215. The Council considered the Reports of the Eleventh and Twelfth Sessions of the Finance Committee (CL 43/41, Section III, and CL 43/45) covering the financial matters on the Council Agenda.
The Council was informed that as at 9 October 1964 the position was as follows:
| Total Due | Amount Received | Balance Still Due | |
| $ | $ | $ | |
| 1964 Contributions | 17,789,162 | 13,326,854 | 4,462,308 |
| Arrears of Contributions (present Member Nations) | 1,010,137 | 289,250 | 711,887 |
| 18,799,299 | 13,625,104 | 5,174,195 |
216. The amount of $13,625,104 received so far in 1964 compared with receipts of $14,131,572 in the same period of 1963 on a smaller assessed Budget. The Council noted with concern that the contributions received so far in 1964 represented approximately 75 percent of the assessed Budget while in 1963 the comparable figure had been 91 percent. The Council also noted that as the Republic of South Africa had withdrawn from the Organization, no contribution would be payable by that country in 1965, which would mean an income reduction of $126,132 in that year.
217. The Council further noted the delay in payment in the early months of the year of a number of contributions, in particular that of the United States, which, for internal reasons, will henceforth not be paid until the second half of the year. In view of the small size of the Working Capital Fund the Council therefore agreed that it was necessary to provide for the authority of the Director-General to contract short-term loans. While noting the arrangements made with the Managing Director of the United Nations Special Fund, it adopted the following resolution:
Resolution No. 4/43
FINANCIAL SITUATION
THE COUNCIL
Having reviewed the report of the Finance Committee on the prospective rate of receipt from contributions in 1965 in relation to the expected expenditure rate and in order to avoid a temporary shortage of funds arising therefrom;
Authorizes the Director-General to borrow in case of need in the course of 1965 from available sources an amount of up to $2,000,000, such borrowings to be repaid in 1965 as soon as adequate funds are received;
Further authorizes the Director-General to negotiate and contract loans with such lenders as he may select, having due regard, in settling the terms thereof, to the necessity of reducing interest costs to a minimum; and
Requests the Finance Committee to keep the position under review, and to report to the first session of the Council in 1965 on action taken.
218. The Council also agreed with the Finance Committee's proposal to retain until the end of 1965 the excess credits in the Working Capital Fund, and adopted the following resolution:
Resolution No. 5/43
WORKING CAPITAL FUND
THE COUNCIL
Noting that the Finance Committee will at its first session in 1965 consider a proposal of the Director-General to increase the level of the Working Capital Fund of the Organization,
Noting further that the Twelfth Session of the Conference by Resolution No. 56/63 agreed to withhold the release of excess credits in the Working Capital Fund until 1965, and
Considering that these excess credits amounting to $81,764 might be needed if the Conference approves an increase of the Working Capital Fund,
Authorizes the Director-General to withhold the release of those excess credits until the Thirteenth Session of the Conference.
219. The Council shared the concern of the Finance Committee over the serious financial position of the Organization. On the one hand there had been some improvement in the income from contributions and in the estimate of Miscellaneous Income since the Finance Committee reviewed the position in May/June 1964. On the other hand, the unbudgeted cost of necessary salary increase resulting from the continuing upward trend in the cost of living and outside wages in Rome is now estimated at almost $1,750,000 for the 1964/65 biennium.
220. During its discussion the Council recognized that as the level of the Organization's Working Capital Fund was only $2,500,000, and as the calls that were likely to be made on it in the early months of 1965 consequent upon the changing pattern of contribution payments was likely to be heavy, it would be necessary for the Director-General to obtain the major portion of the total amount needed by effecting savings through adjustments to the approved Program of Work and Budget.
221. The Council expressed its appreciation of the Director-General's efforts to date, which, it hoped, would result in savings in the neighborhood of $1,000,000 in the biennium. It felt, however, that it could only support the recommendation of the Finance Committee that a total amount of $1,250,000 should be saved in the 1964/65 budget and that the balance of the unbudgeted costs (presently estimated at nearly $500,000) should be met by a withdrawal from the Working Capital Fund.
