CL 125/10

Council

Table of Contents

I. Introduction

II. Approach

III. Impact

Chapter 1: General policy and direction
Chapter 2: Technical and economic programmes
Chapter 3: Cooperation and partnerships
Chapter 4: Technical cooperation programme
Chapter 5: Support services
Chapter 6: Common services

IV. Important Issues

I. Introduction

1. In relation to the Summary Programme of Work and Budget (SPWB) 2004-05, the report of the last session of the Council includes the following statement:

Without prejudice to the final budget level and recognizing that some Members already supported a Real Growth scenario and did not want to impose additional demands on the Secretariat, the Council at the same time acknowledged the need for the Secretariat to prepare an additional Zero Nominal Growth (ZNG) scenario in order for Members to fully understand the implications of possible budget decisions.

2. In response to this implicit request, the present document outlines a possible scenario which would be consistent with the ZNG concept. On the basis of the interventions made at the last Council, it is, in fact, the understanding of the Secretariat that it is not generally expected that such a scenario could be developed with the same analytical depth and degree of detail as normally adopted in the full PWB document. It is recalled that the proposals in the latter document are based upon an exhaustive post-by-post review of staffing requirements and the allocation of staff time to substantive programme entities and other non-substantive activities, as well as the formulation of comprehensive lists of biennial outputs.

3. It also bears recalling that the Real Growth and the Zero-Real Growth scenarios in the PWB have been designed to ensure a balanced response to the main longer-term orientations in the Strategic Framework, and are closely derived from the substantive content of the Medium Term Plan 2004-09. They were also geared to respond to the maximum extent possible to the recommendations of the Council’s Technical Committees. The reduced allocations which would stem from a ZNG Appropriation in most substantive and non-substantive areas (as shown in the following resource tables) would have considerable implications on the range of biennial outputs and other activities planned for the next biennium.

4. It is clear that the resulting programme, despite the best efforts to do so, is unlikely to give full justice to the approved strategic objectives of the Organization, to the Strategies to Address Cross-organizational Issues (SACOIs) and to the Priority Areas for Inter-disciplinary Action (PAIAs). The major deviations from these approved macro-level policy orientations can only be assessed as implementation of the reduced Programme of Work proceeds during the biennium.

II. Approach

DEFINITION OF ZNG

5. One major conceptual hurdle in seeking to develop a ZNG scenario at the present juncture is one of definition. This problem is compounded by the great uncertainties linked to the impact of exchange rates.

6. In this connection, it may be pertinent to recall the circumstances of the approval of the 2002-03 budget. The Regular Budget Appropriation approved by the last FAO Conference, i.e. US$ 651.8 million, technically embodied a Zero Real Growth (ZRG) decision over the 2000-01 budget of US$ 650 million. The relatively limited difference of US$ 1.8 million between these two total amounts was on account of the then very strong US dollar vis-à-vis the Euro, which virtually offset the requirement for additional resources to meet anticipated cost increases.

7. As the Council is well aware, the present situation is vastly different. As more fully explained in the PWB document, a ZRG budget – i.e. which would just maintain the same purchasing power of the approved Appropriation of US$ 651.8 million – would imply a significantly higher amount, if expressed in US$ terms. Using the exchange rate of € 1=US$ 1.15, which is close to the current market rate and is also an example that is covered in the PWB 2004-05 (paragraphs 250 to 256), the key figures are as follows:

8. Two clarifications are warranted in relation to the above picture. Firstly, it is not the understanding of the Secretariat that the above-mentioned proposed tranche of US$ 14.1 million for ASMC amortization should be met from within a budget level involving a negative net programme change, as ZNG would embody. Secondly, as the €/US$ rate has been fluctuating between extremes of 1.11 and 1.19 since the beginning of the year, the use of a different rate would have been, of course, conceivable. However, as indicated above, since the 1.15 rate has already been referred to in the full PWB document and is also very close to the rates prevailing at the time of writing, it has been retained in this document.

9. Therefore, the difference, again if expressed in US$ terms, between the ZRG scenario presented in the PWB document (excluding ASMC amortization in order to be consistent) and a possible ZNG scenario would no longer be the relatively modest amount of US$ 1.8 million, but could be a massive US$ 133.6 million. It ensues that ZNG, if no changes were to be made to the practice of budget approval hitherto used by the Governing Bodies, could imply a net programme reduction of 17% from the ZRG level of US$ 785.4 million, at an exchange rate of € 1=US$ 1.15.

