Director-General for use in determining the amount of discount for each Member Nation that had paid its contributions before 31 March 2001. An amount of US$107 000 would be credited against the 2002 contributions of qualified member states.

AUDITED ACCOUNTS - FAO CREDIT UNION 2000

50. The Committee reviewed the Financial Statements of the Credit Union for the year ended 31 December 2000 and approved the accounts.

AUDITED ACCOUNTS - FAO COMMISSARY 2000

51. The Committee reviewed the Financial Statements of the Commissary for the year 2000 and approved the accounts.

PROGRESS REPORT ON IMPLEMENTATION OF THE EXTERNAL AUDITOR'S RECOMMENDATIONS

52. The Committee reviewed the progress in implementing the recommendations of the External Auditor. The secretariat explained that most of the recommendations had been accepted and were being implemented. However, there were some recommendations to which the secretariat did not agree, specifically the ones relating to the procurement procedures for the selection of a financial advisor and short-term investment manager.

53. The Committee requested that future versions of the progress report include an indication of the relative priority of the recommendations as well as the timeline for their implementation. The External Auditor confirmed that it would be possible to indicate the relative priorities. At its September 2002 session, the Committee could review the Organization's planned timetable for implementation of the recommendations.

54. The Committee discussed specific recommendations and received clarifications as follows:

    1. With regard to staff related schemes, the Committee approved the enabling draft resolution for the Conference under the agenda item on Liabilities for After Service Medical Coverage in order to bring Termination Payments under the same funding mechanism as other After Service benefits.
    2. In relation to the procurement of investment advisory services and short-term investment management services, the Committee requested the secretariat to clarify the procurement procedures followed.
      1. In the case of the financial advisor, the advice of the Advisory Committee on Investments was obtained on potential suppliers. Three firms were indicated by the Committee as being equally suitable to provide the required service. These firms were subsequently invited to submit proposals, and a selection was made based on the lowest quotation meeting the requirements.
      2. As regards the short-term investment managers, the Organization made use of the significant experience of WFP and IFAD in drawing up the lists of qualified firms, which they had invited to bid. Five of the top ten firms were common to both of their lists; these were requested by FAO to submit proposals and make presentations to the Investment Committee. The latter then evaluated the proposals and made the selection. Pending contracting with these managers, the investments had been placed with FAO's existing custodian.
      3. The above procedures were subsequently re-endorsed by the Advisory Committee on Investments.
    3. The Committee noted the slow progress in the implementation of the External Auditor's recommendation to reduce the number of FAO bank accounts. The secretariat explained that this exercise was expected to be completed by the end of 2002.
    4. With regard to Long Term Investments, the Committee noted that there had been no progress in implementation of the External Auditor's recommendation and that this had been due to the lack of staff to manage the process. The Committee considered that its suggestion to set timelines for implementation of recommendations could be applied to this recommendation as well.
    5. The Committee decided to defer consideration of items relating to Human Resources Management to the separate agenda item dealing with those issues.
    6. The Committee considered that in view of its importance and effect on the Organization, there was a need for an evaluation of the effects of decentralization at the earliest opportunity. The Committee was informed that decentralization had been selected by the Programme Committee as a subject for evaluation in the next biennium.
    7. The Committee requested that it receive a special briefing on the Oracle upgrade and that the secretariat prepare a note for members covering all aspects of the Oracle project. The Committee also requested that a briefing on all aspects of the project be given to it at each future session. The secretariat confirmed that it would be possible to provide the note for the present meeting and a regular briefing at each future session. The secretariat further informed the Committee that specification work for the Oracle 11i upgrade was well under way and that this project was progressing as planned. The current plans foresaw the delivery of Oracle 11i by Easter 2002. However, this deadline was highly dependent on the availability of user resources to undertake the necessary tests. If user resources were not available then this date would need to be reconsidered as the ultimate goal was to ensure that the new processing environment was at least as stable as the one currently in place.
    8. Members discussed the timing of the Inspector-General's review of internal control over the use of the Organization's resources and asked whether the report would be available before the Conference. The secretariat recalled that the Committee had agreed at its last session that the Inspector-General would carry out this work and report as usual to the Committee at the May 2002 session. The Inspector General commenced the review in July 2001. It covered both headquarters and the decentralized offices and was still in progress. In accordance with normal practice, once the work and the report were completed, the External Auditor would receive a copy of the report and have access to the related working papers. Members asked whether the External Auditor could prepare and issue an interim report before Conference. The representative of the External Auditor confirmed their plan to review internal controls during 2001 and that the External Auditor would report to the Finance Committee on this work in his Long Form Report in September 2002.

55. The Committee requested feedback from the External Auditor in regard to a meeting held in Montreal on currency exchange arrangements. The External Auditor advised that reports on the meeting had been sent to Finance Committee secretary in December 2000 and June 2001. The secretariat agreed to convey these documents to Committee members as soon as possible.

