World Bank and IMF: Pay and Benefits Compared with Those of Other
Organizations (Briefing Report, 07/17/95, GAO/NSIAD-95-177BR).

Pursuant to a legislative requirement, GAO reviewed the salaries and
benefits of World Bank and International Monetary Fund employees,
focusing on the: (1) system used to determine Bank and Fund pay and
benefit levels; (2) salaries and benefits of employees in comparable
positions in the public and private sector in member countries and the
international sector; and (3) role of compensation in staff recruitment
and retention.

GAO found that: (1) the World Bank and the International Monetary Fund
rely heavily on prevailing practices in large private companies to
determine employee compensation levels; (2) this system generates
relatively high rates of pay and benefits commensurate with average
levels in the surveyed markets, in order for the Bank and Fund to
compete for the best employees from all member countries; (3) the
average net salary among Bank and Fund professionals, excluding the
highest level management, is about $86,000; (4) Bank and Fund pay rates
are designed to be about equal to the compensation level for comparable
positions in the U.S. market and are higher than the European
compensation levels; and (5) the main problems in recruiting and
retaining Bank and Fund staff are associated with recruiting certain
highly paid professions from certain high-salary member countries that
are underrepresented in the institutions' workforce.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-95-177BR
     TITLE:  World Bank and IMF: Pay and Benefits Compared with Those of 
             Other Organizations
      DATE:  07/17/95
   SUBJECT:  Compensation
             Personnel recruiting
             Financial institutions
             International organizations
             Comparative analysis
             Non-government enterprises
             Employee benefit plans
             Personnel management
IDENTIFIER:  International Monetary Fund
             Germany
             France
             United Nations
             
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Cover
================================================================ COVER


Briefing Report to Congressional Committees

July 1995

WORLD BANK
AND IMF - PAY AND BENEFITS
COMPARED WITH THOSE OF OTHER
ORGANIZATIONS

GAO/NSIAD-95-177BR

World Bank and IMF


Abbreviations
=============================================================== ABBREV


Letter
=============================================================== LETTER


B-260170

July 17, 1995

The Honorable Mark O.  Hatfield
Chairman
The Honorable Robert C.  Byrd
Ranking Minority Member
Committee on Appropriations
United States Senate

The Honorable Bob Livingston
Chairman
The Honorable David R.  Obey
Ranking Minority Member
Committee on Appropriations
House of Representatives

As required by section 583 of the Foreign Operations Appropriations
Act for Fiscal Year 1995, we reviewed the salaries and benefits of
employees of the World Bank and the International Monetary Fund, as
well as the benefits provided to employees' dependents.  In
accordance with the law and subsequent discussions with your staff,
this report

  explains the system used by the Bank and the Fund to determine pay
     and benefits levels,

  provides information on salaries and benefits at these institutions
     in comparison with those provided to employees in comparable
     positions in the public and private sectors in member countries
     and the international sector, and

  discusses the role of compensation in staff recruitment and
     retention. 


   BACKGROUND
------------------------------------------------------------ Letter :1

The Bank and the Fund employ more than 12,000 professional and
support staff, most of whom are located in Washington, D.C.\1 The
Fund employs primarily economists, while the Bank employs a broad
range of professionals (e.g., engineers, health professionals,
lawyers, investment and finance specialists, and economists).  Staff
compensation (salaries, benefits, and allowances) accounts for the
largest portion of Bank and Fund administrative expenses, which are
paid out of income generated by the two institutions' loans and
investments.  While staff levels increased during the 1990s, both
institutions have announced restructuring plans under which staff
levels will be reduced. 

Designing and implementing a compensation system for an international
organization is a complex undertaking, calling for compromise among
member countries on numerous technically involved and politically
contentious issues.  Compensation policy at the Bank and the Fund has
been the subject of controversy for many years, with the United
States a leading advocate for conservatism in setting pay and
benefits levels.  Other countries, particularly those who are
underrepresented in the two institutions' workforces, support more
generous compensation practices.  Two joint Bank/Fund committees of
Executive Directors have invested more than 6 years of effort in
major systemic overhauls, the last of which resulted in adoption of
the current compensation system in 1989.  Nonetheless, member
countries continue to have differing views on Bank and Fund
compensation. 


