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Staff remuneration policy decisions by the Board of Directors of Banco de Portugal

1. The Board of Directors of Banco de Portugal recently took decisions on staff remuneration policy, the nature and content of which have now been released.

2. However, it is important to understand the context of these decisions and Banco de Portugal’s nature and activity as a national central bank of the Eurosystem.

a) As a result of the Treaty on the Functioning of the European Union, with the consequences defined in the Opinion of the ECB of 12 November 2010, Banco de Portugal has statutory financial and administrative independence and autonomy.

b) Banco de Portugal staff are covered by the collective bargaining agreements in force, namely the company agreements and the banking industry’s Collective Bargaining Agreements, and not by public administration labour regulations.

c) Banco de Portugal funds its legal obligations, its operating costs and, of course, its staff remuneration through financing arising exclusively from its own activity as a central bank and not from State Budget funding.

3. In this context, the Board of Directors decided to adopt salary containment measures in 2011 which had the same effect as those defined in the 2011 State Budget Law. The Board has decided to continue that policy in 2012.

4. Thus, although Banco de Portugal has taken on more tasks, such as those relating to the financial assistance programme for Portugal, and new functions, specifically in supervision, the Board has decided the following:

i.To confirm the reductions already applied in 2011 to specific personnel earnings items
ii. To extend the containment policy, through additional reductions to other personnel expense items
iii. To adopt a policy to increase the staff’s annual work time through reducing the discretionary holiday days linked to employees’ years of service in the Bank, creating additional savings
iv. Regarding the collective bargaining agreements that bind the Bank (company agreements and the banking industry’s Collective Bargaining Agreements), to continue the holiday and Christmas subsidy payments for active members of staff

5. As a result of this containment policy, Banco de Portugal expects personnel expenses for 2012 to be EUR 6.5 million less than in 2010 (down around 5.4%), despite the increase in staff numbers over 2011 (about 2.5% net), the cost of which will only be fully felt in the 2012 financial year.
From a longer-term standpoint, the personnel expenses forecast for 2012 compared to those of 2005 clearly illustrate the containment policy’s impact: for a comparable number of members of staff, the cost has remained unchanged in nominal terms, equivalent to a fall of more than 12% in real terms.
Lisbon, 10 January 2012