Brussels remuneration report

Brussels remuneration report 2010/2011

Ellwood Atfield Ltd, 34 Smith Square, Westminster, London SW1P 3HL / T: +44 (0)20 7340 6480 Ellwood Atfield SPRL, 41 Rue de Naples, Brussels B1050, Belgium / T: +32 (0)2 503 57 34 E: hello@ellwoodatfield.com / W: ellwoodatfield.com / @ellwoodatfield / ellwoodatfield

1 Contents Opening statement by Ben Atfield 2 About Ellwood Atfield 3 Introduction & Methodology 4 Summary of 2010 remuneration survey 5 Notes on Remuneration 6 Related Costs and Expenses 7 Public Affairs & Communications Consultancies 8 NGOs 9 Business 10 Trade Associations 11 EU Institutions 12 Parliament Compensation 13 European Commission 14 Appendix 16

2 Welcome We are delighted to present our Brussels Remuneration Report detailing the salary and related costs of those working in the public policy capital of the EU. To our friends in London, Washington, Tokyo, and across the capitals of Europe, we hope this Brussels Remuneration Report is a first step in providing you with the information you have so often asked us for. It is intended as an overview of the labour costs involved in pursuing public policy and communications work in Brussels. However we also hope that those living and working in Brussels will find points of interest. In the past Brussels may have been seen as a place where corporate executives went to pasture at the end of their careers. But no longer. With up to 80% of legislation in certain policy areas emanating from Brussels and an expanded EU of 27 countries, most interest groups are scaling up their representation in the capital of Europe. It is estimated that there are more than 15,000 lobbyists and 2,500 lobbying organisations in Brussels, so the city offers exciting careers for communications and public affairs professionals and much more besides. Ben Atfield Indeed the magazine International Living rates Belgium as the World s 8th Best Place to live in. Recently it wrote about Brussels: - A dreary place of Mark Dober paper-shuffling bureaucrats? Not at all. Ringed with parks, it s Europe s greenest capital. Along with many international schools, it delivers all an expat could desire: theatre, English-language cinema, sports centers, great public transport, Trappist-brewed beers, numerous gourmet and ethnic restaurants, and fast trains to London, Paris, and Amsterdam. A city with such a unique and pivotal position in the formulation of public policy and opinion needs a recruitment partner that is dedicated to its specific character. Ellwood Atfield is the first Brussels based search and selection firm dedicated to public policy and corporate communications recruitment. As part of our ongoing commitment to providing interesting and useful insights into the Brussels policy and communications community we will be producing reports on various subjects. Our next publication will be Key success factors for European trade associations a report based on interviews with many of the leading Directors and Secretary Generals based in Brussels. We are of course pleased to assist with any bespoke research as required. We would like to thank the many people who have provided information and helped with this report. In particular we would like to thank Christopher Thubron and Olivier Grenson of Moore Stephens for kindly assisting with some of the data. Lastly, we are delighted to thank Mark Dober, for reviewing this report and accepting our offer to join the board of Ellwood Atfield, Brussels.

3 About Ellwood Atfield EA is the specialist Public Affairs and Communications Search and Selection firm and the first to have a dedicated office in Brussels. We are therefore uniquely placed to help companies and associations from EU member states and around the world. We recruit experts who help engage and shape European debate and policy. We are also the leading practice in London. Our specialisation is our strength. It provides us with in-depth knowledge of the sector and its trends. Mark Dober is the Managing Director of EA Brussels. He has over 20 years of experience in the practice of public affairs and public relations. He has been twice voted European Consultant of the Year by Jury for Public Affairs News, and also by members of The European Public Affairs Directory. He was APCO Worldwide s first employee in Europe and set up APCO s Brussels office in 1995, acting as Managing Director in various roles until September 2010 which involved recruiting many key positions around Europe. He speaks English, French, Spanish and Portuguese. We can assist organisations to recruit at a mid to senior level, including: Association Leaders Public Affairs Public Policy Corporate Communications Media Relations specialists Interim cover (Maternity leave etc) We can also assist organisations: Set up new offices Identify an appropriate PA Consultancy Bespoke research Benchmarking services Career coaching We can also help advise individuals who are interested in relocating to or from Brussels or looking for general career advice. EA is proud to be a member of the European Centre for Public Affairs.