--------------------
\1 Unless otherwise stated, references to the Bank apply to all
members of the World Bank Group--the International Bank for
Reconstruction and Development, the Multilateral Investment Guarantee
Agency, and the International Finance Corporation.  The operations of
the fourth member of the Bank Group--the International Development
Association--are carried out by International Bank for Reconstruction
and Development staff. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :2

The system used by the Bank and the Fund for determining compensation
gives the civil service some consideration but relies most heavily on
prevailing practices in large private companies in the United States,
Germany, and France.  To enable the two institutions to compete for
the highest quality employees from all member countries, the system
generates relatively high rates of pay, and benefits commensurate
with average levels in the surveyed markets.  Excluding salaries of
highest level management, the average net-of-tax salary among Bank
and Fund professionals is about $86,000. 

By design, Bank and Fund pay rates are approximately equal to the
75th percentile level (P75) for comparable positions in the U.S. 
market and are higher than overall European P75 levels.\2 However,
they do not provide the desired margin over pay levels in European
private sector organizations.  They exceed the pay rates in the
public sector in all surveyed markets, as well as in the United
Nations.  Other international organizations, however, provide
compensation that is comparable to that provided by the Bank and the
Fund.  Benefits are generally commensurate with those available to
employees in comparator organizations in the three surveyed countries
and the international sector. 

Overall, the Bank and the Fund are able to recruit and retain staff
with only modest difficulty.  Problems center on recruiting staff in
certain highly paid professions and from certain high-salary member
countries that are currently underrepresented in the two
institutions' workforces. 


--------------------
\2 Midpoints for Bank/Fund pay grades are set about equal to or
higher than the pay of 75 percent of the employees in comparable
positions in the surveyed organizations. 


   SYSTEM DESIGN AND OPERATIONS
------------------------------------------------------------ Letter :3

The system is designed to provide competitive compensation that will
permit recruitment and retention of the highest quality,
multinational staff--including personnel from countries with the
highest internal pay rates.  Bank and Fund officials stressed the
need for the highest quality employees in light of the potential
economic impact of the two institutions' lending activity and policy
reform recommendations. 

Professional salaries are based on those provided by selected
financial and industrial concerns and government agencies in the
United States.  Because international organization employees
generally do not pay income taxes, all comparisons are on a
net-of-tax basis.\3 Benefits are based on separate quadrennial
surveys of comparator organizations in the United States, France, and
Germany.  Appendix I provides information on the U.S., French, and
German comparator organizations surveyed for pay- and
benefits-setting purposes. 

The system generates relatively high pay rates by, among other
things, (1) giving private sector pay rates twice as much weight as
public sector rates, (2) benchmarking pay at the P75 level among
surveyed U.S.  private and public sector organizations combined, and
(3) attempting to maintain at least a 10-percent pay margin over the
P75 level among surveyed private and public sector organizations in
other high-salary markets combined.  Other high-salary markets are
represented in the survey by France and Germany.  (This margin is
intended to provide an incentive to candidates from other countries
to move to the United States.) The system provides overall benefits
commensurate with average levels in surveyed organizations. 

Since 1990, the system has provided incremental annual increases in
real pay--4 percent on average in nominal terms, compared with an
average U.S.  inflation rate of about 3.6 percent.  In every year
except 1995, increases have been greater than indicated by the U.S. 
market due to the desire to maintain the specified margin over the
surveyed European markets.  Though some economy measures have been
introduced, employee benefits remain basically unchanged. 


--------------------
\3 That is, actual gross pay received by employees of comparator
organizations is reduced to represent net pay retained after taxes. 
The net figures are used as the basis for generating Bank and Fund
tax-free pay rates. 