222. The Council recognized that the measures already taken have had the result of a substantial slowing down of the Program approved by the Conference, and sympathised with the difficulties which the Director-General faces in his efforts to make still further savings. The Director-General indicated that he would do his best to save the $1,250,000 as recommended by the Finance Committee. The Council Members generally indicated their desire that the integrated Program of Work as approved by the Conference should not be severely disrupted.
223. This being the case, the Council considered that $1,250,000 should be provided from savings in the 1964/65 biennium leaving it to the Director-General to determine the most appropriate ways to achieve this target, as well as some flexibility as to the final amount. Also, in view of these considerations, the Council asked the Finance Committee to review the entire situation again at its next session and make such amended or additional recommendations as might be necessary to the next session of the Council.
224. The Council therefore adopted the following resolution:
Resolution No. 6/43
WITHDRAWAL FROM WORKING CAPITAL FUND
THE COUNCIL
Noting that the amount of unbudgeted increase in salaries and related costs in 1964/65 is now estimated at $1,750,000, and
Concurring in the recommendation of the Finance Committee that an amount of $1,250,000 should be provided from savings in the 1964/65 Budget to be effected by the Director-General,
Authorizes the Director-General to withdraw an amount up to $500,000 from the Working Capital Fund to meet the balance of this expenditure in accordance with Financial Regulation 6.2(a) (ii);
Requests the Finance Committee to review the situation again at its next session.
225. The Council noted that at its Eleventh Session the Finance Committee had agreed with the Director-General that an increase in the level of the Working Capital Fund was necessary. It noted also that pending further consideration of this matter the Finance Committee at its Twelfth Session had agreed in principle with the Director-General's proposal that in framing his Budget and Budget Assessments for the 1966/67 biennium he should be authorized to earmark the estimated 1966/67 Miscellaneous Income for the purpose of increasing the Working Capital Fund, rather than deduct this income, when assessing the contributions of Member Nations and Associate Members, from the total budgeted expenditure for that biennium. The Council took note of the relevant section of the Committee's report of its Twelfth Session, which recommended that the Budget for the 1966/67 biennium be drawn up to reflect the application of the estimated Miscellaneous Income to cover in part an increase in the level of the Working Capital Fund.
226. The Council at its Fortieth and Forty-First Sessions had shared the concern of the Finance Committee over the worsening financial situation of the Organization and had agreed “that further measures should be developed to secure payment from the defaulting countries.” The Council had also “authorized the Finance Committee to consider the matter further in consultation with the Director-General and to submit proposals to the Council to achieve this purpose.” The Finance Committee examined the matter at its Eleventh Session and submitted several suggestions to the Council for its consideration.
227. The Council decided to study the matter further and to consider the problem again at a later session in the light of future developments.
228. The Council in the meantime urgently appealed to Member Governments in arrears to regularize their position at as early a date as possible within the current biennium and before the 1965 Session of the Conference.
229. The Council also called the attention of Member Governments to the need to pay their current contributions early in the year, in order to avoid a critical cash position for the Organization.
230. The Conference at its Twelfth Session reviewed the findings of its Technical Committee on Agriculture with regard to the proposals for the establishment of an emergency fund for the control of livestock diseases.
231. The Conference had supported the establishment of such a Fund to be financed from the cash surplus of the 1962/63 biennium. At the same time, the Conference realized that it was possible that no such surplus might eventuate and in that event it requested the Director-General to consider the possibility of establishing an emergency fund for the above purpose from outside sources and requested Member Governments to offer practical suggestions to this effect to the Director-General for consideration by the Finance Committee and approval by the Council.
232. Accordingly, as a cash surplus did not result, the Director-General approached Member Governments with the request that they offer practical suggestions, and 25 replies were received. The Council was informed that amongst the replies received the Finance Committee considered a proposal, which provided for the determination of an amount for emergency use based upon voluntary pledges from Member Nations and for emergency expenditure to be met in the first instance from the Working Capital Fund which would be reimbursed by calling up Member Nations' pledges. The Council agreed with the Finance Committee that this proposal would have certain practical disadvantages.