10. Precisely in order to obviate wide fluctuations in budget levels linked to exchange rates which are beyond the control of the Organization, a split assessments arrangement has been under extensive consideration by the Finance Committee, which has now recommended its adoption to the Council, before eventual decision by the Conference. Document CL 125/12 Split Assessments provides a comprehensive explanation of the background, the proposed solution and the changes required to the Appropriation Resolution and the Financial Regulations.

11. In view of these developments, other interpretations of ZNG were offered by Members at the last Council, also prompted by the recognition of the massive impact of the exchange rate at the present time. In effect, had the €/US$ exchange rate remained stable since the last Conference, ZNG in US$ terms would mean the absorption of foreseen cost increases of US$ 33.0 million. The acceptance by the Conference of the proposed split assessments arrangement would imply that ZNG technically means the necessary absorption of cost increases by the more limited amount of US$ 33.0 million.

12. Regrettably, this necessary absorption of cost increases is bound to require meeting exceptional costs of redeployment and separation of staff (cf. further explanations under section IV below). These (one-time) costs are estimated at ca. US$ 7.9 million for the biennium. As there is no indication that additional resources would be forthcoming to cover this shortfall, this would lead to a needed reduction by an equivalent amount to the resources available for programme implementation in the next biennium. The resulting overall picture may be summarized as follows:

13. This approach to ZNG has been used in the present scenario. In order for Members to appreciate the impact of an eventual decision based on this approach at the level of specific PWB Chapters, Major Programmes or Programmes, the resulting ZNG amounts must be seen against those which would materialize in the event of a ZRG decision. Hence, the overall table at the end of this section II, shows possible provisions under aggregate PWB headings at ZNG level also taking into account the need to absorb one-time redeployment and abolition costs – stemming from the scenario developed below - in relation to the ZRG proposals in the full PWB document, recosted at the assumed €/US$ exchange rate of 1.15.

LACK OF GUIDANCE

14. Beyond the preceding definitional problem, an equally acute problem for the Secretariat is that no inter-governmental guidance is available for the identification of net resource cuts of such magnitude. The Council will note the negative reactions in the Programme and Finance Committees to the reductions made to Major Programme 2.5 in the ZRG scenario contained in the PWB document, which pale into insignificance if compared to the above figure. Therefore, no combination of reductions totalling such a high amount can stand a reasonable chance of getting broad endorsement, let alone generating full consensus by the Membership.

15. It is also necessary to put into proper perspective the expectations of some Members that the solution could lie in the generation of savings from restructuring or from enhanced efficiency, along with the implication that there need to be no damage to the programmes entrusted to this Organization by its Members.

16. Undoubtedly, in the normal evolution of any institution over time, whether in the public or private sectors, savings may be generated by a variety of measures. These can include restructuring which is normally prompted by considerations other than the search for savings per se, but which can produce reductions in cost. Savings may also stem from the orderly and progressive achievement of efficiency gains, to capitalize for instance on the beneficial impact of technological change and favourable input cost differentials (e.g. due to lower prices) or as the result of simplified workflows, while maintaining adequate standards of timeliness and quality in the delivery of outputs.

17. However, FAO has gone through a major organizational overhaul in the last few years. In fact, one of its key dimensions, i.e. decentralization, is about to be evaluated, and the resulting findings are to be considered by the appropriate FAO Bodies next year. In this light, it may be assumed that Members would not wish the Secretariat to put forward ill-conceived and hurried-through restructuring proposals, the implications of which could not be fully analyzed, just for the sake of developing a range of scenarios. This would inevitably also have a damaging impact on the morale of the staff in the concerned units. Hence, this document does not address restructuring, although proposals might eventually evolve, were a ZNG scenario of such extent to eventuate.

18. As to efficiency gains, the magnitude of those achieved by FAO in recent years is well known to Members, and has been fully documented. As stressed in the PWB, this does not mean that the Organization has exhausted all possible avenues for generating further efficiency gains in the future. In fact, the PWB makes explicit reference to the application of an adapted results-based model to the work of non-technical units, including the use of an analysis of strengths and weaknesses, which should lead to effective efficiency savings. What is clear, however, is that sufficient time is needed for analytical efforts of this nature, while the order of magnitude of potential gains should not be expected to be even close to the gains made in the recent past.