REVIEW OF THE WORKING PRACTICES REGARDING APPOINTMENT OF THE EXTERNAL AUDITOR

56. The Committee discussed the working practices for the appointment of the External Auditor. The Committee decided to return to the subject at its May 2002 session and invited members to submit in writing to the secretariat their proposals for improving the working practices.

SCALE OF CONTRIBUTIONS 2002-2003

57. The Committee considered the explanatory paper on the criteria used to establish the UN Scale of Assessments which had been prepared by the secretariat in response to the request of Council at its one hundred and twentieth session (June 2001).

58. The Committee agreed that the paper should be forwarded to the Permanent Representatives in Rome and that the secretariat should provide a briefing on the matter to interested Representatives as had also been requested by the Council at its one hundred and twentieth session (June 2001).

59. The Committee further recommended that the secretariat should include in the briefing to Permanent Representatives the following additional explanatory information:

    1. Historical information on why FAO had always adopted the practice of deriving its Scale of Contributions directly from the United Nations Scale and the difficulties which would be encountered in deviating from this practice;
    2. Comparative information on how other UN agencies had applied the new UN Scale, including any transitional measures;
    3. Information on the impact of the three percent reduction in the maximum contribution on the assessed contributions of individual member states; and
    4. Background on the legal basis for the FAO decision to implement the revised scale in 2001.

60. Some members were of the view that, if in future the Conference were to decide to adopt a scale of contributions based on a UN scale of assessments not known at the moment of the adoption of the FAO scale of contributions, the Conference should provide for a forum for discussion before its implementation.

PERSONNEL MATTERS

REPORT ON HUMAN RESOURCES MANAGEMENT ISSUES AND STATISTICS OF PERSONNEL SERVICES

61. In its consideration of this item, the Committee had before it the following documentation:

    1. Report on Human Resources Management Issues (doc. FC 97/15)
    2. Statistics of Personnel Services (doc. FC 97/15(a))
    3. FAO Audited Accounts 1998-1999 (doc. C 2001/5, paras. 104-134)
    4. JIU Report on Young Professionals in Selected Organizations of the UN System (doc. CL 120/INF/13)
    5. Progress Report on Implementation of the External Auditor's Recommendations (doc. FC 97/12, section on Human Resources Management)

62. The Committee recalled that it had postponed discussion of (c) and (d) above at its 96th session in order to take them in the overall context of human resources management at this session.

63. The Committee strongly welcomed the Report and stated that it was so significant that it ought to be placed before the membership of the Organization at the Council (see Annex I).

64. The Committee noted the importance of a timely as well as transparent recruitment process and retention of staff, given the demographic situation the Organization faced. The Committee discussed the need to improve the competitiveness of the compensation package. The Committee was advised that the ICSC had embarked on a fundamental review of the pay and benefits system and was expected to report to the General Assembly before the end of 2002.

65. In this connection, the Committee considered the work/family issues to be particularly important. The Committee welcomed the Organization's review of the policy on employment of spouses and noted the importance in this context of the position of the host country in allowing spouses to be employed. It also underlined the need to adhere to strict standards of transparency and competence in recruitment.

66. The Committee supported proposals for a Young Professionals Programme.

67. The Committee addressed the resources issue and noted the crucial importance of the linkage between an efficient and functioning human resources management information system and the strategies outlined in the paper. In this regard, the Committee stressed the importance of providing adequate resources for the Oracle HR project.

68. In response to the questions put by the Committee, the secretariat explained that contracts given to new comers were more flexible. Flexibility was, however, still very limited in terms of pay setting.

69. The secretariat emphasized that, as regards recruitment, the Director-General was guided by the principles of the FAO Constitution, and in particular Article VIII (3). While stressing that the paramount consideration for FAO lay in the candidates' technical skills and competence, the secretariat stated that gender and geographic balance were also important factors in the recruitment process. Some members stressed that more specific action should be taken to achieve balanced geographic distribution, in particular, considering the situation of non- and under-represented nations in the Organization.

70. The secretariat recognized that recruitment had to be speeded up, although significant improvements had already been made over the past three years.

71. The Committee requested that a progress report on human resources management issues, including projected timelines and performance indicators be submitted at its next session.

RECOMMENDATIONS AND DECISIONS OF THE ICSC AND THE UN JOINT STAFF PENSION BOARD

72. The Committee took note of the information provided in document FC 97/16 and the oral information provided by the Personnel Division.

73. The Committee approved the recommendation of the Director-General regarding the ICSC findings relative to the Rome Salary Survey November 2000.

74. The salary scale which would be presented to the Council and was recommended to be implemented effective 1 November 2000 would be attached to this report (see Annex II).