233. As no satisfactory method for establishing such an Emergency Fund from outside sources had been found, the Finance Committee had reviewed another proposal under which provision would be made for the emergency fund in the Regular Budget and all Member Nations would, therefore, be assessed in accordance with the scale of contributions. The Finance Committee was in general agreement with this proposal, but suggested that, instead of establishing a separate fund, the required amount should be added to the Working Capital Fund and be made available, subject generally to the conditions suggested in that proposal. These would provide inter alia for a special committee of representatives of Member Governments which would be authorized to approve withdrawals from the Fund within a specific limit. The actual expenditure during any biennium would be reimbursed by assessment of additional advances to the Working Capital Fund in the subsequent biennium.
234. The Council felt that it was not in a position to make a recommendation at this time as to how an emergency fund for the control of livestock diseases should be financed. It was agreed that more thought needed to be given to the Finance Committee's suggestion that the fund should be added to the Working Capital Fund. Accordingly the Council decided to reconsider the matter at its next session in the light of more detailed proposals from the Director-General on this point.
235. In approving the Report of the Eleventh Session of the Finance Committee (CL 43/41) the Council noted that because of austerity Budgets for 1964 and 1965 no provision for expenditures of the type contemplated by the amended Article 9 of the Codex Alimentarius Commission's statutes would be made in these two years. The Council further noted that any provision for this type of expenditure in 1966 and 1967 would be included in the Organization's Regular Budget and would therefore be subject to the normal budgetary examination and safeguards.
236. The Council was informed that the Compensation Plan, which provides for payment of annuities or lump sum payments in cases of disability and death attributable to performance of duty, had been funded in FAO by a Compensation Plan Reserve Fund and by commercial insurance. Heretofore annual contributions amounting to 0.19 percent of the payroll of the Regular Program staff and to 0.319 percent of the payroll of field project personnel had been paid into the Reserve Fund. In addition, the Organization was insured for four times the annual pensionable remuneration of the staff members.
237. The Finance Committee at its Eleventh Session in May 1964 considered the report of the Actuary on the Organization's Compensation Plan. It noted that some overfunding of the Plan seemed to exist. It therefore agreed with the Director-General that if it became possible to amend the insurance policies which were to expire on 30 September 1965 so as to reduce the premium costs to the extent corresponding at least to the increase in the revised payroll contributions recommended by the consulting actuary, the Director-General should proceed with such amendments.
238. The Director-General reported that the insurance policies had been terminated on 30 September 1964, a year earlier than the policy term and had been substituted by two new policies effective 1 October 1964, one covering losses exceeding $250,000 in the aggregate up to $750,000 in the aggregate in any one annual period, at an annual premium of $12,500, and the other a personal accident insurance for catastrophy risks which would pay up to $400,000 each and every loss in excess of $100,000 each and every loss, at an annual premium of $750.
239. In line with the recommendations of the consulting actuary, the payroll contributions to the Compensation Plan Reserve Fund were increased on 1 October 1964 to 0.358 percent for Regular Program staff and to 0.421 percent for field project staff on the payroll.
240. The resulting net savings under these new arrangements were estimated at $17,050 for the Regular Program in respect of 1964/65.
241. The Finance Committee would in 1967 review the experience gained under the new procedures and report of the position of the Compensation Plan Reserve Fund as of 31 December 1966. On the basis of this review it would recommend when another actuarial survey should be performed. The Council approved of these arrangements.
242. The Chairmen of the Program and Finance Committees reported to the Council the changes recommended by the two Committees in their Joint Report (CL 43/41) on the format of and documentation on the Program of Work and Budget 1966/67. The main change relating to the format or presentation was the addition of column 5 in the proposed format of the summary table attached as Appendix IX to the above document. The Council agreed to the changes proposed.
