Svetoslav Apostolov's blog

THE RISING PYRAMID

I think myself that we have more machinery of government than is necessary, too many parasites living on the labor of the industrious.

Thomas Jefferson

The people are the government, administering it by their agents; they are the government, the sovereign power.

Andrew Jackson

There is hardly any person living in Europe who does not come across names such as European Commission, European Parliament, Council of the European Union, European Central Bank, European Ombudsman, Court of Justice of the European Communities, European Police Office (Europol), European Environment Agency, or European Space Agency at least once a day… Names that govern the lives of the vast majority of European citizens and have a considerable impact on the lives of people around the globe… These are just a few of the numerous European institutions, specialized agencies and bodies (further in the text referred to as “European Institutions”) spread across Europe, which are entrusted with developing the Community’s common legislation at the supranational level “in order to gain a strength and world influence none of [the Member States] could have on their own” and with “uphold[ing] the rule of European law” (Gateway to the European Union). In addition to those come the practically countless European Commission Delegations and Offices all over the world…

All of the above-mentioned institutions, agencies, bodies, delegations, offices and others, numbering as many as the sand grains on a beach, are literally paid by the taxpayer: every citizen of a European Community Member State pays his or her contribution to the common pot forming the budget of the Community. This contribution, initially “a balancing item”, “has become the largest source of revenue” (European Commission’s EU Budget at a glance) and accounts for 65,4 % of the total revenue for the 2009 budget (EUR-Lex Budget online) (see also Figure 1 below):

Sources of revenue

Figure 1. Preliminary assessment of the share of the various sources of revenue
in the 2009 budget of the European Communities (actual figures in the text)
(Source: European Commission 2008c).

Figure 2 below clearly shows the trend of increasing share of this component in the revenue of the European Communities:

Evolution of the sources of actual revenue

Figure 2. Evolution of the sources of actual revenue for the budget of the European Communities
from 1991 to 2007 (Source: adapted from Court of Auditors 2008a).

On the average, about 6% of this amount has been spent on so-called “administrative costs” for “running the European Union” or “staff and building costs” (as described in the EU Budget at a glance) of the above European Institutions in the period 2004 – 2008, and the figure exceeds 6,6% in the 2009 budget (see also Figure 3 below). However, one should not let oneself be misled by this relatively constant share to believe that the administrative costs remain constant year after year; on the contrary, in absolute figures these costs have been increasing every year during the last six years as clearly demonstrated by Figure 3 below.

Administrative costs

Figure 3. Administrative costs for the period 2003 – 2009 in absolute numbers and as budget share
(Note:
The figures for the financial years 2003 – 2008 correspond to the adopted budget plus
the amending budgets for the respective year
; the figures for the financial year 2009 correspond
to the General budget of the European Communities for the financial year 2009,
which was the only available source at the time of preparation of this publication)

(Source: data from the EUR-Lex Budget online).

The main reason for these constantly growing costs is the expansion (not to say explosion) of the administration – a process wittily described by Parkinson on another occasion as “the rising pyramid” in his book Parkinson’s Law and Other Studies in Administration (1957), who formulated the following principles related to staff increase in public administrative departments not at war:

Work expands so as to fill the time available for its completion.

Granted that work (and especially paperwork) is thus elastic in its demands on time, it is manifest that there need be little or no relationship between the work to be done and the size of the staff to which it may be assigned.

The fact is that the number of the officials and the quantity of the work are not related to each other at all. The rise in the total of those employed is governed by Parkinson’s Law and would be much the same whether the volume of the work were to increase, diminish, or even disappear.

… we may distinguish at the outset two motive forces. They can be represented for the present purpose by two almost axiomatic statements, thus: (1) “An official wants to multiply subordinates, not rivals” and (2) “Officials make work for each other.”