4 Introduction & Methodology On each assignment we advise our clients as to the market norm on compensation. We can also provide them with a competitor analysis in order to set the right level of package for successfully hiring individuals into their organisations. From our experience we are aware of the lack of publicly available, accurate information to help employers understand the costs involved in employing Public Policy and Communications experts in Brussels. This report is intended to help individuals and organisations that invest in Public Policy work (in its broadest sense) in Brussels benchmark and compare costs in related sectors. We have focused on the compensation of those working at a mid to senior level, which is where EA s market knowledge is strongest. We have also identified related issues of compensation and employment cost, such as tax issues and consultancy costs. For further information please contact EA s Mark Dober. Methodology During the first half of 2010 telephone interviews were conducted with close to 200 people representing a cross-section of mid to senior level individuals working in Brussels. These interviews gave us accurate compensation details and we thank all those who took part. In addition to our interviews, EA drew upon its extensive market knowledge (a database of 8,000 individuals within Public Affairs and Corporate Communications in Europe) and insights gained during many search assignments, cross-referencing certain details with local HR Directors. Information relating to compensation for EU institutions has been taken from various public sources. However as it can be complex we have simplified and aggregated some information. The report covers five areas: Public Affairs / Communications Consultancies NGOs (e.g. charitable or Campaigning groups) Business In-House Trade Associations EU Institutions

5 Summary of 2010 Remuneration Survey Summary Running consultancies and trade associations are some of the most lucrative jobs in European Public Affairs. In companies, salaries are often higher for public affairs professionals compared to their colleagues in communication functions. EU officials are well paid when all their perks including low tax and generous pensions are taken into account but many have crossed over to the private sector in recent years. NGO staff have the lowest pay even though their organizations are often funded heavily by the EU. Taxes are high for many salaried employees in Belgium, but attractive tax structures like expat status and being self-employed can lower the burden considerably. Typical job title and salary band Consultancies Associate Director 70,000-120,000 Director 90,000-180,000 Managing Director 180,000-400,000 NGOs Policy Director 50,000-100,000 Director of Communications 50,000-100,000 Director/Head of Office 60,000-120,000 + Business Director 125,000-150,000 European Head of Communications 100,000-260,000 European Head of Public Affairs 140,000-400,000 + Trade Associations Manager 70,000-100,000 Director of Public Affairs or Communications 90,000-220,000 Secretary-General 150,000-400,000 + EU Institutions MEP 126,000 +/- AD16 Director-General 200,000-217,000 Commissioner or President 240,000-300,000

6 Notes on Remuneration in Brussels If you currently work in Brussels, many of the points included in this section will be familiar. However in our experience many organisations looking to recruit for the first time are unaware of some of the options and complexities of an individual s total remuneration. Tax Apart from some fortunate EU officials who pay as little as 8%, taxes are very high in Belgium, ranking third in the world on Forbes 2010 Tax Misery Index after France and China. The OECD also confirmed once again that Belgium has one of the highest tax burdens in Europe amounting to 57.3% for a single earner if social security is included. This compares to an average 44.5% in Europe. Most senior individuals tax categories are either as Salaried Employees or as Independents whether as directors of the organization or self-employed (often through a Private Limited Company or SPRL). The standard salaried status is the most common and heavily taxed form of employment, although it offers employees the best social protection. Independent director and self-employed status can allow for significant social charge savings. For foreigners moving to Belgium there is also a special tax regime for expats which can be very advantageous with beneficiaries receiving tax free days for time outside Belgium and many useful tax deductions. For certain high flying expats, Belgium can actually be better than some nearby tax jurisdictions such as the UK. Salaries Salaries are usually expressed in annual amounts but paid in 13.92 instalments (12 regular monthly payments and two additional payments in May and December). This is critical, as confusion can often arise on both sides of the hiring desk. Clarification on monthly salary expectation is essential to avoid surprises, e.g. is a candidate s gross salary of 10,000 per month equivalent to 139,200 annually, or is that employer s offer of 120,000 actually a monthly gross of 8,600, not 10,000? Benefits A wide range of benefits are commonplace. One of the most common and tax-efficient benefits is a company car, even at junior levels. Most senior individuals also value their lunch vouchers, petrol cards and subsidised dental plans. This can sometimes come as a surprise to hiring executives familiar with tax jurisdictions where such benefits are unusual or hold no tax advantages. Redundancy Unlike countries such as the UK where there are sensitivities over unfair dismissal, an employer may fire an employee on any grounds, as long as the grounds are not prohibited by law such as discrimination. No reason for the dismissal or legal approval is needed. This gives employers a high degree of flexibility. However, it comes at a price for staff on salaried employee status and there can be high redundancy payments often amounting to 6 months of salary for even short periods of employment, and exceeding 1 month per year for longer employment periods under the so-called Claeys formula (widely used to calculate redundancy payments). Net & Gross reference table: See Appendices for estimations of Employees Net take-home and Employers Gross costs.