243. The Council noted however that figures in the proposed format table were purely illustrative, having been based on a survey of staff time devoted to the management and operation of field programs and the Regular Program conducted in 1963. Changes were already anticipated as a result of another survey carried out in the autumn of 1964, and further changes might be necessary before the 1966/67 Program of Work and Budget was finalized.
244. Regarding documentation, the Council recognized that the udget documents in the past, prepared in conformity with the recommendations of the Conference and the Council, did serve useful purposes but it agreed that in the future they should be made more concise and factual, with somewhat more detailed explanation of new activities. The Council agreed with the Program and Finance Committees that the document for the current biennium was a substantial improvement compared with those for previous years, but there was scope for further reduction. The Director-General indicated that he was fully aware of this and was taking the necessary steps in that direction in the preparation of the draft 1966/67 Program of Work and Budget. The Council approved of the changes recommended by the Program and Finance Committees in paragraphs 29 and 30 of their Joint Report (CL 43/41).
245. The Council requested the Program and Finance Committees periodically to review the format and documentation of the Program of Work and Budget and submit such information and views as they consider necessary for the guidance of the Council and the Conference in reaching decisions in the matter.
246. The Council, at its Fortieth Session (June 1963), after reviewing the Report of the Joint Session of the Program and Finance Committees on the general staffing and recruitment situation of the Organization and of the actions undertaken to improve recruitment activities, suggested that “it would strengthen the efforts of member countries to help the Director-General in dealing with specific recruitment action if he would provide through the Program and Finance Committees a study at the next session of the Council, giving guidance to member countries on the most effective means of ensuring that they are submitting to the Organization suitable candidates in terms of educational background, training, languages, age, and the physical and emotional qualities most suitable for international service.”
247. The Program and Finance Committees at their Joint Session in May/June 1964 reviewed the study submitted by the Director-General and reported to the Council that it “provided the Committees with an opportunity not only for a useful consideration of practicable ways of improving the recruitment activities of member countries in behalf of FAO, but also a comprehensive review of the current general staffing and recruitment situation of the Organization, and the most suitable methods of coping with a problem which is increasing in both scope and complexity.”
248. The Council concurred with the Committees that the survey itself (CL 43/3414) provided, in a helpful and concise form, an annotated checklist of the main pertinent factors which Member Nations should take into account in endeavoring to present the most suitable candidates for positions in the Organization, and that the Director-General should make the result of the study available to the Member Nations. In this respect, the Council suggested that particular emphasis should be given to the importance of designation by governments of specific organizational units through which vacancy announcements could be channeled and which were furnished with adequate resources for positive follow-up action in locating and evaluating suitable candidates.
249. The Council endorsed the procedural improvements already introduced by the Organization, as a result of the study and of the related comments of the several governmental agencies co-operating in submitting candidates for field project posts, especially the provision of more complete job description - issued in the three official languages - of the vacancies to be filled, along with summary reports on the status of announced vacancies. The Director-General agreed with several delegates who felt that the development of the new procedure should be systematized and accelerated so as to strengthen the considerable efforts made by many Member Governments to improve their recruitment activities in behalf of the Organization both qualitatively and quantitatively.
250. It was agreed that the traditional dependence in recruitment of technical staff primarily on the personal contacts of individual officers in various specialties had to be reconciled with the increasing volume and complexity of the Organization's professional staffing requirements. This would involve not only systematic preparation and distribution of adequate vacancy announcements for field posts but also a more positive and orderly recruitment program, a strengthened central co-ordination of relations with the most suitable sources of recruitment, and more efficient interviewing methods.
251. In considering the general recruitment problem, the Council also took note of the current recruitment picture, which was not quite as bright as had been anticipated at its session in June 1963. This was due mainly to the increasing number of United Nations Special Fund (UNSF) projects assigned to FAO as executing agency.
14Recruitment of Professional staff
252. The total staff complement of the Organization as at 30 September 1964, was over 3600, representing an increase of nearly 12 percent in one year, covering all locations - Headquarters and regional offices, and in particular field projects.