ORGANIZATIONAL MATTERS

UN JOINT INSPECTION UNIT REPORTS

75. The Committee took note of the information provided in documents CL 121/INF/11 - Annual Report of the JIU for the year 2000 and CL 121/INF/12 - Work Programme of the JIU for 2001 and Preliminary List of Potential Reports for 2002 and Beyond.

WORLD FOOD PROGRAMME

SECOND PROGRESS REPORT ON IMPLEMENTATION OF THE 1998-1999 AUDIT REPORT OF THE WFP EXTERNAL AUDITOR

76. The Finance Committee reviewed the document FC 97/18, Second Progress Report on the Implementation of the 1998-99 External Auditor's Recommendations. The Committee requested comments from the External Auditor, who responded that WFP's implementations of recommendation were, in general, satisfactory, and that they looked forward to a complete evaluation of decentralization initiative and the full implementation of these recommendations with WINGS. The Committee inquired and received explanation from the Executive Director, Ms Catherine Bertini, on how WFP had successfully achieved its goals on gender and geographic balance in its human resources. The Committee noted with appreciation WFP's implementation of the External Auditor's recommendations and resolved to advise the Executive Board that the External Auditors be requested in future to prioritize their recommendations and the secretariat to prepare a time-frame for their implementation.

WFP BIENNIAL BUDGET FOR THE PERIOD 2002-2003

77. The Committee considered the document (WFP/EB.3/2001/5-C/1) submitted to it for discussion and recommendations to be presented to the Executive Board at its Third Regular Session in October 2001.

78. The Executive Director introduced the WFP budget for 2002-2003 and explained that the projections were in line with the estimates contained in the Strategic and Financial Plan (SFP) 2002-2005. The Committee expressed its appreciation of the effort to project the level of relief operations in the coming biennium in light of uncertainties.

79. Members of the Committee expressed their appreciation and thanks to the Programme and to Ms. Bertini, in particular, for the leadership she had provided to the Programme.

80. The Committee commended the Programme for its concentrated and concise document. It noted the effectiveness of WFP's decentralization efforts, and congratulated the Programme's successful implementation of WINGS, WFP's new corporate information system. The Committee took particular note of how WFP had effectively used technology in doing its business with the usage of video/teleconferencing, e-mail system and website. The Committee also commended WFP on progress made in implementing a results-based management approach and looked forward to the management plan as part of the governance initiative of the Board. The Committee appreciated the Executive Director's suggestion to the Committee to continuously look into the cost containment efforts, and noted that WFP's total support costs as a percentage of turnover continued to decline and believed that this was the right direction for the Programme.

81. The Executive Director stressed that the security of staff, both in headquarters and the field should be taken seriously by the UN and adequately funded. The issues discussed in this regard included the cost sharing methodology, funding mechanisms, security resources level and the on-going dialogue with other UN agencies that concerned the current and future global situation.

82. The Committee sought clarification on a number of issues to which the representatives of the Programme responded, including cost recovery, carryover funds, staff salary increases and exchange rate assumptions.

83. Based on the review of the document and the responses put forward by the Programme, the Committee decided to recommend to the Executive Board to approve the WFP 2002-2003 Budget document.

APPOINTMENT OF THE WFP EXTERNAL AUDITOR FOR 2002-2005

84. The Committee reviewed doc. FC 97/20, the final report of the Evaluation Panel for the selection of the External Auditor of WFP for 2002-2005, submitted to it for comments and advice to be provided to the Executive Board.

85. The Chairperson of the Evaluation Panel, H.E. Ambassador M.S. Nouri-Naeeni of Iran, presented the report.

86. The Committee requested, and the Chairperson of the Evaluation Panel provided information on the following issues: having two different external auditors in FAO and in WFP, having a very small score difference between the first and second candidates, relative costs of the audit, and the procedures followed by the Evaluation Panel and its confidentiality.

MANAGEMENT AND ACCOUNTING OF FULL COST RECOVERY IN THE WFP INFORMATION NETWORK AND GLOBAL SYSTEM (WINGS)

87. The Committee received the document FC 97/21, WFP Information Network and Global System (WINGS) for Cost Analysis and Cost Containment and noted the information contained therein.

OTHER MATTERS

UTILIZATION OF THE UNSPENT CONTRIBUTION OF TCP FOR OTHER PURPOSES

88. The Committee reviewed the Information Document FC 97/INF/2, Utilization of the Unspent Contributions of TCP for Other Purposes. After considering the advantages and disadvantages of the proposal, the Committee agreed that it would not pursue this matter further.

STRENGTHENING OF FAO'S RESPONSE TO EMERGENCY

89. The secretariat presented to the Committee the proposal to convert the Special Relief Operations Service (TCOR) into a new Division for Emergency Operations and Rehabilitation (TCE), including the establishment of a Division Director (D-2) and a Service Chief post (D-1) for programmes in Iraq.