   PAY AND BENEFITS COMPARISONS
------------------------------------------------------------ Letter :4

In summary, Bank and Fund pay rates

  are approximately equal to P75 levels for comparable positions
     among all surveyed U.S.  organizations;

  are slightly above P75 levels among all surveyed European
     organizations;

  are slightly above P75 levels for both U.S.  and European
     comparator organizations at the lower professional grades;

  are below U.S.  P75 levels at the upper grades;

  are higher than P75 levels among public sector comparator
     organizations in the United States and Europe; and

  do not provide the desired margin over P75 pay levels among
     European private sector comparator organizations. 

Base pay is higher than in the international organization
compensation systems we reviewed (those used by the United Nations
and the Co-Ordinated Organizations).\4

However, the latter system provides expatriate employees with
premiums over base rates that elevate their total pay to Bank and
Fund levels.  Bank and Fund officials identified other European
international organizations with comparatively high pay, such as the
European Investment Bank.  If pay is adjusted to include U.S.  taxes
and highest level management is excluded, Bank and Fund professionals
earn about $114,000 on average.  Benefits for all employees are more
generous than those available in the United States but less generous
than among European comparator organizations. 

Public and private sector organizations that employ expatriates
generally provide them with various additional benefits to prevent
them from experiencing a loss of real income and to compensate them
for the costs of living abroad.  Among these are cost-of-living
allowances and expatriate premiums over normal pay.  The system used
by the Bank and the Fund provides neither of these.  However,
cost-of-living allowances are unnecessary because pay rates are based
on the U.S.  market, while the maintenance of at least a 10-percent
margin over surveyed European markets functions as a proxy for an
explicit expatriate premium.  The Bank and Fund do provide two common
expatriate benefits--home leave and partial reimbursement for
educating children back home or in a similar environment. 


--------------------
\4 The Co-Ordinated Organizations comprise the Organization for
Economic Cooperation and Development, the North Atlantic Treaty
Organization, the Western European Union, the Council of Europe, the
European Space Agency, and the European Center for Medium-Range
Weather Forecasts.  Nineteen additional European international
organizations base their systems on the Co-Ordinated Organizations. 


   RECRUITMENT AND RETENTION
------------------------------------------------------------ Letter :5

The Bank and Fund appear to recruit and retain staff with only modest
difficulty.  About 21 percent of recent entry-level and 6 percent of
mid-career professional job offers were rejected in 1994.\5 Voluntary
separation rates are analogous to those experienced in the U.S. 
government and the other international organizations we reviewed. 
Problems center on certain scarce or highly paid professionals
(e.g., investment bankers) and citizens of particular high-paying
countries, (e.g., Japan and Germany).  Pay is a factor in these
difficulties.  However, other factors also deter expatriates,
including disruption of spouse careers and cultural concerns. 

Treasury Department officials noted that discussions of deficiencies
in the skills possessed by the staff have been prominent in the
current dialogue on reforming Bank operations.  According to these
officials, recruiting highly sought-after expertise in such areas as
financial market development is an important element in the Bank's
efforts toward reform. 


--------------------
\5 These rates exclude information for one unit of the Bank
Group--the International Finance Corporation, which employs about 11
percent of Bank Group staff.  Because the Corporation's staff is
concentrated in the relatively high-paying investment and finance
fields, it experiences greater difficulty recruiting than other Bank
Group members.  For example, Corporation mid-career job offers are
rejected at nearly five times the rate experienced by other Bank
Group members. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :6

In commenting orally on a draft of this report, officials from the
Bank, the Fund, and the U.S.  Treasury Department generally concurred
with the report.  Their technical comments have been incorporated
where appropriate.  Treasury Department officials also expressed
concern about providing a broader context for discussion about Bank
and Fund compensation, and they provided written comments that
address this concern.  These comments, reproduced in their entirety
in appendix II, point out that it is the borrowing countries who pay
the administrative costs of the World Bank Group, and that the
presence of the Bank and the Fund in the United States results in
substantial economic benefits for this country. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :7

As agreed with your staff, we did not conduct original research to
identify jobs in other organizations that are comparable to Bank and
Fund jobs, nor did we independently verify the compensation received
by individuals in such jobs.  Rather, we assembled a database from
several existing sources, mentioned in this section.  The database
enabled us to analyze Bank and Fund pay and benefits and comparable
practices among the international organizations we surveyed and
public and private sector comparator organizations in the United
States, France, and Germany.  Comparator organizations from France
and Germany are referred to throughout the report as representing
"European" markets. 