253. On the Regular Program the number of professional staff had been practically stationary, reflecting the specific action taken by the Director-General to slow down and partially freeze recruitment at Headquarters in order to provide savings to cover the increase in cost of living and in salaries as a result of the current economic developments in Rome.
254. In the field, however, there were nearly 1200 field project officers already on the rolls, which represented an increase of about 25 percent in one year. The main objective in this respect was to recruit a monthly average of 30 to 35 new technical officers over the ensuing next two or three years for UNSF projects until a stabilization point was reached. As of 1 October 1964, the Organization had 169 UNSF projects, of which 121 were operational: and there was reason to believe that 29 additional projects might be assigned at the January 1965 Session of the Governing Council of the Special Fund.
255. The Council was informed that the ability of the Organization to meet the remuneration standards of governmental programs for bilateral technical assistance continued to be a significant problem. The Council noted that this question would undoubtedly be taken into account by the International Civil Service Advisory Board when at its 1965 Session it reviewed the results of an interagency study on the adequacy of the existing salary levels for professional staff of the agencies in the United Nations common system.
256. The Council, at its Fortieth Session, considered the Director-General's submission of suggested guidelines and procedures for personal upgradings on a merit basis and proposed that a broad review be carried out on the general question of recognition of merit.
257. The Program and Finance Committees were informed at their Joint Session in June 1964 that the International Civil Service Advisory Board (ICSAB) would be considering this matter at its July 1964 Session, in connection with its review of career prospects, and that the Director-General therefore did not wish to press for any further action on the question at that stage. The report of that Joint Session indicated that the Committees agreed that the question should be discussed when the ICSAB report was available.
258. While ICSAB did, in fact, deal with the question of careers and promotions at its July 1964 Session, its report was not yet available for use by the council in connection with the specific question of merit promotions or recognition of merit. The Council therefore agreed with the Director-General's suggestion that consideration of the subject be deferred until the Program and Finance Committees have had opportunity to review the question further in the light of the ICSAB report.
259. The latest cost of living index figures available from the International Labour Office for Headquarters staff in the Professional category and above (CL 43/37 Supp. 115), as reviewed by the Finance Committee, showed that under the procedures adopted at the Thirty-Ninth Session of the Council a Class 4 post adjustment was payable as from 1 June 1964. The Council therefore concurred in the establishment of Rome as Class 4 for post adjustment purposes effective as of 1 June 1964 for entitled staff in the Professional category and above on the payroll on 30 September 1964.
260. The Council also noted that, in view of the continued upward trend in the cost of living in Rome, it was likely that a Class 5 post adjustment would become due on or about 1 April 1965.
15 Developments in post adjustments.
261. The Director-General had proposed to the Council, through the Finance Committee (CL 43/3716, and amendment to Staff Regulation 301.133 authorizing him to effect changes in the post adjustment classification at headquarters without the prior approval of the Council, subsequently reporting the changes and the proposed funding in respect thereof to the Forty-Fourth Session of the Council. The Council noted that the Finance Committee, whilst agreeing in principle with the proposed amendment (since changes in post adjustment classification are, for all practical purposes, mandatory), had, in the light of the general financial situation, deferred making a specific recommendation until a later session (CL 43/4117 and CL 43/4518).
262. At its Eleventh Session (May/June 1964) the Finance Committee considered with the Director-General the results of his study (of which the Council had taken note at its Forty-First Session in November 1963) on the practicability of introducing a wage index system (in lieu of the current cost-of-living system) for salary adjustments between comprehensive surveys of best prevailing rates for General Service staff in Rome. The Committee recommended that the Council approve the adoption of the Director-General's proposals (CL 43/41) which were the outcome of an intensive survey by a special working party.
263. The Council therefore concurred in the following action by the Director-General:
A wage index is to be established for effecting pensionable salary adjustments between the prescribed four-year comprehensive surveys of best prevailing rates for salaries of General Service staff in Rome.