90. The proposal, which, as outlined in document FC 97/INF/3 called for no additional resources from the Regular Programme, was discussed and endorsed by the Committee and transmitted to the Council for consideration and approval.

PROGRESS REPORT ON THE ORACLE PROJECT

91. In its review of the status report, the Committee took note of the funding issue with respect to Phase II of the Oracle Project. It noted that the full cost had yet to be determined and, furthermore, expressed its concern that under the zero real growth budget funding for Phase II would not be sufficient. If a ZRG budget was adopted and arrears payments were not received, it would be necessary either to find funds in the ZRG budget or delay the implementation of Phase II. The Committee re-affirmed its view that the completion of the Oracle project was vital to the effective functioning of the Organization.

DATE AND PLACE OF THE NEXT SESSION

92. The Committee was informed that the 98th session was tentatively scheduled to be held in Rome from 6 to 10 May 2002. The final dates of the session would be decided in consultation with the Chairperson.

ANNEX I

REPORT ON HUMAN RESOURCES MANAGEMENT ISSUES

INTRODUCTION

1. The Medium Term Plan covering the period 2002-2007 [hereinafter referred to as the Medium Term Plan (MTP)] reflects the human resources (HR) needs for the implementation of the Organization's objectives as set out in the Strategic Framework. It contains specific objectives for the human resources function of FAO.

2. This paper describes the background against which FAO's human resources management reform efforts have been undertaken and which must be considered in developing human resources strategies and policies. In light of that background it provides a summary of specific human resources objectives for FAO (Part II). It also summarizes some of the recent and planned reform initiatives in key areas of human resources management (Part III). The conclusions are contained in Part IV.

MANAGING HUMAN RESOURCES IN A NEW ENVIRONMENT

3. The environment in which international organizations are operating is evolving radically. Rapid advances in technology, demographic changes, and additional expectations of the emerging workforce are modifying the ways of work. There is evidence that the gap between the skills required by organizations and the availability of skilled workers is growing, and the ability to attract and retain the best workers is increasingly becoming vital for organizations. At the same time, the new workforce, younger, more mobile and versatile, with different values and career expectations, places more emphasis on an appropriate balance between work and personal lives and requires organizations to adopt work/life policies.

4. There is a growing demand in organizations to accommodate a variety of individual needs and circumstances. Experience in both public and private sector organizations shows that staff productivity is enhanced when alternatives, options and the freedom to adapt work demands with personal commitments and interests are provided. Today's workforce continues to highly value a competitive compensation package but is also looking for a management culture which promotes communication, accountability, flexibility and transparency in the implementation of human resources policies. When this is coupled with information sharing and opportunities to learn and develop new skills to ensure marketability both within and outside the organization, staff interest and productivity are well sustained.

5. Competitiveness in the international labour market, driven by the supply and demand trends, has placed increasing pressures on international organizations to offer competitive pay and benefits packages. United Nations Organizations can no longer rely on their diversity and multiculturalism to attract and retain personnel of the highest standard of efficiency and technical competence. The pay and benefits system of the UN Common System is no longer competitive resulting in recruitment and retention difficulties. With the objective of rendering the UN compensation package competititive, FAO along with other organizations of the UN Common System, is participating in the review, begun in December 2000 by the International Civil Service Commission (ICSC), of the pay and benefits.

6. FAO, like a number of national administrations, private sector companies, and other international organizations, is experiencing this phenomenon and facing the critical task of adapting to a new environment. In fact, market concepts, hitherto mainly an experience of the private sector, are increasingly permeating the public sector including international organizations.

7. Thus it is not surprising that many international organizations have embarked on a thorough review of their human resources management in order to enhance its effectiveness. It is well known that the most important resource of any organization is its employees. Consequently, improved human resources management is essential to the effective delivery of high-quality programme results. In this connection, empowerment of managers coupled with enhanced accountability is seen as a means to achieve this objective. Interestingly all stakeholders, namely employees, management and the governing bodies, all stress the importance of the availability of an efficient accountability mechanism.

8. The aforementioned transformations can be accomplished most effectively by involving staff and their representatives in the process. FAO recognizes that staff representatives play a key role in the consideration of conditions of employment. The Organization will continue to foster staff-management collaboration in this area through consultation with the recognized staff bodies. In this connection regular meetings are held with staff representatives and, staff and management have the opportunity to add or comment on items for discussion on the agenda. In addition staff are consulted and provided the opportunity to comment on papers being presented to the Human Resources Management Committee (HRC) (see Part III below).

9. In this context of changing environment and human resources management practices, FAO's human resources policies are being directed towards the following main objectives:

HUMAN RESOURCES MANAGEMENT REFORMS

10. This part outlines the status of implementation of human resources management reforms in the following areas: establishment of an advisory body on human resources management policies, accountability of line managers, changing role of the central human resources function, human resources planning, recruitment and retention of staff, supportive work environment, performance management, career development, staff development, human resources management information, and streamlining of rules and procedures.