19. In any event, it is hard to imagine what type of efficiency enhancement measures could at short notice generate savings of US$ 33 million.

NEED FOR CONTINGENCY MEASURES

20. In the event of a ZNG decision by the Conference, as defined above, it needs to be emphasized that it would effectively take place in early December 2003, i.e. less than four weeks before the start of the next biennium. The anticipated cost increases would inevitably materialize in 2004-05 and would have to be absorbed within the approved level of the Appropriation. It is clear that the management responsibility vested in the Secretariat would impose the enactment of measures of an emergency nature to contain expenditures, so as not to exceed the total amount voted. This makes an initial general freeze on recruitment – which would, of course, be adjusted over time to take account of priority requirements – a foregone conclusion. At the same time, limitations on non-staff provisions may also have to be enforced, at least temporarily. As stressed above, the Secretariat has no indication that additional resources could, for instance, be available to deal with extra-ordinary staff redeployment and separation costs.

21. It may be clarified that, if the entire stock of available vacant posts, i.e. those existing at the start of the 2004-05 biennium and those becoming vacant from natural attrition during the biennium, were to be kept vacant throughout the period, the resulting savings would be higher than the overall requirement for containment of expenditures. The above-mentioned initial freeze on recruitment is thus likely to be progressively relaxed once all FAO units have prepared more detailed expenditure plans, adding up to the total available resources.

22. As to where the reductions should apply in aggregate terms, the Director-General has consistently stressed his strong belief that the Secretariat cannot take upon itself to arbitrarily privilege certain priority areas at the expense of others. There is no area in the current Programme of Work which is not favoured by at least a sizeable group of Members, if not the vast majority. If areas of work existed that were not supported by the Membership, it seems most probable that the Governing Bodies would have commented on such a situation.

23. In the circumstances, it is stressed that the problem is not simply to decide on the cancellation of a given publication or a given meeting. The Organization would have to deal with resource cuts which could mean the weakening of domains of hard-earned expertise in the Organization, or the possible elimination of well-appreciated entities, or – at least in theory – even entire programmes. For the sake of example, a decision which would seek to maintain the current allocations for work on animal health (e.g. related to veterinary services, control and eradication of specific diseases), while reducing capacity to advise Members on animal production issues (feeding systems, breeding, etc.), is clearly bound to invite strong criticisms by those Members who have a deep interest in the affected areas.

24. Nevertheless, some measure of protection for a number of selected areas has been reflected in the present scenario. This is done where the Secretariat considers that either a formal decision from the Governing Bodies, or consistent expressions of support from the Membership justifies such a course of action. In addition, in some limited cases, where there is a contractual obligation from the Organization vis-à-vis third parties (e.g. External Audit, Inter-agency agreements, etc.), protection becomes clearly mandatory, either in full or in part.

25. Beyond those favoured areas, the present ZNG scenario is based on the assumption that the needed reductions should be spread in a generally uniform manner throughout the remainder of substantive and non-substantive areas.

AREAS OF PREFERENTIAL TREATMENT

26. The areas afforded some measure of protection are summarily listed below.

TCP and SPFS

27. Conference Resolution 9/89 regarding the share of FAO Regular Programme resources to be devoted to the TCP, states in its operative paragraph: Invites the Director-General to make every effort in order to restore the resources available to TCP to the former level of 14 percent of the total Regular Programme budget and, if possible, to raise it to 17 percent. In addition, repeated expressions of support for the TCP have been made in FAO fora, as a most valuable source of catalytic assistance to meet pressing problems of beneficiary countries. Therefore, the present scenario seeks to maintain the absolute amount, as would be achieved under ZRG conditions.

28. The same approach has been applied to the Regular Budget provision for the SPFS (Programme 2.5.6), given its multiplier impact at country level.

IPPC and Codex Alimentarius

29. These important normative instruments which operate under the aegis of FAO (together with WHO for Codex) have assumed even greater significance in the context of a globalized economy and expanding international trade, as well as growing and legitimate concerns to protect health. Therefore, the need to ensure that FAO related work should be adequately funded, has been consistently stressed in the Governing Bodies.

30. Most recently, the Programme Committee: reaffirmed its call, as endorsed by Council and reiterated by COAG to fund IPPC at the level of its biennial business plan under any budget scenario. The Committee also: reaffirmed the recommendation of the 17th Session of COAG that FAO provide its share of the additional resources required for the recommendations of the Joint FAO/WHO Evaluation of Codex Alimentarius and other FAO and WHO Work on Food Standards to be implemented in full, noting that this should normally apply irrespective of the budget level.