(Parkinson 1957)

That Parkinson’s postulate of “little or no relationship between the work to be done and the size of the staff to which it may be assigned made over half a century ago is absolutely true for the European Institutions today is proven by the institution of the European Ombudsman: as the European Parliament notes in its resolution of 23 April 2009 with observations forming an integral part of its Decision on discharge in respect of the implementation of the European Union general budget for the financial year 2007, Section VIII – European Ombudsman (C6-0423/2008 – 2008/2282(DEC)):

“… over the period 2003 to 2007, commitment appropriations have steadily increased from EUR 4,4 million to EUR 8,2 million (nearly +86%) and posts from 31 to 57 units (+84%), while complaints have increased from 2 436 to 3 217 (+32%) and new enquiries opened from 253 to 308 (+22%) …”

In other words this means that while the number of open enquiries has increased only by 21,7%, and the incoming complaints have increased by 32,1%, in the reference period the institution’s staff has increased disproportionately by 83,9% (or 3,9 times higher than the increase in open enquiries and 2,6 times higher than the increase in complaints).

The staff increase of the European Institutions will be illustrated on the example of the Commission of the European Communities (alias the European Commission), which in 1999 started an ambitious task of reforming itself in order “to equip the institution with a modern and effective European civil service that [is] able to meet the major challenges facing the Union, a reform described as “the most radical internal modernisation since the European Commission was established in 1958” (European Commission 2006). Because of the inconsistent and partial data in the General Reports on the Activities of the European Union, which were used as the source of data, only the so-called “permanent posts for administrative duties” (alias “permanent administrative posts”) were taken into consideration. Figure 4 below clearly shows the increasing trend in the number of Commission employees and the coupled with it administrative costs increase:

Permanent posts

Figure 4. Number of permanent posts for administrative duties in the Commission in the period 1997 – 2007
and the coupled with it increase in the administration expenditures
(Source: data on staff numbers from the
General Reports on the Activities of the European Union,
data on costs from the
EUR-Lex Budget online as described in the note to Figure 3).

The graph showing the increase in staff number is limited to 2008 by the most recent edition of the General Report on the Activities of the European Union available at the time of preparation of this publication. The graph presenting the increase in the administrative costs is limited to 2003 by the information available in the EUR-Lex Budget online database.

The drop in the graph corresponding to 2003 can be explained with the 2002 institutional reform (Commission of the European Communities 2001, Council of the European Communities 2002), which led to the proliferation of various permanent and temporary “offices attached to the Commission”, “decentralised bodies” and “agencies” (European Commission 2004, 2005, 2006, 2007, 2008, 2009) (hereunder referred to as “Commission Extensions”) in the following years and thus resulted in an “export” of employees to these Commission Extensions (see also European Commission 2009, Court of Auditors 2008).

As already mentioned, the above figure refers only to the “permanent posts for administrative duties” in the Commission; however, a look into the data reveals the same increasing trend for the Commission Extensions. With new agencies established every year (two agencies expected creation as of the time of preparation of this paper: the European Electronic Communications Market Authority (European Commission 2008) and the Agency for the Cooperation of Energy Regulators (European Commission 2009)), there is no end to the rise of the pyramid.

In relation to the above it is worth mentioning the results of my study on the efficiency of the European Ombudsman revealing that, despite its reform, the Commission of the European Communities was the reason for most of the maladministration complaints submitted to the Ombudsman in the period 2006 – 2008. Considering the fact that the European Personnel Selection Office is merely one of the Commission Extensions as proven by Decision 2002/620/EC establishing a European Communities Personnel Selection Office, which in its Article 4 explicitly states that “Any appeal in [areas of requests and complaints relating to the exercise of the powers conferred under Article 2(1) and (2) of this Decision] shall be made against the Commission(see also the office’s subordination to the European Commission), the following numbers appear: 86,7% of the complaints in 2006, 60% of these in 2007 and 73,3% of the ones in 2008 targeted the Commission.

Further, it should be pointed out that, as little as the share of administrative costs incurred by the staff increase may seem at the first glance (see Figure 3 and Figure 4 above), in absolute figures these costs are comparable to (and in some cases even exceed) the planned annual budget revenue of many Member States (see Table 1 below for examples), from which these costs are financed through the above-described mechanism.

Table 1. Comparison between the administrative costs of the European Communities and the budget revenue of selected Member States, in EURx109.