ESTABLISHMENT OF THE HUMAN RESOURCES COMMITTEE (HRC)

11. In 2000 the Director-General established a Human Resources Committee, chaired by the Deputy Director-General and comprising all departmental heads and heads of independent offices. The role of this Committee is to provide policy and strategic advice to the Director-General on human resources management issues. It is the vehicle by which human resources reforms are being steered through the Organization.

12. The Committee is seized with a variety of human resources management policy issues covering both general service and professional staff. For example, the Committee considered proposals to modernize and update general service job roles and functions and the challenging subject of career development in an Organization that is engaged in post reduction. In the professional area the HRC has commenced a review of the recruitment process with the intention of making it more efficient and timely. A detailed discussion of efforts to improve recruitment is set out below.

THE ROLE AND ACCOUNTABILITY OF LINE MANAGERS

13. An integral part of human resources management reform is to establish clearly the respective roles and accountability of line managers and the central human resources management function. Increasingly, as line managers are held accountable for programme results, there is a requirement for corresponding responsibility for management of resources to achieve these programme results. Through the progressive decentralization of human resources management, programme managers have become more responsible for the day-to-day management of their staff. Further progress in this direction would be facilitated by the establishment of clear work objectives and performance standards for monitoring achievements and strengthened resources management information system for regular reporting on progress achieved as indicated below (see Performance Management and Management Information).

THE ROLE OF THE CENTRAL HUMAN RESOURCES MANAGEMENT

14. The central human resources function no longer deals with the day-to-day management of staff which is now the prerogative of the line managers. It links the human resources management function with FAO's strategic directions and programme priorities and presents the human resources needs of the Organization in terms of where it is now and where it should be in the future. Viewed in this context, the central human resources management office will focus on designing new policies and strategies to meet changing situations, providing guidance and support to departments, independent offices and the field offices, and monitoring the application of human resources policies.

HUMAN RESOURCES PLANNING

15. Human resources planning involves having a clear idea on the demand side (i.e. the identification and planning of organizational human resources requirements, programme needs, staff turnover, demographic trends, budget forecasts, etc.) of what is needed by way of types and numbers of skills and then determining on the supply side, how these skills will be provided through factors such as the internal deployment and development of skills, availability within the market of skills and competencies required. This process also involves issues of organizational planning such as the review of work roles and design of jobs for these roles.

16. As regards the aforementioned "demand side", the aging of the staff is one of the major issues that FAO is currenly facing. Almost 45% of the staff members in all categories (Director, Professional and General Service) are above the age of 50 and more than 20% are beyond the age of 55. As a result, the average age among professional staff members in grades P1 to P5 has risen steadily to reach 48 years (as of 30 June 2001); it is 55 years for staff members at senior levels (D1 to DDG); and 47 years for staff in the General Service category. Consequently, a large number of staff members are expected to retire over the next five years. As can be seen from the chart below, 65% of the staff members at senior levels (D1 to DDG) and more than 25% of the staff in professional categories will reach either the age of mandatory retirement or the age of 55 or more with more than 25 years of service during the period 2001-2006.

Undisplayed Graphic

17. Such a demographic profile, combined with evolving programmes requiring new skills, call for careful human resources planning and for a rejuvenation of the human resources of the secretariat. In order to establish an integrated human resources planning system that specifies human resources needs at the level of individual departments, the Personnel Division will meet with each department to agree on departmental human resources action plans which will cover for a specific period of time such areas as succession planning, required competencies, filling of vacant posts, geographical and gender representation, mobility, performance appraisal, staff development, etc. Departmental action plans will serve both as a monitoring tool and also as a mechanism of accountability to ensure compliance with the overall corporate goals of the Organization.

18. Further progress in human resources planning on the "supply side" will include the development of a skills inventory for all existing staff, which will provide the Organization and each department with an overview of the workforce, including information on its skills, experience, background and career aspirations, by means of a comprehensive electronic database. It will serve as an objective basis for assessing the existing skills of staff to be matched to departmental needs, evaluating gaps in personnel resources and assessing candidates for vacancies, transfers, training and specialized assignments.

19. To complement the aforementioned human resources action plans and to underpin them, a global human resources management information system (Oracle HR) is being introduced (see "Management Information" below).

STRENGTHENING THE RECRUITMENT AND RETENTION OF STAFF

(1) PROFESSIONAL STAFF

20. FAO as an aging organization has been losing large numbers of staff through either early or mandatory retirement. At the same time the number of appointments made has not kept pace with departures as can be seen from the table below.

  1994 1995 1996 1997 1998 1999 2000 Av. No.
Professional separations 295 248 188 172 143 130 133 188
No. of appointments made 127 91 198 104 125 98 106 108

21. These figures indicate that professional separations are outstripping professional appointments. This has resulted in an increasing number of vacant professional posts despite a reduction in overall posts over recent years.