31. The FAO Council at its June 2003 Session: emphasized the importance of the work of the international standard-setting bodies hosted by FAO, the International Plant Protection Convention (IPPC) and Codex Alimentarius, and urged full funding of their identified needs under the Regular Programme.

32. Therefore, provisions for these two areas of work are only reduced by 3.4 percent, which is half the average percentage applied to most other areas.

Fisheries and Forestry

33. The same measure of relative protection is applied to the Major Programmes dealing with Fisheries and Forestry, on account of the widespread and consistent expressions of support they have received.

Other Protected Areas

34. Several areas of work have been afforded a similar treatment, on account of the great interest expressed by many Members. They are activities directly linked to: water management and conservation; SARD (Sustainable Agriculture and Rural Development); plant and animal genetic resources; support to IPM (Integrated Pest Management) and seed systems; safe pesticide management; FIVIMS, and the two components of EMPRES, dealing with plant pests (locusts) and animal diseases (especially rinderpest).

35. The overall table below provides an overview of resulting available resources under this ZNG scenario, assuming it can be implemented in accordance with the stated priorities. It shows the impact of ZNG vis-à-vis ZRG both for the Programme of Work (hence including the benefit of other income) and for the Appropriation. The impact is in fact similar since the level of the Appropriation should not normally affect projections for other income, subject to some caveats as mentioned in Section IV and with the exception of income from IFIs (International Financing Institutions) to TCI which will automatically be constrained by the absence of matching Regular Programme resources despite the strong demand for FAO’s services from the IFIs. In accordance with the established presentation technique in the PWB, figures in the more detailed tables which follow refer to the Programme of Work.

Summary of Programme of Work and Appropriation by Chapter and Major Programme at 2004-05 Costs Reduced to Absorb Cost Increases

III. Impact

36. The aggregate information in the preceding table is provided at the level of individual programmes in the more detailed tables below.

37. It is stressed that the reductions (from the ZRG provisions indicated in the PWB document) shown in the programme change column, have been developed centrally, taking account of high priority areas, as explained in section II Approach. The concerned units and the staff at large (including in decentralized locations) have not been asked to carry out the usual thorough review of the implications of given resource levels, in terms of precise staffing requirements, resource needs under other budget components and their effect on planned outputs, as was done for the two scenarios in the PWB document. This would have been particularly disruptive to workloads, and especially to staff morale. It is recalled that the process of full scenario definition inter alia necessitates: widespread internal consultations (meetings at various levels – i.e. service, division, department and organization-wide); exchanges with decentralized locations; detailed justifications for staff changes to be assessed by AFH; voluminous data entry and validation in the computerized system PIRES.

38. Therefore, the resource reductions can be appreciated mostly in terms of “post equivalents” for both Professional and General Service staff. Their impact in the short narratives below, can only be indicative. Some flexibility would have to be exercised, depending not only on pressing priorities and requests, but also on the opportunities offered by planned or unforeseen vacancies to alter staffing profiles within units.

39. It may also be noted that, since vacancy rates in the Professional category are normally higher than those in the General Service category, this could create imbalances at the level of individual units, which may have to be progressively corrected through transfers, or other means. This is further addressed under the subsequent section IV on Important Issues.

CHAPTER 1: GENERAL POLICY AND DIRECTION

Major Programme 1.1: Governing Bodies

40. Stringent limitations would have to be imposed on the operations of major Statutory Bodies (documentation, length of sessions, eventual supplementary sessions for ad hoc consultations, etc.) and on Meetings of Permanent Representatives. The eventual need for the GIC division to keep several posts vacant throughout the period, would clearly hamper the range of essential services it provides (support to meetings, protocol, liaison, etc.).

Major Programme 1.2: Policy, Direction and Planning

41. As is evident from the above table, all the five offices (ODG, PBE, AUD, LEG and OCD), budgeted in full or in part under this Major Programme, would be affected. The marginally lower percentages for Programmes 1.2.3 and 1.2.4 reflect the need to maintain the fee for the External Auditor at its established level, and a certain measure of protection for legal services on account of services provided to WFP. While further developmental work on the computerized system PIRES (carried out with funding from outside the normal Appropriation) is to continue, all offices would need to cope with reduced staff (e.g. equivalent of ten posts for all offices combined).