Comparison EC costs and MS revenue

(Note: figures for Cyprus for 2006 and 2007 were calculated using the European Central Bank’s (ECB’s) fixed exchange rate 1 EUR = 0,585274 CYP; figures for Bulgaria were calculated using the Bulgarian National Bank’s fixed exchange rate 1 EUR = 1,95583 BGN; figures for Slovenia for 2005 and 2006 have been calculated using the fixed exchange rate 1 EUR = 239.640 SIT; figure for Latvia for 2005 was calculated using the ECB’s exchange rate 1 EUR = 0,6622 LVL as of 21.09.2004, for 2006 was calculated using the ECB’s exchange rate 1 EUR = 0,6962 LVL as of 20.10.2005, for 2007 was calculated using the ECB’s exchange rate 1 EUR = 0,6974 LVL as of 19.12.2006, for 2008 was calculated using the ECB’s exchange rate 1 EUR = 0,6964 LVL as of 31.12.2007, for 2009 was calculated using the ECB’s exchange rate 1 EUR = 0,7093 LVL as of 17.11.2008) (Source: data on the Administration of the European Communities from the European Commission’s Financial Programming and Budget website and EUR-Lex Budget online; data on Cyprus for 2006 and 2007 from the International Coordinating Committee “Justice for Cyprus”, data on 2008 from the EUbusiness.com, data on 2009 from the London Greek Radio; data on Bulgaria for 2005 from the Bulgarian Ministry of Finance, data on 2006 – 2009 from the Bulgarian Law Portal LEX.BG a, Bulgarian Law Portal LEX.BG b, Bulgarian Law Portal LEX.BG c and Bulgarian Law Portal LEX.BG d; data on Slovenia from the Ministry of Finance of the Republic of Slovenia 2008; data on Latvia for 2005 from the Ministry of Foreign Affairs of the Republic of Latvia 2004, for 2006 from Regnum.ru 2005, for 2007 from Crew 2006, for 2008 from Radionov 2008, for 2009 from Kolyako 2008).

In addition, professionals like Heaton-Harris claim that these costs are much higher considering the numerous “decentralised bodies” of the Commission of the European Communities (e.g., Community agencies) and Community “satellite bodies” that have their own budgets (Court of Auditors 2000, Court of Auditors 2001, Court of Auditors 2007, Court of Auditors 2008).

Conclusion

A stable trend of increase in the number of employees in the European Institutions, respectively in the budgets of the institutions, which is not necessarily coupled with the amount of work done by these institutions, is observed since 1997. There is, therefore, considerable potential for optimization of the work of the European Institutions and, hence, of their spending of taxpayers’ money.

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  1. The Rising Pyramid as a production of patently unsustainable human overconsumption, overproduction and overpopulation activities worldwide…….

    Imagine for a moment that we are looking at an ocean wave, watching it move toward the shore where it crashes finally at our feet. The wave is moving toward us; however, at the same time, there are many molecules in the wave that are moving in the opposite direction, against the tide. If we observe that the propagation of the human species worldwide is like the wave and the reproduction numbers of individuals in certain locales are like the molecules, it may be inaccurate for the latter to be looked at as if it tells us something meaningful about the former.

    Abundant research indicates that most countries in Western Europe, among many other countries globally, have recently shown a decline in their rates of human population growth. These geographically localized data need not blind us to the fact that the absolute global human population numbers are skyrocketing. The world’s human population is like the wave; the individual or localized reproduction numbers are like the molecules.

    Perhaps a “scope of observation” problem is presented to everyone who wants to adequately understand the dynamics of human population numbers.

    Choosing a scope of observation is a forced choice, like choosing to look at either the forest or the trees, at either the propagation numbers of the human species (the wave data) or localized reproduction numbers (the molecular data). Data regarding the propagation of absolute global human population numbers is the former while individual or localized reproduction data are the latter.

    From this vantage point, the global challenge before humanity could be a species propagation problem. Take note that global propagation numbers do not vary with the reproduction data. That is to say, global human propagation data and the evidence of reproduction numbers of individuals in many places, appear to be pointing in different directions. The propagation data are represented by the wave; the reproduction data are represented by the molecules moving against the tide.