We interviewed Bank and Fund officials at their headquarters in
Washington, D.C., including several member-country Executive
Directors and the two institutions' staff associations.  We received
excellent cooperation in all instances.  In New York, we consulted
with officials of the International Civil Service Commission (an
agency of the United Nations).  In Paris, we consulted with officials
of the Bank and the Fund; the United Nations Educational, Scientific,
and Cultural Organization; the Organization for Economic Cooperation
and Development; and the Co-Ordinated Organizations'
Inter-Organizations Study Section on Salaries and Prices.  We also
met with French government and private sector representatives to
discuss compensation practices in France and Europe.  We interviewed
representatives of Hay Management Consultants and Hewitt Associates
(the pay and benefits consultants employed by the Bank and the Fund). 
We employed Hay Management Consultants to conduct additional analyses
of the pay data used in analyses for the Bank and Fund.  We also
consulted with several other private and U.S.  government
compensation experts. 

Pay information for public and private sector comparators in the
United States, France, and Germany was provided by Hay Management
Consultants.  Information on private and public sector comparator
organizations in the United States, France, and Germany is gathered
on a nationwide basis.  Information on comparator organization
support staff pay is gathered from the Washington, D.C., market. 
U.S.  public sector pay information represents average levels plus 10
percent, as this is the manner in which the system used by the Bank
and Fund incorporates information on this sector.  Data for France
and Germany is converted into U.S.  dollars using the average of the
nominal exchange rates and purchasing power parities between the U.S. 
dollar and the French and German currencies.  Additional information
on public sector pay was provided by the governments of the United
States and France.  Benefits comparisons are drawn from data
assembled by Hewitt Associates, supplemented by information from the
Bank and the Fund, the other international organizations we surveyed,
the governments of the United States and France, and private sector
benefits experts. 

We assembled pay information for the Bank and the Fund, the United
Nations, and the Co-Ordinated Organizations from information provided
by these organizations.  This is the most recent applicable
information available on pay grade midpoints for employees stationed
in Washington, D.C.\6 Pay comparisons among these three systems are
made on the basis of conclusions about grade level equivalency drawn
by officials of the Inter-Organizations Study Section on Salaries and
Prices. 

All analyses compare Bank and Fund pay to total cash compensation
(including bonuses) received for comparable jobs among comparator
organizations.  Unless otherwise indicated, professional pay rates
are calculated for married incumbents with two children, while
support staff calculations are made on the basis of single
incumbents.  This is the approach used by the Bank and the Fund.  Our
primary concern was with compensation for professional employees, so
we provide only limited information on support staff.  We did not
examine the separate pay system that is used to determine
compensation for Executive Directors and their staffs, nor did we
review the salaries paid to the heads of the two institutions or
their immediate deputies.  For these reasons and because information
from all markets is not available for all Bank and Fund grades, most
graphs do not include pay grades occupied by support staff, and none
includes grades occupied by highest level management. 

Information on recruitment and retention was obtained from sources in
the Bank, the Fund, the other international organizations we
reviewed, the governments of France and the United States, and
various sources in the private sector. 

This review was conducted from December 1994 through May 1995 in
accordance with generally accepted government auditing standards. 


We are sending copies of this report to the Secretary of the
Treasury, the President of the World Bank, and the Managing Director
of the International Monetary Fund.  Copies will be made available to
others upon request. 

If you or your staff have any questions about this report, please
call me at (202) 512-4128.  Other contributors to this report include
LeRoy Richardson, Michael McAtee, Caroline Vernet Harper, and Joy
Labez. 