7 Related Costs and Expenses For executives relocating/seconded to Brussels, the following should be taken into consideration as potentially additional costs. Education Overall, the Belgian education system is of a very high standard. The choice is broad for parents willing to integrate their children into local schools (a straightforward choice for Dutch and French speakers). Moreover, several local schools offer facilities for tuition in English, costing 2,000-5,000 per annum. There are also a wide variety of excellent private international schools (French, German, American, British, Swedish ) at the top end of the price scale. Expect to pay 20,000-30,000 depending on the age of the child. These benefits are tax deductible for certain non-belgian organisations. Accommodation Is cheaper in Brussels than many EU capitals but location and quality still costs. High-quality, centrally-located apartments cost from around 1,500 per month to rent. A good family house in an appropriate suburb may cost between 2,500 and 3,000 per month. If entertainment of senior visiting executives or receptions for the EU leadership are anticipated, costs rise to 4,000-5,000 +

8 Public Affairs & Communications Consultancies According to a recent report by ALTER-EU there are 328 public affairs consultancies operating in Brussels, although only 163 are listed on the Commission s register*. In addition there are many consultancies focusing on the international PR market, and communication contracts with the European Commission which can be worth many millions of Euros. There are also many Belgian agencies targeting their national market where budgets and salaries tend to be significantly lower. Pay rates between different consultancies on a like-for-like basis are relatively similar. The recent recession has seen a downward pressure on many consultancies and this has meant that pay for many has been frozen. Bonuses usually make up only a limited part of total remuneration and have been substantially reduced because of the downturn. There is a shortage of talented individuals at the top level of consultancies in Brussels. This represents an interesting opportunity for individuals who would consider relocating from other EU capitals to Brussels. Consultancies usually charge hourly. Client billing rates typically vary for mid to senior individuals from 200 to over 500 per hour, with slightly lower rates at local boutique firms. Rates have stayed fairly stable over the last three years despite the market becoming more competitive with many new consultancies starting up. Level of Salary (Gross) Typical related benefits Approximate total Seniority cost to employer Associate Director 70,000-100,000 as employee 120,000 as SPRL Car, private health insurance, pension, phone 100,000-155,000 as employee 120,000 as SPRL Director 90,000-140,000 as employee 140,000-180,000 as SPRL Car, private health insurance, pension, phone, bonus, SPRL status 185,000-220,000 as employee 140,000-180,000 as SPRL Managing Director 180,000-250,000 as employee 300,000-400,000+SPRL etc Car, private health insurance, pension, phone, bonus, SPRL status 280,000-380,000 as employee 300,000-400,000 as SPRL Note: Most frequently seen in the Consultancy world, the SPRL ( Société Privée à Responsabilité Limitée or Private Limited Company ) can be considered a one-person management company, through which the individual invoices monthly for the work they perform, rather than receiving a paycheque. This arrangement can have a positive effect on both net pay and on lowering the associated costs for the employer, but can have a substantial impact on them and their employer s legal rights and indeed tax risks. The individual invoicing via an SPRL is responsible for all their own taxes and social security costs (in addition to their own car, health insurance and pension) which are built into their fee there is therefore no difference for the company between the gross payment and total cost of employment. *Figures correct at time of publication.