    In the year 1900 world’s human population was approximately 1.2 to 1.6 billion people. With the explosive growth of the global human population over the 20th century in mind (despite two world wars, ubiquitous local conflicts, famine, pestilence, disease, poverty, and other events resulting in great loss of life), what might the world look like in so short a period of time as 41 years from now? How many people will be on the planet at that time? The UN Population has recently made its annual re-determination that the world’s human population will reach 9.2 billion people around 2050, and then somehow level off. No explanation is given for how this leveling-off process is to occur.

    We can see that the fully anticipated growth of absolute global human population numbers is about 8 billion people for the 150 year period between 1900 and 2050.

    Whatever the number of human beings on Earth at the end of the 21st century, the size of the human population on Earth could have potentially adverse impacts on the number of the world’s surviving species, on the rate of dissipation of Earth’s resources, and on the basic characteristics of global ecosystems.

    For too long a time human population growth has been comfortably viewed by politicians, economists and demographers as somehow outside the course of nature. The potential causes of global human population growth have seemed to them so complex, obscure, or numerous that a strategy to address the problems posed by the unbridled growth of the human species has been assumed to be unknowable. Their preternatural, insufficiently scientific grasp of human population dynamics has lead to widely varied forecasts of global population growth. Some forecasting data indicate the end to human population growth soon. Other data suggest the rapid and continuous increase of human numbers through Century XXI and beyond.

    Recent scientific evidence appears to indicate that the governing dynamics of absolute global human population numbers are indeed knowable, as a natural phenomenon. According to unchallenged scientific research, the population dynamics of human organisms is essentially common to, not different from, the population dynamics of other organisms.

    To suggest, as many politicians, economists and demographers have been doing, that understanding the dynamics of human population numbers does not matter, that the human population problem is not about numbers, or that human population dynamics have so dizzying an array of variables as not to be suitable for scientific investigation, seems not quite right.

    If I may continue by introducing an extension of my perspective.

    According to the research of Russell Hopfenberg,Ph.D., and David Pimementel, Ph.D., global population growth of the human species is a rapidly cycling positive feedback loop in which food availability drives population growth and this recent, astounding growth in absolute global human numbers gives rise to the misperception or mistaken impression that food production needs to be increased even more.

    Data indicate that the world’s human population grows by approximately two percent per year. All segments of it grow by about 2%. Every year there are more people with brown eyes and more people with blue ones; more people who are tall and more short people. It also means that there are more people growing up well fed and more people growing up hungry. The hungry segment of the global population goes up just like the well-fed segment of the population. We may or may not be reducing hunger by increasing food production; however, we are most certainly producing more and more hungry people.

    Hopfenberg’s and Pimentel’s evidence suggests that the magnificently successful efforts of humankind to increase food production in order to feed a growing population has resulted and continue to result in even greater human population numbers.

    The perceived need to increase food production to feed a growing population is a widely shared and consensually validated misperception, a denial both of the physical reality and the space-time dimension. If people are starving at a given moment of time, increasing food production cannot help them. Are these starving people supposed to be waiting for sowing, growing and reaping to be completed? Are they supposed to wait for surpluses to reach them? Without food they would die. In such circumstances, increasing food production for people who are starving is like tossing parachutes to people who have already fallen out of the airplane. The produced food arrives too late; however, this does not mean human starvation is inevitable.

    Consider that human population dynamics are not biologically different from the population dynamics of other species. Human organisms, other species and even microorganisms have essentially similar population dynamics. We do not find hoards of starving roaches, birds, squirrels, alligators, or chimpanzees in the absence of food as we do in many “civilized” human communities today because these non-human species are not annually increasing their food production capabilities.

    Please take note that among tribal peoples in remote original habitats, we do not find people starving. Like non-human species, “primitive” human beings live within the carrying capacity of their environment. History is replete with examples of early humans and more remote ancestors not increasing their food production annually, but rather living successfully off the land for thousands upon thousands of years as hunters and gatherers of food.

    Prior to the agricultural revolution and the production of more food than was needed for immediate survival, human numbers supposedly could not grow beyond their environment’s physical capacity to sustain them because global human population growth or decline is primarily determined by food availability. Looked at from a global population perspective, more food equals more human organisms; less food equals less human organisms; and, in one and all cases, no food equals no humans.