Benjamin F.  Nelson
Associate Director
International Affairs Issues


--------------------
\6 The Bank and Fund pay scale was revised in May 1995.  The
Co-Ordinated Organizations last revised their pay scale in January
1995.  The United Nations professional pay scale was last revised in
March 1995 (August 1994 for support staff). 


COMPARISONS
============================================================ Chapter I


   BACKGROUND:  FISCAL YEAR 1994
   ADMINISTRATIVE COSTS
---------------------------------------------------------- Chapter I:1



   (See figure in printed
   edition.)

Note:  Total administrative costs were about $1.6 billion at the Bank
and about $450 million at the Fund.  Salaries include fees for
consultants and Bank temporaries. 

Salaries, benefits, and allowances amount to about two-thirds of Bank
and Fund administrative costs, which are paid from returns on loans
and investments--not member country contributions.  Benefits and
allowances (including retirement, health insurance, certain payments
to expatriate employees, and tax allowances for Americans) equal over
60 percent of salaries.  (The United States is one of few countries
that requires citizens employed at international organizations to pay
taxes.)

Staffing levels and attendant costs have increased, but this upward
trend has stopped.  During 1990-94, Bank staff increased by 24
percent (to about 9,400), and Fund staff increased by 20 percent (to
about 2,500).\1 Expansion of work in Eastern Europe and the Former
Soviet Union was an important factor in staff growth.  Both
institutions have announced plans to retrench and restructure.  The
Bank has begun eliminating positions and plans to reduce the
workforce by over 500 persons by 1997.  The Fund eliminated about 40
positions in 1995. 


--------------------
\1 These figures include regular permanent and fixed-term employees
(staff are usually offered fixed-term appointments--often 2
years--before being offered permanent positions), long-term
consultants, and Bank temporaries.  Bank temporaries constitute the
pool from which the Bank hires its permanent support staff.  The
compensation systems for long-term consultants and Bank temporaries
are different from that employed for regular and fixed-term staff. 


   BACKGROUND:  HISTORY OF
   CONTROVERSY ABOUT COMPENSATION
   SYSTEM
---------------------------------------------------------- Chapter I:2



   (See figure in printed
   edition.)

The current compensation system was adopted in 1989 after more than a
decade of controversy, including two overhauls by Bank/Fund
committees of Executive Directors.  It represents compromise among
member countries on several technically complex and politically
contentious issues.  Among these are defining the universe of
comparator organizations and establishing a benchmark level for pay
comparisons.  The United States and some other countries, like the
United Kingdom, advocate conservatism in setting pay and benefits
levels.  Other high-salary countries, including Germany and France
(with developing country support), advocate more generous practices. 


   COMPENSATION SYSTEM GOAL
---------------------------------------------------------- Chapter I:3



   (See figure in printed
   edition.)

Bank and Fund officials stress the need for the highest quality
staff.  They point out that employees are responsible for
recommending policy changes and financing projects that can have
major impacts on particular countries, and that employees must be
prepared to negotiate with high-ranking officials of member
countries.  The institutions are required by their Articles of
Agreement to pay "due regard to the importance of recruiting
personnel on as wide a geographical basis as possible." This is
interpreted to apply to candidates from high- as well as low-paying
markets.  While the Fund employs primarily economists, the Bank also
employs a broad range of specialists in other fields. 


   PAY SYSTEM DESIGN
---------------------------------------------------------- Chapter I:4



   (See figure in printed
   edition.)

The salary structure is derived from Hay Management Consultants'
annual surveys of U.S.  financial and industrial concerns and
government agencies.  Only large companies are included because their
operations tend to be national or international in scope.  They are,
therefore, regarded as more appropriate points of comparison than
smaller, locally focused firms.  Unrelated jobs are excluded. 
Related jobs are graded for comparability across organizations and
weighted by relevance to Bank and Fund operations.  Aggregate
information by level of responsibility is used to generate pay
scales.  Survey information covers only a portion of the complete
scale.  Salaries for support staff and upper management are set by
extending the scale.  Support staff salaries are checked against pay
rates in the Washington, D.C., market.  Because staff pay no income
taxes, all comparisons are on a net-of-tax basis. 