Major Programme 1.3: External Coordination and Liaison

42. The provision under Programme 1.3.1 appears less negatively affected, as mandatory contributions to a number of inter-agency mechanisms included under these programmes, would have to be met. However, the small unit SAD (Special Advisers to the Director-General) – also budgeted under 1.3.1 - which covers inter alia the coordination of a broad range of UN system cooperation activities, as well as the Liaison Offices would have difficulties in meeting the staff cost reductions which would need to be imposed on them, given their relatively small size and their remote locations.

CHAPTER 2: TECHNICAL AND ECONOMIC PROGRAMMES

Major Programme 2.1: Agricultural Production and Support Systems

43. The negative percentages of changes affecting the component programmes vary, depending on whether specific activities have been afforded some protection. A straightforward case is that of the joint FAO/IAEA division (Programme 2.1.5) on account of the contractual obligation to meet part of the cost of the staff in the IAEA Seibersdorf Laboratory, and the desire to demonstrate FAO’s continuing commitment to maintaining an acceptable cost-sharing arrangement with its partner organization.

44. Under programme 2.1.1, two key entities dealing with water use efficiency and conservation, and water quality issues would only suffer from half the usual percentage of 6.8% applied to the other areas (dealing with land and soils management and information systems and dissemination). The responsible division AGL may, however, need to keep a number of specialist Professional posts vacant, which were particularly active in the latter disciplines.

45. Among the Headquarters-based programmes, Programme 2.1.2 is the least penalized by resource reductions, in view of the provisions for the IPPC, plant genetic resources, the safe use of pesticides and the plant pest component for EMPRES (locusts) and associated activities, which have received lower cuts. The same degree of protection applies to the Secretariat of the Commission on Genetic Resources for Food and Agriculture under Programme 2.1.0. Nevertheless, AGP would have to operate without two specialist posts for specific periods to meet its overall reduction target, affecting its complementary work on cropping systems, and especially its advisory services to Members and to the field programme.

46. Programme 2.1.3 benefits less from relative protection measures, as these had been restricted to the livestock component of EMPRES and animal genetic resources. AGA would be obliged to keep two or three Professional posts vacant, mostly affecting its remaining entities, including policy advisory services and information dissemination.

47. Programme 2.1.4 is to cope with the most severe percentage reduction, with attendant loss of capacity for the AGS division, in the several important areas it covers (credit, marketing, farming systems, other agricultural services).

Major Programme 2.2: Food and Agriculture Policy and Development

48. The relatively favourable situation of Programme 2.2.1 implemented by ESN, vis-à-vis the other main component programmes implemented by the other divisions of the ES department (ESA, ESC and ESS) and the GIL division, is clearly on account of the three entities dealing with Codex standards and food safety, resources for which have been reduced by half the average percentage cut. As the entity for FIVIMS under 2.2.0 was given a similar preferential treatment, this also explains the lower percentage reduction there.

49. Programme 2.2.2 is by nature “information processing intensive”, including major systems (FAOSTAT and coordination of WAICENT, as well as of the FAO website) and publications, but also related advisory services and support to capacity building in countries. While the negative impact on specific planned outputs cannot be assessed, the combined loss of the full-time equivalent of seven posts for ESS and GIL (both Professional and General Service) speaks for itself in terms of the pressures which would be put on those two divisions.

50. Programmes 2.2.3 and 2.2.4 include key FAO flagship publications and studies (SOFA, AT2030, Commodity Review), direct or indirect support to key meetings (CCP and CFS) and the GIEWS. They also have strong dimensions of policy advice, in particular in relation to Multilateral Trade Negotiations. The potential loss of the equivalent of seven or eight posts (both Professional and General Service) for ESC and ESA is certainly bound to hamper their analytical activities, the planned publication outputs, and the volume and timeliness of advisory services.

Major Programme 2.3: Fisheries

51. While subject to the same preferential treatment as other high priority areas, this Major Programme would need to cope with the reductions shown in the above table, by surrendering the equivalent of about four to five posts. There will be consequential loss of substantive outputs and lower technical capacity to meet demands from Members in the key sector of fisheries.