Professional posts vacant
  1994 1995 1996 1997 1998 1999 2000 Average
Vacancies 191 232 251 212 193 178 200 208
Percentage of total posts 14.8 18.5 20.4 18.1 16.5 15.1 17.1 17.2

22. Our projection is that over the next three and half years, FAO will need to replace some 270 professional and higher categories staff resulting from mandatory retirements. Together with the current vacancy levels this will amount to over 470 posts or over 130 recruits per annum. A critical element for success in this process will be a further reduction in the time taken to recruit professional staff through our staff selection processes.

23. While the following statistics clearly indicate that there has been a significant improvement, further efforts are needed in order to reach the target goal of completing professional recruitment within a time frame of seven months or 140 workdays [1998: 318; 1999: 304 and 2000: 217 days].

24. The streamlining of recruitment and selection procedures and the elimination of a number of steps, together with the greater use of technology by FAO to post vacancy announcements electronically, to receive applications electronically, to better monitor and follow-up outstanding cases, has without doubt assisted in reducing the time taken to recruit professional staff.

25. Further improvements in the reduction of recruitment time will come from strengthening the services provided by the Personnel Division in the briefing and training of line managers and other staff on selection issues and on the provision of quality advice and assistance to both the Professional Staff Selection Committee and to line managers.

(2) YOUNG PROFESSIONALS

26. A careful analysis of the types and numbers of skills required to replace departing staff will be part of FAO's human resources planning. While many middle and senior level posts will require replacement with similar levels of experience and skills, there is also a need to commence recruitment of young professionals at the entry level of the professional category and to provide internal training and development to these staff. This by its nature is a medium to longer-term strategy for rejuvenation of the professional cadre within FAO.

27. Currently the average age of professional and higher categories staff within FAO is 52 years of age. Over the past 4 years the average age of recruitment of professional staff has been as follows:

Average Age of External Recruitment

1997 1998 1999 2000 2001
42.8 43.9 42.8 41.9 42.8

28. This indicates that the average age on appointment has been consistently about 42-43 years of age. Given the level of staff turnover and retirements there is need to start building a longer-term cadre of younger staff through a young professionals programme.

29. This intake of young professional staff will address the corporate goals for a balance in gender as well as in the geographical representation of member states. The young professionals recruitment and development programme will commence in the second half of 2002.

(3) EQUITABLE GEOGRAPHICAL REPRESENTATION

30. In accordance with the UN Charter, FAO places great importance in its recruitment programmes on ensuring that appointments of qualified persons to the secretariat also reflect an equitable geographical representation.

31. As a result of strenuous efforts by the secretariat, the number of non-represented countries has decreased from 54 countries as at 1 January 1994 to 23 countries as at 30 April 2001, despite an increase in the membership of FAO from 169 to 180.

The non-represented countries are distributed as follows:

South West Pacific Near East Europe Latin America and
the Caribbean
Africa Asia
5 7 4 2 2 3

32. Continuing efforts are being made to identify qualified candidates from nationals of non-represented countries, including recruitment missions targeted on these areas.

33. As of 30 April 2001 a total of 13 countries are still under-represented5. FAO's strategy to address the under-representation of these countries covers a number of activities including recruitment missions and the establishment of a young professionals programme (see above).

(4) IMPROVING GENDER BALANCE

34. The total number of women in both the professional and higher categories is 300 or 22% of the staff in these categories as at 1 June 2001.

  P-1 P-2 P-3 P-4 P-5 D-1 D-2 ADG
Female 3 45 96 89 44 14 6 3
Male 0 43 162 343 337 130 36 12

35. Set out below is a comparative distribution of male and female staff in the professional and higher categories.

Undisplayed Graphic

36. In November 1999, the FAO Conference adopted a resolution which, amongst other matters, "requested the Director-General to continue actively to redress geographical and gender imbalances in the Professional and Higher Categories staff structure ...".

37. FAO has established a target that women should represent 35% of all professional and higher category staff. An analysis of projected retirements, together with current vacancy levels, indicates that if FAO is to achieve the target of 35% by 2005, and assuming that current post levels remain constant, the number of women employed needs to be doubled (i.e. 307 over 5 years) requiring 65% of all projected vacancies arising over this period to be filled by women.

38. To achieve this outcome it requires a strong commitment from all levels of the Organization, from divisional management, supported by the Division of Personnel, to top management. At present the responsibility for achievement of this target is diffused and thus not fully owned by line management. This is an important issue as the Organization needs to be clear in terms of who is responsible for ensuring that this target is met. While departmental targets were established in 1999, these are being updated to ensure that collectively they will result in the Organization reaching the 35% level. The Personnel Division will monitor and assist, through specialized recruitment support, line managers in identifying sources of recruitment to increase the size of qualified applicant pools.

