Correction coefficients in the European Union (Countries) - index (Belgium = 100) methods, notes and classification

DATA_DESCR Correction coefficients are used to ensure equality of purchasing power of salaries and pensions of, respectively, EU officials and pensioners in the different duty stations and countries. According to Annex XI of the Staff Regulations the adjustment of salaries and pensions of EU officials and pensioners is determined by the following factors: changes in the purchasing power of salaries of national civil servants in central government (Specific Indicator); changes in the cost of living in Brussels (Brussels International Index); for officials: economic parities between Brussels and the other duty stations in the Member States (Correction Coefficients for officials); for pensioners: economic parities between Belgium and the Member States (Correction Coefficients for pensioners). The aim of the economic parities is to compare the relative costs of living of: European institution officials in Brussels (reference city) and in each of the capitals and other duty stations where EU staff are serving. EU pensioners in Belgium (reference country) and in each of the other Member States. The ratio between the economic parity and the exchange rate (where applicable) used to pay the remuneration is called a correction coefficient. It operates as a percentage adjustment to salaries to take account of the cost differences between Brussels and the duty stations. As, according to the Staff Regulations, no correction coefficient is applicable to Luxembourg, no estimation of that figure is made. National Statistical Institutes (NSIs) and Eurostat are responsible for data collection. Eurostat, in cooperation with NSIs, .is responsible for the CC estimations.

CLASS_SYSTEM The overall list of products and services priced contains about 3000 items. The items are classified according to the classification system COICOP. COICOP (Classification of Individual COnsumption by Purpose) has been adopted as a national accounts classification for consumer expenditure applying to all national accounts as from 1999. According to COICOP, all products and services are first broken down into 12 main groups: (1) Food and non-alcoholic beverages (2) Alcoholic beverages and tobacco (3) Clothing and footwear (4) Housing, water, electricity, gas and other fuels (5) Furnishings, household equipment and maintenance of house (6) Health (7) Transport (8) Communication (9) Recreation and culture (10) Education (11) Hotels, cafes and restaurants (12) Miscellaneous goods and services Each of the 12 groups is then broken down into sub-groups, which in turn are further broken down into more detailed groups. This operation continues until reaching the most detailed level for which elementary parities are calculated. This level is called "basic heading". An exhaustive classification regarding CCs comprises 80 basic headings. The basic headings have a dual role: Firstly, they constitute the most detailed level for which realistic expenditure data (weights) can be obtained by the Family Budget Surveys regularly conducted among the staff serving in the various EU duty stations and among pensioners. Secondly, they serve as reasonably homogeneous pools of products, which can be used for price surveys.

STAT_CONC_DEF The ratio between the economic parity and the exchange rate (where applicable) is called a correction coefficient. It operates as a percentage adjustment to salaries and pensions to take account of the cost differences between Brussels and the duty stations (staff) or between Belgium and the country of residence (pensioners). The method used is to compare the price of a basket of goods and services purchased by the average official (or pensioner) in Brussels (or Belgium) with the price of the equivalent basket in each of the other duty stations (or country). For this purpose, National Statistical Institutes (NSI) in co-operation with Eurostat carry out a number of price surveys, in the frame of the European Comparison Programme (ECP). Since the collection of prices is time-consuming and expensive, the pricing of the full list of products is spread over a 3-year period with two surveys each year covering a broad category. Housing costs are treated differently from other prices mainly for two reasons: a) They are the largest single item of expenditure (at least 20-25% of total spending). b) Housing is different from any other type of good or service because of its uniqueness. No two dwellings are alike, especially when one takes account of all the secondary attributes which affect the price, such as the quality of the district, access to shops, transport, schools and so on. To cope with those problems, Eurostat, in cooperation with the National Statistical Institutes, conducts housing surveys every year. The dwellings analysed in the surveys are similar to the dwellings used by EU officials. The total range of goods and services constituting the consumption of the average EU official (pensioner) are grouped into 80 basic headings for which a price ratio between Brussels and the duty station is calculated; for pensioners a ratio between Belgium and the country of residence is estimated. The average of all the price ratios is called "economic parity" or Purchasing Power Parity (PPP). The calculation of the overall economic parities, used for salary or pension adjustment in duty stations or countries other than Brussels and Luxembourg, is based on the consumption weighted aggregation of 80 elementary parities. For each place, the weights are estimated for each of the 80 basic headings and are expressed as percentages of total expenditure, according to their relative importance in the consumption basket. The weights normally reflect the expenditure pattern of the average EC official or pensioner in each duty station or country. To estimate expenditure patterns for EC officials, Eurostat carries out Family Budget Surveys (FBS), among the staff serving at that time in a duty station, every five to seven years. The average result is established as the consumption pattern of the duty station until the next survey. The purpose of these FBS is to determine the relative amounts of expenditure on different items of consumption. Similar surveys are periodically carried out among pensioners as well

STAT_UNIT Shops and firms for prices. EU officials or pensioners for consumption habits.

STAT_POP The full market for prices of goods and services All the EU officials or pensioners for consumption habits

REF_AREA Correction coefficients for staff: all capitals of the Member States (except in Netherlands where The Hague, instead of Amsterdam, is being used since 2004) and other duty stations. Correction coefficients for pensioners: All Member States except Luxembourg. No correction coefficient is estimated for Luxembourg as, according to the Staff Regulations, it is equal to 100%.

BASE_PER Not applicable.

UNIT_MEASURE n.a.

• • Unit of measure
  • Classification of individual consumption by purpose (COICOP)
  • Geopolitical entity (reporting)