Major Programme 2.4: Forestry

52. This Major Programme would suffer from similar reductions as those applied to fisheries. In view of its smaller size, this would entail the loss of about three to four posts (Professional and General Service) which would still be detrimental to FAO’s range of expertise in forestry. This would occur at a time of considerable expectations of an active FAO’s involvement in major international efforts for improved management and conservation of forest resources in all regions.

Major Programme 2.5: Contributions to Sustainable Development and Special Programme Thrusts

53. Compounding the reductions already imposed on programmes 2.5.1 and 2.5.3 in the ZRG scenario, provisions under component programmes would be further reduced, with no cut imposed on 2.5.6. This should enable the latter programme to continue FAO’s catalytic action for the generation of a much larger volume of SPFS – linked activities at country level. The apparent lower percentages for 2.5.1 and 2.5.3, if compared to 2.5.2, are due respectively to the need to maintain FAO’s share of the cost of the Secretariat of the CGIAR Science Council under 2.5.1, and to some measure of protection afforded to entities promoting SARD within 2.5.3. However, even with this degree of protection, the Sustainable Development Department would need to cancel approximately six posts.

CHAPTER 3: COOPERATION AND PARTNERSHIPS

Major Programme 3.1: Policy Assistance

54. The essential analytical and advisory capacity vested in the TCA division (both at Headquarters and in its decentralized teams in Regional and Sub-regional Offices, in Programmes 3.1.1 and 3.1.2 respectively) and the Development Law Service of LEG (Programme 3.1.3) would need to be curtailed, at a time of pressing demands for both field programme development and direct policy advice in all regions.

55. It is estimated that TCA would need to do away with seven or eight of its Professional posts in various locations, and their supportive General Service staff. The random incidence of vacancies may create imbalances across regions, which cannot be addressed by the use of consultants, since non-staff provisions would also need to be contained.

Major Programme 3.2: Support to Investment

56. The Investment Centre is funded from the Regular Programme (i.e. 58%) with the balance coming from partial reimbursement of its costs by the World Bank and other IFIs for services rendered. The reduction in Regular Programme funding requires a corresponding reduction in such services and hence in the reimbursements from these institutions by an amount of approximately US$ 1.9 million.

Major Programme 3.3: Field Operations

57. As this Major Programme, especially the emergency component, relies for the most part on Other Income, it is only marginally affected by reductions within the Regular Budget Appropriation. Nevertheless, the operations teams in the regions would be subjected to even tighter budgetary constraints (coming after the substantial adjustments in staffing levels made in the recent past).

Major Programme 3.4: FAO Representatives

58. The FAOR network cannot be insulated from a context of general retrenchment for the Organization. However, this is the area where the required reduction – quite substantial in its total amount – would be very difficult to manage. Translated into posts which must be kept vacant, the reduction means about eight Professional and thirty General Service posts, to be accompanied by equally damaging restrictions on non-staff expenditures. As vacancies are not likely to occur in a uniform manner across countries and regions, this may lead to untenable situations in some countries, particularly since the General Service posts are filled with locally-recruited incumbents, who cannot move beyond national boundaries.

Major Programme 3.5: Cooperation with External Partners

59. This Major Programme covers the work of several Headquarters units (e.g. in TCA, TCD, GID or OCD), which carry out a range of important liaison activities, as conveyed by the titles of the Programmes (and also including support to World Food Day and TeleFood). It is clear that the reductions would hinder their work, leading to potentially widespread impact throughout the Organization.

CHAPTER 4: TECHNICAL COOPERATION PROGRAMME

60. As mentioned above, the present ZNG scenario maintains the absolute amount of the provision for the TCP, as in the ZRG scenario in the PWB document.

CHAPTER 5: SUPPORT SERVICES

Major Programme 5.1: Information and Publications Support

61. Some loss of capacity for the GII division (at Headquarters) would result from the need to keep up to four posts vacant. In such circumstances, the division would not be able to fully carry out its multi-faceted programme of public information activities and, as importantly, publication support services (e.g. editorial support and publishing arrangements) with the same degree of quality and comprehensiveness.

Major Programme 5.2: Administration

62. While the AFF and AFH divisions (respectively responsible for programmes 5.2.1 and 5.2.3) appear as the hardest hit in absolute terms, the AFI division would also be affected, as the costs of its central computer infrastructure and the other services it offers in support of telecommunications and local computer facilities are distributed across the programme structure through the computer pool account which would be reduced by about US$ 1.8 million. The impact of the potential loss of nearly six Professional and an even higher number of General Service posts for these three divisions, at a time of major system enhancements (the so-called “Oracle phase II”) is self-evident. This would also be in contradiction with recommendations in expert reports on the staffing of AFF and AFI.