Pending further experience and analysis, the index is to be based on a weighted average of the indices of “stipendi” for commerce and industry as published monthly by the Istituto Centrale di Statistica (the Central Statistical Institute of the Italian Government).
The pensionable salaries of the General Service staff between surveys are to be increased by five percent at the beginning of the month following the month in which the weighted average of the two indices shows an increase of five percent.
The basis of the applicable wage index for the General Service staff is to be adjusted as of the effective date of changes in the basic salary scale resulting from the next comprehensive survey of the General Service staff salaries in Rome.
Pending the implementation of the results of the next comprehensive wage survey, the Rome wage index will be established initially as of 1 January 1964 and will be calculated from the base of January 1964, the effective date of the latest revision of the Rome General Service salary schedule.
264. At its Thirty-Fifth Session in June 1961 the Council, in setting out the main elements of the procedure to be applied for the period 1 January 1962 through 31 December 1965 for Rome General Service salary scales, stated that “the next comprehensive local wage survey in Rome will be scheduled so as to provide recommendations for basic modifications in the General Service salary schedule effective with the Budget biennium beginning 1 January 1966…” It added, however, “that the Director-General should keep the situation under review and should be free to propose an earlier survey if, in his opinion, special circumstances resulting in difficulties should arise” (Report of Thirty-Fifth Session, page 77).
16 Developments in post adjustments
17 Reports of the Joint Session of the Program and Finance Committees, the Eighth
Session of the Program Committee and the Eleventh Session of the Finance Committee
18 Report of the Finance Committee, Twelfth Session
265. The Director-General reported to the Council, through the Finance Committee that a significant disparity had arisen between the actual trend of wages and the cost-of-living trend in the three-year period since the last comprehensive survey was conducted. In the light of these special circumstances he proposed that the comprehensive local wage survey in Rome be advanced so as to be completed as soon as possible and that the results of the survey be made applicable as of 1 January 1965. The Council concurred with this proposal as recommended by the Finance Committee, on the following basis:
A new basic Rome General Service salary schedule based on a comprehensive wage survey is to be put into effect as of 1 January 1965, instead of on 1 January 1966;
1 January 1965 will constitute the new date from which adjustments are to be measured on the basis of the wage index;
Following the normal cycle the next comprehensive wage survey is to be conducted in 1969, to be put into effect on 1 January 1970;
The comprehensive survey will investigate also the calculation and application of the current “minimum adequate budget” formula adopted by the Council in October 1960 to govern the determination of the nonresidence allowance.
266. The Council noted that the Finance Committee had arranged, in agreement with the Director-General, for one of its members, Mr. Louis Maire, to assume a general liaison and oversight responsibility on behalf of the Committee at key stages of the survey in order that it might be kept in close and continuing touch with the course of events so as to facilitate its later review of the results and recommendations emanating from the survey.
267. The Council noted, that under the wage index system, the pertinent official information available from the Italian Central Statistical Institute indicated (CL 43/37, Supp. 219) that the first 5 percent pensionable wage index adjustment in the Rome General Service basic salary rates was due as of 1 April 1964, and a second 5 percent adjustment was due as of 1 September 1964. The Council approved these payments to entitled staff on the payroll as of 30 September 1964.
268. The Council further noted that in the case of increases granted in 1964 under the wage index system, a strict application of the current formula would require a consequential reduction of the current equivalent of $150 (from $624 to $474) in the existing Rome nonresidence allowance payable to nonlocal General Service staff, effective as of 1 November 1964. Since, however, the comprehensive wage survey currently under way would result not only in recommendations for revision of the basic salary rates for Rome General Service staff as of 1 January 1965 but also in a reassessment of the so-called “minimum adequate budget” which determines the amount of the nonresidence allowance, the Council agreed with the Director-General's proposal, as concurred in by the Finance Committee (CL 43/45), that for November and December of 1964 the nonresidence allowance for Rome should be established at the current equivalent of $574.