39. FAO currently runs a very large and complex recruitment programme which seeks to select highly qualified staff taking account of multiple factors. These include technical competence, geographical representation and gender balance. At any point in time and in any particular selection it can be difficult to balance all these elements. FAO is thus concentrating on increasing the number of women candidates particularly in those professional areas with few women professionals and at the same time using such programmes as the young professionals recruitment programme to target women candidates from under-represented countries.

40. A recent internal study of the factors impacting on women's employment in FAO reported that the most commonly raised issue was the absence of policies on work/family life issues and in particular the question of spouse employment. This would appear to be not only a barrier to recruitment that disproportionately affects women, but also it also affect the ongoing retention of professional staff. While we lack adequate quantitative and qualitative data on the reasons for turnover of women staff, the experience in comparable organizations, which have studied this issue, indicates that these elements are key factors.

(5) GENERAL SERVICE STAFF

41. The impact of technology, new organizational work requirements and demographic trends has changed the nature and environment for general service work, creating a need for the redefinition of work roles.

42. At the same time over the past 7 years there has been a major reduction in general service jobs, particularly at Headquarters (602 or 31.2%). In addition, retirement forecasts indicate that there could be further major reductions of general service staff over the next four years.

43. As a consequence, work is underway to restructure the general service category in order to develop new job roles and also to provide better career development opportunities for this category of staff.

44. A key to career development for general service staff is the modernizing of the general service jobs and work structures, in order to allow for the recognition of the higher level roles and functions that many general service staff have already assumed whilst at the same time ensuring that the FAO gains longer term benefits in productivity and quality of work performed.

45. To date, the key trends driving this change have been budget pressures requiring the Organization to do more with less. The use of technology which is transforming the roles and work of clerical, keyboard and administrative support functions and organizational needs requires increased flexibility in staff deployment.

46. These trends present opportunities to review and restructure the way administrative support functions are delivered, while at the same time improving career development opportunities for this category of staff. A review of the work to be done and the redesigned roles emerging from both the review of the general service and of temporary staffing arrangements have identified the skills and competencies required in the future to undertake these roles.

SUPPORTIVE WORKING ENVIRONMENT

47. In order to be able to attract and retain the staff of the highest standard of efficiency and technical competence that it needs, FAO must maintain a work environment which recognizes work/family issues as a priority for employees. Human resources management strategies need to reflect this enhanced importance and in planning the rejuvenation of the FAO workforce, such issues as spouse employment, teleworking, part-time work, etc. must be part and parcel of that plan. A number of measures have been instituted at FAO, such as part-time employment for staff at Headquarters.

48. A policy on breastfeeding has been recently introduced to help nursing-mothers. It was also decided to grant special leave to parents adopting a child. Some other initiatives are currently being developed to make the use of special leave without pay for family reasons more flexible, to allow staff members in some cases to telework and to authorize the employment of spouses under specific conditions.

PERFORMANCE MANAGEMENT

49. A key goal of the human resources reform efforts is to create a fair, equitable, transparent and measurable system of performance management that supports the development of a management culture of responsibility and accountability.

50. Over the course of the next biennium 2002/2003, the Division of Personnel will work in collaboration with the Office of Programme Planning, Budget and Evaluation and departmental managers, to improve and link more closely the individual performance plans to the Organization's programme plan, and hence strengthen the current performance management process. A revised system will identify individual objectives and expected results linked to approved programme objectives, career development and training needs, and managerial skills requirements.

51. Initiatives aimed at improving performance will include mechanisms for identifying poor performance in order to take corrective measures while, at the same time, focusing on excellent performance and how to sustain the motivation for such performance.

CAREER DEVELOPMENT

52. Career development is concerned with ensuring that the need of the Organization to have the right staff in the right place at the right time is linked to the needs and aspirations of staff for meaningful work and careers. Thus it is a key area of activity for meeting staffing needs.

53. Career development entails the planning of careers by staff with an understanding of what the Organization expects of them, as well as of their own aspirations and abilities. Career development thus involves personal responsibility for one's own career coupled with organizational responsibility for providing an enabling environment.

54. It covers a range of aspects such as the development of skills and competencies in the current job, the development of new skills and experience through lateral mobility and the recognition of staff performance through promotion.

55. The implementation of a comprehensive and integrated programme of career development is an objective of both FAO management and staff. As already indicated this process has already commenced for the general service category with an analysis of workforce needs and a review of job roles and structures.

STAFF DEVELOPMENT

56. Staff development programmes are designed and delivered to support both present and emerging skills requirements of the Organization. They are based on annual divisional staff development plans through which line managers and staff identify their staff development needs.

57. The Organization has made a significant investment in training in the areas of office technology in support of FAO-wide automation efforts and in the maintenance and development of the language skills of staff. The value of training to support staff mobility has been particularly important, when, in response to a drastic reduction in the number of budgetary posts, it became necessary to undertake a major redeployment of staff. The career and competency development requirements of general service staff are being supported as part of the overall staff development programme.