9 NGOs The large variety of Non-Governmental Organisations in Brussels include not only the major international civil society campaigning groups, but also religious and country-centric organisations. If they are the operation of a foreign-based association their legal identity will usually be an AISBL ( association internationale sans but lucratif, international not-for-profit association). As most of their funding comes from donations or grants, compensation is substantially lower than in commercial organisations. Remuneration at Think Tanks is usually comparable with NGOs. However, as they are often led by academics, seconded or semi-retired individuals, leadership compensation varies widely. Brussels also has NGOs that are directly, partly or indirectly funded by EU institutions (such as the Progress Programme) and this sometimes affects the remuneration available for senior staff. The figures below refer to NGOs that are part of international based franchises. The size of a particular office can have an impact on the remuneration within this sector. Level of Seniority Salary (Gross) Typical related benefits Approximate total cost to employer Director Policy (Other) 50,000-100,000 Pension, health insurance, meal vouchers, no car 70,000-140,000 Director Communications / Campaigns Director (Leader) / Head of Office 50,000-100,000 Pension, health insurance, meal vouchers, no car 60,000-120,000 + Pension, health insurance, meal vouchers, no car 70,000-140,000 88,000-170,000 Note: The norm is that people working in NGOs are salaried employees and on local contracts. However some NGOs do have senior staff who operate as independents. Due to the length of service or exceptional circumstances some will earn over 100,000 but this is rare. Some NGOs that have direct or indirect commercial backing will pay higher than the figures indicated above. For example AISBLs which receive large grants from business or an institute that is pursuing some form of philanthropy may pay salaries substantially above the rates indicated above, even when compared to some commercial organisations.

10 Business (Corporate In-house) Many international companies have a local sales office targeting the Belgian market, but some have gone even further and set-up global centres of excellence, such as GSK with their global vaccines division based in Rixensart. Furthermore, there are many European HQs of US and Japanese multinationals such as Exxon Mobil and Toyota, based in and around Brussels. Increasingly, multinationals have set-up Brussels offices to represent their interests to the EU. There are currently over 400 corporations listed on the EU Register of Interest Representatives; however, this figure represents only a fraction of the total number of commercial organisations with dedicated EU Public Affairs employees. Some companies maintain dedicated staffed offices in Brussels, while others are based in nearby European HQs and fly in for important meetings. Total packages in businesses are often higher than those available in consultancies. There is also a constant drawing of talent from consultancies and associations into in-house positions. Level of Seniority Salary (Gross) Typical related benefits Approximate total cost to employer* Manager 70,000-90,000 Car, phone, pension, healthcare insurance 110,000-155,000 Director 125,000-150,000 + Bonus (circa 20%) Car, phone, pension, healthcare insurance 185,000-235,000 European Head of Communications 100,000-260,000 + Bonus (circa 30% - 40%) Car, phone, pension, healthcare insurance 175,000-400,000 European Head of Public Affairs 140,000-400,000 + Bonus (circa 30% - 40%) Car, phone, pension, healthcare insurance 280,000-600,000 Note: In-house practitioners are almost always full-time employees of their respective organisations. 1. Due to the recession, salaries have stayed fairly constant over the last two years. However bonuses (often 15% to 40% + of gross remuneration) have been substantially reduced across the board and some industry sectors have not paid bonuses at all. 2. A main differentiator for Brussels-based In-house public affairs remuneration stems from the size of their geographical remit and size of team. A Director of Public Affairs may cover only EU Institutions or all EU countries, some will have an EMEA remit. Remuneration is affected accordingly. 3. Individuals who are posted to Brussels by large organisations will frequently be on expat status, which will vary according to the domicile of their parent company and therefore has not been a substantive part of this report.