269. The Council also agreed with the Director-General's proposals, as concurred in by the Finance Committee, that the implementation of the findings of the advanced comprehensive local wage survey should be effected as soon as feasible. In view of the significant disparity that now appeared to exist between FAO General Service salaries and prevailing local wages in Rome, the Council approved, as an equitable interim solution of the problem a provisional 10 percent increase as of 1 January 1965 (in addition to the increases resulting from the application of the wage index system in 1964), as well as an appropriate interim adjustment in the nonresidence allowance from $574 to the current equivalent of $424. The result of these adjustments represents as of 1 January 1965 an over-all adjustment of the base of the General Service salary scale of approximately 21.3 percent as against the rates prevailing on 1 January 1964.
19 Developments in Rome General Service remuneration
270. At its Forty-Fourth Session the Council would have before it the findings of the comprehensive wage survey and the resulting new General Service salary scale, which was to come into effect retroactively as at 1 January 1965 for staff on the payroll on 1 July 1965, together with the recommendations of the Finance Committee, for consideration and approval.
271. The Council noted that the Finance Committee, in line with its action on the proposal for a like arrangement in respect of post adjustments had deferred until a later session its consideration of the proposal to grant the Director-General authority, without prior authorization by the Council, to introduce automatically changes in local salary scales as indicated by the wage index.
272. The cost of the changes in post adjustment for headquarters staff in the professional category and above and of adjustments in the salaries of the General Service staff in Rome for the remainder of the 1964/65 biennium have been taken into account in the Council's recommendations regarding their financial implications as set out in paragraphs 219 to 224.
273. The Council noted with satisfaction that the new wing, Building C, was virtually completed and was now largely occupied.
274. The Council reviewed the Director-General's proposals (document CL 43/3820) regarding the construction of a temporary, prefabricated structure in the interior courtyard of the Headquarters compound in view of the continuing necessity to rent less efficient outside premises at high cost. The relevant report of the Finance Committee (document CL 43/45) indicated that no budgetary implications were foreseen, since construction costs of approximately $300,000 would be met within five years from savings on present rental and related charges. The Council noted that the appropriate ministries of the Italian Government had found no objection to the proposed construction and that it was envisaged that the building could be completed by mid-1965. On the basis of these considerations, the Council authorized the Director-General to proceed with the construction.
275. The Council reiterated the concern which it had expressed on previous occasions regarding the lack of progress in reaching agreement with the Italian authorities in the matter of adjustment of the boundaries of the Headquarters site. The Council therefore once again appealed to the Italian Government for early and favorable action.
276. The Council noted that the Finance Committee had again reviewed the question of the propriety and level of charges imposed by FAO against Trust Funds for Associate Experts to cover operational and administrative costs, and reiterated its previous recommendation that the charges should stand at the current rate of 12 percent of the funds made available.
277. The Council adopted the Finance Committee's recommendation.
278. The Expert Group which carried out a comprehensive review of the United Nations Joint Staff Pension Fund in 1960 concluded that pensions should be based on “gross” salaries in order to remove the anomaly that the pensions of retired staff members or their surviving dependents are taxable, whereas the salaries from which they are derived are on a lower “net” basis, i.e. free of national income taxes. Since, at that time only the United Nations and the International Civil Aviation Organization maintained a gross salary system, the Expert Group concluded that the best that could then be done was to make an appreciable movement toward the gross basis, leaving the complete achievement of a full gross basis until such time as the gross salary system would be more of a reality.
279. The Expert Group therefore recommended, and the General Assembly of the United Nations approved, that pensionable remuneration should be established for the time being at the midpoint between the net salary and the then prevailing United Nations gross salary.
280. The Joint Staff Pension Board at its July 1964 meeting noted that all except two of the smaller Organizations had now adopted the gross salary system and a staff assessment plan. The Board concluded that the conditions suggested by the Pension Review Group had been sufficiently met to justify the adoption of the full gross basis from 1 January 1965, with retroactive effect, i.e., that all past service of serving staff and present pensioners should be treated as if it had been pensionable on full gross salaries at the relevant time. This recommendation required the approval of the United Nations General Assembly, which, it was expected, would act on it at its Nineteenth Session (1964).