58. For professional staff, the need to maintain and develop further a strong programme of continuing professional and technical skills development remains a key priority through the use of the External Training Programme and attendance at seminars and other professional development activities.

59. Management development will become a higher priority for FAO over the medium-term, particularly in light of:

60. Finally a shift toward providing greater support and assistance in staff development and training matters to the decentralized offices is underway. New distance learning methods will be designed to support staff in the field.

HUMAN RESOURCES MANAGEMENT INFORMATION

61. Action already initiated in past biennia to fully integrate information systems in support of the management process will continue to be pursued. Such systems are seen as essential tools to underpin accountability mechanisms, which are to be gradually implemented. In the field of human resources, the replacement of PERSYS by Oracle HR will be a priority. The new system will facilitate the management of human resources, while maintaining the quality and reliability of transaction processing as currently provided by PERSYS.

STREAMLINING RULES AND PROCEDURES

62. The increasing devolution of responsibility for the day-to-day management of staff to line managers requires the simplification and streamlining of rules and procedures applicable to staff. The current rules governing the terms and conditions of service at FAO are numerous, minute and often overly prescriptive. With time, they came to be disseminated from different sources in various documents, which too often renders them difficult to access and understand. Effective, transparent and fair human resources management by line managers requires a set of staff rules that are readily accessible, easy to understand and to apply.

63. This is why considerable efforts are being made to consolidate these rules into a comprehensive set of simple norms that can be easily accessed by line managers and staff members through the Intranet system. For example, a new contractual arrangement called "Personal Services Agreements" is being introduced to replace the previous four types of contracts: Reimbursable Loan Agreements, Special Services Agreements, Employment of National Professional Project Personnel and Author Contracts.

64. A systematic review of all documentation regarding existing rules and procedures will be initiated in the coming year. At the same time efforts to make rules and procedures progressively available on-line through the Intranet system will be pursued.

CONCLUSION

65. As can be seen from the foregoing, the Organization has embarked on an ambitious plan of human resources management reforms and revitalization that is intended to carry FAO forward into the new millenium with qualified staff that forms a corps of dedicated international civil servants in the best traditions of the United Nations system. The Organization will ensure that human resources management reforms described above are inspirited by, and consonant with, the ethical standards guiding international civil servants in all their actions. These standards, which were recently revised and updated by the ICSC, will continue to be given full recognition at FAO. In particular, the concepts of integrity, competence and efficiency which are enshrined in the Charter of the United Nations and the FAO Constitution, will continue to be given paramount consideration in the recruitment and retention of staff.

66. Many of the changes outlined in the present report are far-reaching and will require time and adequate resources in order to be fully implemented. The Director-General is wholly committed to the successful implementation of the reform process and looks forward to the support of Member States for his efforts to further strengthen human resources management in the Organization.

ANNEX II

RECOMMENDED NET SALARY SCALE FOR STAFF IN THE GENERAL SERVICE AND OTHER LOCALLY RECRUITED CATEGORIES IN ROME

Grade 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
G-1 41 631 42 863 44 095 45 327 46 559 47 791 49 023 50 255 51 487 52 719 53 951 55 183 56 415 57 647 58 879
G-2 44 128 45 628 47 128 48 628 50 128 51 628 53 128 54 628 56 128 57 628 59 128 60 628 62 128 63 628 65 128
G-3 47 220 49 019 50 818 52 617 54 416 56 215 58 014 59 813 61 612 63 411 65 210 67 009 68 808 70 607 72 406
G-4 51 471 53 576 55 681 57 786 59 891 61 996 64 101 66206 68 311 70 416 72 521 74 626 76 731 78 836 80 941
G-5 57 122 59 544 61 966 64 388 66 810 69 232 71 654 74 076 76 498 78 920 81 342 83 764 86 186 88 608 91 030
G-6 65 695 68 454 71 213 73 972 76 731 79 490 82 249 85 008 87 767 90 526 93 285 96 044 98 803 101 562 104 321
G-7 75 545 78 733 81 921 85 109 88 297 91 485 94 673 97 861 101 049 104 237 107 425 110 613      

 

_____________________________________

1 Doc C 2001/3

2 Doc FC 96/4

3 Doc JM 2000/3

4 Financial Regulation 4.1(b): The Director-General may also incur obligations against future periods before appropriations are voted when such obligations are necessary for the continued effective functioning of the Organization, provided such obligations are restricted to administrative requirements of a continuing nature not exceeding the scale of such requirements as authorized in the budget of the current financial period.

5 Austria, Brazil, China, Germany, Israel, Japan, Luxembourg, Norway, Republic of Korea, Slovenia, South Africa, Switzerland, United States