    Thank you.

    Steven Earl Salmony
    AWAREness Campaign on The Human Population, established 2001
    http://sustainabilityscience.org/content.html?contentid=1176

  2. Mr. Apostolov, I do not understand what is the point of your analysis.

    1. If the EU were a business, it has seen it’s number of clients (Member States) grow by 40% (15 to 27) over the period you examine (2005 to 2009).
    Staff (which make most of the expenses you mention) grew some 20% only and the % of administrative expenses grew from 10% (from 5 to 5.5% of total expenditure). I would call this rather efficient economies of scale.

    2. Recruitment of these 20% additional staff was written in the accession treaties of the 12 new countries. Do not worry, it will stop soon, when the still missing 1000 Bulgarian (yes, Bulgarian) and Romanians still missing are recruited. And the Commission will have to start saying no to Member States asking that it deals with more and more issues.

    3. Indeed there are more and more agencies spawning across Europe. Management by Agencies, and not by Central Administration is more effective. I understand it is the Member States who want to have such agencies “close to the citizen” so that indeed Europe, like in many other countries, is managed from different places and not only from Brussels.
    Of course this increases administrative costs. Just like having several thousand translators allowing all Europeans to understand and contribute in their own language to the woring of the EU. Would you prefer going back to all decisions being taken in Brussels or individually by Member States (as for example for saving banks or negotiating energy prices with Russia) ?

  3. Mr. Giorgio,

    I am sorry you did not see my points. I will summarise these for you below:

    1. My major point (also stated in the conclusion to the article) is that there is considerable potential for OPTIMISATION of the work of the European Institutions and, hence, of their spending of taxpayers’ money (yes, yes, of my and (providing you pay your taxes) your money – see figures 1 and 2 above).

    2. As little as “six cents in every euro” (as modestly put by the European Commission on their web site, see the EU Budget at a glance) for administrative expenses may sound, in fact these cents add up to MILLIONS of euro per year (as shown in figure 3 above).

    3. Contrary to your statement, the increase in staff number and, respectively, in the associated administrative expenses (the latter of which are funded to more than 65% by the taxpayer today) is NOT necessarily coupled with the increase of work as demonstrated on the example of the European Ombudsman: while the number of open enquiries has increased only by 21,7%, and the incoming complaints have increased by 32,1% in the period from 2003 to 2007, in the same period the institution’s staff has increased disproportionately by 83,9% (or 3,9 times higher than the increase in open enquiries and 2,6 times higher than the increase in complaints), and its budget has increased disproportionately by 86,4% (or almost 4 times higher than the increase in open enquiries and 2,7 times higher than the increase in complaints).

    NEITHER is the increase in staff and expenses coupled with increased quality as demonstrated by research of mine carried out on the institution of the European Ombudsman: out of the studied 45 randomly selected cases in the period from 2006 to 2008, the outcomes of the Ombudsman’s intervention were not to the complainant’s satisfaction in all 100% of the admitted cases in 2006 and 2008, and only one complainant was satisfied with the Ombudsman’s performance in 2007. In addition, the Ombudsman made five proposals for a friendly solution in the studied period; however, one of these was eventually withdrawn by the Ombudsman, one was partially ignored and one was rejected by the respective institution concerned. Of the remaining two cases, the one complainant rejected the possibility of a friendly solution, which is interpreted here as a manifestation of the complainant’s dissatisfaction with the Ombudsman’s performance, and the other complainant ‘did not … consider the … response [of the institution concerned to the proposal] to be satisfactory’, which is also interpreted as dissatisfaction for the purpose of the research.

    Certainly, increased amount of work requires increased human and, respectively, financial resources – but there must be a CORRELATION between these!

    Last but not least, I would abstain from comparing the Community’s expansion to a business because along this line one runs the risk of concluding that the former USSR was also a great business as it also experienced a boom in “number of clients” (to use your own language) in the first half of the last century: from one in 1917 to four in 1922 (400% increase in 5 years, or 80% new “clients” per year on the average) and to sixteen in 1946 (1600% increase in 29 years, or 51,2% new “clients” per year on the average).

    I hope this summary has been of help to you!

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