63. Another somewhat hidden impact throughout the Organization, would be on account of the required loss of about five posts for the Management Support Service (MSS) placed in AFD, but which assists administrative actions in all Headquarters departments and offices.

CHAPTER 6: COMMON SERVICES

64. Through both the implied loss of posts (close to 10 in total), and the curtailment of its substantial non-staff provisions to meet the cost of utilities and other essential services, the AFS division would need to downgrade its services in both qualitative and quantitative terms, and delay much needed maintenance activities. It is not clear to what extent such cuts could be compatible with obligations stemming from occupational health and safety standards.

IV. Important Issues

65. The potentially disruptive impact of an eventual ZNG scenario as defined above, on current programmes and necessary support services, has been demonstrated in the preceding section. Nevertheless, section III offers only a partial view of the total picture, as a number of important additional issues need to be mentioned, as follows:

Feasibility and Consequences

66. The above tables and narratives have been developed based on a distribution of the total reduction which ensures some degree of protection to a number of explicitly stated priorities of the Membership, but otherwise applies the needed balance in a uniform manner across the unprotected programmes.

67. This raises questions of feasibility, the most obvious one being the mismatch between the required post reductions and the vacancies which exist in the units which are required to implement such reductions. This can have distorting effects, as explained below.

Professional versus General Service Posts

68. Logically, the reductions should be spread in roughly equal proportions between the two categories. This is estimated to require about 60 Professional post abolitions and close to 100 General Service posts, the latter being more difficult to achieve because of the lower vacancy rate for General Service posts. Much will depend upon the success or otherwise in matching selected post cancellations to existing or foreseen vacancies. This is impossible to measure until specific posts have been identified. If a significant mismatch occurs, it implies either moving away from the priority based approach during implementation or the redeployment or separation of some General Service staff. Such redeployment or separation exercises generally incur additional one-time costs either in funding to salaries of redeployees pending their placement on funded posts or for the cost of agreed terminations. It has been assumed that up to half of the total General Service abolitions could result in redeployment or separation of staff, at a cost of US$ 4.0 million.

Incidence of Vacancies by unit, versus required Post Reductions

69. The post reductions in each unit have been derived from the value of the budget reduction stemming from the priority based approach described above. However, there are several units where the extent of the post reduction exceeds the available vacancies, leading to further needed redeployments (which are harder to implement with Professional staff because of unique requirements for qualifications and experience). The funding needed to meet the resulting redeployment or separation costs for Professional staff has been estimated at up to US$ 3.9 million.

Likely practical implementation strategies

70. Given the above analysis, and in the absence of additional resources for redeployment and separation costs, the Director-General would, in meeting his obligations under Financial Regulation 4.1, wherein the amount voted in the Appropriation represents a ceiling to his spending authority, be obliged initially to freeze all vacant posts, regardless of the priority of the entities or activities to which they contribute. Of course, once the specific posts for abolition have been identified there could be a gradual unfreezing of high priority vacant posts thus generating expenditure patterns which would eventually reflect the priorities stated above.

Other income

71. The viability of the Programme of Work is predicated on the capacity of concerned units – especially technical units – to earn income, beyond the share of resources from the Regular Budget Appropriation. Obviously, with reduced staffing due to enforced vacancies, it will be difficult for many units to achieve their income-generating targets. This problem has ramifications throughout the Programme of Work and would need to be more thoroughly analyzed in the eventuality of a ZNG scenario, as defined here, becoming reality. In the more material cases, however, the scenario has been developed, bearing in mind the implications on other income (e.g. for the Investment Centre or the Emergency Operations and Rehabilitation Division).

Extra-budgetary Field Programme

72. Linked to the foregoing, is the potential negative impact on FAO’s extra-budgetary field programme. The development and orderly implementation of the latter depends on a myriad of inputs from throughout the Organizational structure (Headquarters, Regional and Country Offices) and an orderly flow information. These prerequisites to a vigorous extra-budgetary field programme would be impossible to ensure in a satisfactory manner in a context of general stringency and of conflicting claims on reduced allotments, putting in jeopardy ongoing efforts to redress earlier declining trends in delivery.