281. The Council noted that the cost of effecting this change retroactively would be absorbed by the actuarial reserves of the Pension Fund. For the future, the contributions to the Pension Fund, amounting to 21 percent of pensionable remuneration, would be based on gross salaries instead of half gross. Of these contributions staff members pay one third and the Organizations two thirds. The additional cost to the FAO budget in 1965 was estimated to be $170,000.
282. The Council approved the proposal of the Director-General, as recommended by the Finance Committee, to introduce the change, provided that it was adopted by the United Nations General Assembly, and with the same effective date as in the United Nations.
283. Appropriate budgetary provision would be included in the 1966/67 Budget.
284. In respect of the 1965 costs, the Council agreed with the Director-General that, in view of the necessity of absorbing within the current biennium substantial amounts of unforeseen and unbudgeted expenditure, no additional burden could be borne by the 1964–65 Budget. Since the current estimate of Miscellaneous Income for 1964–65 substantially exceeded the budgeted level, the Council agreed that a part of this excess could be used for financing the 1965 costs of the increased Pension Fund contributions. Only the Conference can approve the use of excess Miscellaneous Income for this purpose. The Council therefore agreed with the Director-General's proposed method of funding, as recommended by the Finance Committee, authorizing the withdrawal of the amount of $170,000 from the Working Capital Fund and recommending to the Conference that the withdrawal be replaced from the excess Miscellaneous Income.
285. The Council therefore adopted the following resolution:
Resolution No. 7/43
FINANCING OF INCREASED PENSION FUND CONTRIBUTIONS
THE COUNCIL
Noting that the United Nations Joint Staff Pension Board has recommended to the General Assembly that pensionable remuneration should be calculated on the basis of gross salaries as from 1 January 1965,
Noting that if the General Assembly adopts the recommendation, the amount required by the Organization to cover the increased Pension Fund contributions in 1965 is estimated at $170,000,
Authorizes the Director-General, in the event of the adoption of the recommendation by the General Assembly, to withdraw the amount of $170,000 from the Working Capital Fund to finance this unexpected emergency expenditure in accordance with Financial Regulation 6.2(a) (ii).
286. The Council also submitted the following draft resolution for consideration by the Thirteenth Session of the Conference.
Resolution No.
REIMBURSEMENT OF WORKING CAPITAL FUND
THE CONFERENCE
Noting that the Forty-Third Session of the Council authorized the withdrawal from the Working Capital Fund of an amount of $170,000 to meet the unbudgeted expenditure resulting from the change in the basis of pensionable remuneration as adopted by the United Nations General Assembly (Resolution No.),
Noting that in accordance with Financial Regulation 6.5(b) advances made from the Working Capital Fund shall be reimbursed by such method as the Conference determines,
Further Noting that Miscellaneous Income in 1964/65 is expected to substantially exceed the original estimate,
Decides that notwithstanding the provisions of Financial Regulation 6.1(b) the amount of $170,000 from the excess Miscellaneous Income of 1964/65 shall be used to reimburse the Working Capital Fund for the abovementioned withdrawal.
287. The Council at its Forty-First Session approved the amendment of Staff Regulation 301.16, abolishing the service benefit and modifying the provisions covering the payment of the repatriation grant, to be effective from 1 January 1964. Subsequently, in implementing the revised provisions it was noted that the following minor editorial amendments also appeared warranted, and the Council accordingly approves the amendment of the Staff Regulations as indicated:
In Staff Regulation 301.162 the parenthetical expression “(exclusive of periods when an expatriation allowance was received)” no longer applies and should be deleted
The heading of the first column of the table under Staff Regulation 301.162 should be modified to delete the word in brackets, as follows: “Years of [continuous] service away from home country,”
In Staff Regulation 301.094, the bracketed portion should be deleted as shown below:
“The Director-General shall establish a scheme for the payment of repatriation grants [and service benefits] within the maximum dates and under the conditions specified in Annex IV to these regulations.”