11 Trade Associations Most Brussels lobbyists are employed by trade associations. One estimate puts about 10,000 lobbyists working in EU Trade Associations at the EU level and another 1,000-2,000 in National Trade Assoications in Brussels. While some of these groups have only a few staff in Brussels, this category includes major associations such the European Chemical Industry Council (CEFIC) which employs about 170 staff. Broadly speaking trade associations consist of four distinct groups: National Trade Associations EU / Global Federations (representing the collective interests of National Trade associations) Professional Associations Coalitions (that can be a mix of Commercial, Trade and NGO organisations). Some may be very technically focused on specific standards, others responsible for overtly political agendas. There are significant differences in the remuneration of Trade Association Leaders depending on their financial, industry and membership base. There can also be a substantial gap between the remuneration of a Director General of an association and their first line management. Level of Seniority Salary (Gross) Typical related benefits Approximate total cost to employer Manager 70,000-100,000 Pension, healthcare 110,000-140,000 Director of Public Affairs or Communications Director or Secretary General 90,000-220,000 Car, phone, pension, healthcare 130,000-310,000 150,000-400,000+ Car, phone, pension, healthcare 280,000-600,000 Note: There are three major reasons for the variables between different Brussels-based CEO and DG pay levels; 1. A senior executive seconded from a major commercial sector may have simply carried with them a salary level from their previous employer 2. The size of association they represent, as determined by the numbers of members, the number of staff employed in Brussels office or by the wealth of the sector they represent 3. The tax arrangements they are employed under

12 EU Institutions The EU Institutions employ 40,000 women and men under many different contracts as permanent officials, temporary agents, trainees and seconded national experts. Permanent officials are selected by open competitions organised by the European Personnel Selection Office (EPSO). While there are EU officials scattered in agencies and representations around Europe, and even the world, the majority are employed in Brussels by the European Commission, European Parliament, Council, Economic and Social Committee and the Committee of the Regions. There continues to be controversy over EU salary conditions. German tabloids have recently reported a 5.35% pay rise in 2010 despite the financial crisis, and the UK press have pointed out there are now 313 Commission directors who earn more than the UK Prime Minister, David Cameron. However it is not just senior posts that enjoy attractive salaries, The Daily Telegraph recently reported that there are 19 European Parliament assistants, or researchers to MEPs, who earn over 90,000 a year. Indeed, there are many advantages to working in the EU institutions including low taxation and generous pension schemes with an average retirement age of 60. Hence, it is difficult to make direct comparisons between employees under Belgian contracts and EU officials. With such attractive working conditions it is not surprising that many in the private or NGO sector consider applying for EU positions. However, there is increasingly movement from the EU institutions to the private sector, particularly when temporary posts finish or elected officials reach the end of their mandate. For instance, some seven Commissioners from the former EU Commission have joined private firms, as well as many Members of the European Parliament who lost their seats in the 2009 elections. Such moves have increased Brussels reputation for having a culture of revolving doors in which officials move directly to private sector jobs related to areas they were responsible for regulating. We discuss here conditions for the three largest Brussels institutions, the European Commission, Parliament and Council. Also, the reader will find it interesting to compare the salaries of the most senior elected and unelected representatives in the EU institutions.

13 Parliament Compensation The European Parliament has three main locations; Brussels (Belgium), Luxembourg and Strasbourg (France). The European Parliament employs about 6,000 officials and other staff from the EU Member States. The European Parliament consists of 736 Members elected in the 27 Member States of the European Union for a five year mandate. In addition to basic pay MEPs receive various allowances. This is often a hotly debated subject and there is scope for one MEP to ultimately earn substantially more or less than a colleague depending on what allowance they choose to use, their length of service and country of origin. MEP Monthly Salaries are based on 38.5% of a European Court Judges salary* Gross 7,665.31 Net 5,963.33 (post-tax, accident insurance) Net Annual 71,559.96 Staffing (maximum expenditure) 17,540 per month General expenditure 4,202 per month Additional Subsistence 298 for each day of attendance at official meetings Subsistence for external official meetings 149 per day As a rough guide net annual basic pay + maximum general expenditure annually + maximum annual travel allowance = 126,131.96 pa (This does not include further travel refunds or salaries for staff). *Some countries pay 13 or 14 months per year rather than twelve, (Those paid 13 months per year: Luxembourg, Malta, Czech Republic; Those paid 14 months per year: Austria, Greece, Portugal, Spain).

14 European Commission There are approximately 26,000 people employed by the European Commission, of which about 24,000 are located in Belgium. The basic salaries of the Commission s leadership are now publically available. However they also receive additional substantial allowances. President 24,874 per month Vice President 22,531 per month High Representative 23,432 per month Commissioner 20,278 per month Residence allowance 15% of salary Council The Council has around 3,500 permanent posts. The President of the European Council enjoys the same employment conditions as the President of the Commission, with a basic salary of 138% of the highest civil service grade, in other words 24,874.62 per month (not including family and other allowances). Pay grades for Council officials are identical to those for Commission Officials.

15 European Commission Civil Servants Policy makers are divided into a set of grades: from AD5 (the most junior administrator grade) to AD 16 Director-General). Grade 1-4 are assistant roles. Graduate jobs begin at grade AD5 - to start at grade AD6 or 7, a degree and at least one year s relevant work experience are required. Many specialist jobs at these grades (for example a lawyer linguist) require at least three years professional experience and a degree in a specific relevant subject. For grades 9-14 (Unit Heads or Mid-management), 10-15 years experience is generally required, meaning that officials can typically reach this level by the age of 40. While there is one recorded instance of a Director General who started at the lowest level, to progress through all the grades rise could theoretically take 30-35 years, rendering it very difficult for those who enter the commission in their 30 s. In practice there are a series of pistons and parachutes which accelerate the process. Highest grade AD16 16,600pm - 18,025pm Lowest Administrator (graduate) grade AD5 4,267pm - 4,828pm Unit Head/Management eg grade AD12 10,129-11,461 Allowances Vary widely depending on position. E.g. expat: 16% of salary, household & child allowance if working outside their home country Pension 8.25% of basic salary

16 Appendix One For more information on Commissioner & MEP pay: http://ec.europa.eu/civil_service/docs/salary_officials_en.pdf Two - Reference Table: Employer Cost, Employee Gross to Net The following table shows the differences between the costs to employer and net pay to employees under a standard Belgian salaried employee status. As noted earlier in this report, social charges and the overall cost can be considerably lower for the employer under independent director or self-employed status. Individuals can also gain higher net salaries through these tax regimes, and as expatriates. Employer cost: 132,425 158,910 185,395 211,880 238,366 264,851 Gross remuneration: 100,000 120,000 140,000 60,000 180,000 200,000 Net remuneration: 47,826 55,917 64,008 72,098 80,189 88,279 % Net/Total cost 36.12% 35.19% 34.52% 34.03% 33.64% 33.33% Employer cost: 291,336 317,821 344,306 370,791 397,276 430,382 Gross remuneration: 220,000 240,000 260,000 280,000 300,000 325,000 Net remuneration: 96,370 104,461 112,551 120,642 128,732 138,846 % Net/Total cost 33.08% 32.87% 32.69% 32.54% 32.40% 32.26% Employer cost: 463,489 529,701 595,914 662,126 728,339 794,552 Gross remuneration: 350,000 400,000 450,000 500,000 550,000 600,000 Net remuneration: 148,959 169,185 189,412 209,638 229,865 250,092 % Net/Total cost 32.14% 31.94% 31.79% 31.66% 31.56% 31.48% Assumptions: Single, no dependent child Employee status Belgian social security scheme applicable 2009 Belgian tax rates applicable

Ellwood Atfield Ltd, 34 Smith Square, Westminster, London, SW1P 3HL / T: +44 (0)20 7340 6480 Ellwood Atfield SPRL, 41 Rue de Naples, Brussels B1050, Belgium / T: +32 (0)2 503 57 34 E: hello@ellwoodatfield.com / W: ellwoodatfield.com / @ellwoodatfield / ellwoodatfield