Several methodological elements combine to generate relatively high
rates.  First, private sector comparator organizations are given
controlling influence through their two-thirds weighting, versus
one-third for relatively low public sector rates.  Both Bank/Fund
joint committees of Executive Directors on compensation have agreed
that the two institutions are appropriately viewed as most similar to
public sector organizations like central banks and international
development agencies.  However, the last joint committee concluded
that a heavier private sector emphasis was justified because of the
declining competitiveness of U.S.  public sector pay and the fact
that a substantial share of recruiting is done in the private sector. 
Though several much larger agencies are included, the Federal Reserve
Board and the Federal Reserve Bank of New York, which have relatively
high pay, are assigned a 40-percent weight within the public sector. 

Second, benchmarking is against the 75th percentile (P75) level of
comparator pay, rather than, for example, average levels.\2 This
means that salaries are set at equal to or higher than 75 percent of
the individuals at particular levels in surveyed organizations. 

Third, the system maintains an "international competitiveness margin"
over other high-paying markets to provide the ability to attract
candidates from those markets to work in the United States.  France
and Germany have been selected as representative countries.  P75 pay
data is generated for these markets in the same fashion as for the
United States, and salaries are set at least 10 percent above these
levels. 


--------------------
\2 U.S.  organizations that rely on similar market surveys to set
their pay rates commonly refer to comparator organizations' P75
levels as their benchmark. 


   BENEFITS SYSTEMS DESIGN
---------------------------------------------------------- Chapter I:5



   (See figure in printed
   edition.)

Benefits are based on quadrennial surveys (conducted by Hewitt
Associates) of essentially the same U.S.  and European comparator
organizations surveyed by Hay Management Consultants.  The Bank and
the Fund seek to maintain overall benefits that are commensurate with
average levels among U.S.  and European comparator organizations. 
The surveys do not cover benefits that are not made available to all
employees--that is, expatriate benefits.  However, Bank/Fund
expatriate benefits are based on those commonly provided by other
organizations with expatriate staff. 


   COMPENSATION TRENDS
---------------------------------------------------------- Chapter I:6



   (See figure in printed
   edition.)

After an initial 15.8-percent pay increase in 1989 due to systemic
changes and failure to keep pace with the market in prior years, the
current system has provided small but steady increases in real pay. 
Since 1990, annual pay increases have averaged about 4 percent in
nominal terms, compared with 3.6 percent average annual U.S. 
inflation.  In every year except 1995, increases have been greater
than indicated by the U.S.  market due to the need to maintain the
desired margin over surveyed European markets.\3 Though some economy
measures have been adopted, employee benefits at the Bank and the
Fund have remained basically unchanged since 1989. 


--------------------
\3 In 1995, pay rates based on the U.S.  market provided the desired
margin over the combined public and private surveyed European
markets, so no adjustment was necessary. 


   1995 PAY COMPARED WITH U.S. 
   AND EUROPEAN P75
---------------------------------------------------------- Chapter I:7



   (See figure in printed
   edition.)

Even including dependent allowances (not considered in
pay-setting),\4 the system provides an overall pay structure that is
approximately equal to the U.S.  P75 pay line.  However, the Bank and
Fund position with respect to the U.S.  market varies--pay is
equivalent to market rates for support staff, slightly above the
market in the low- to mid-level professional grades where recruiting
is concentrated, and below the market at higher levels.  The Bank and
the Fund's pay is consistently higher than among European comparator
organizations in the grades for which data is available. 


--------------------
\4 Employees with dependents receive an additional 5 percent of
salary up to a maximum of $3,500, depending on spousal income, plus
$600 per dependent child.  Such allowances, common in international
organizations, are the functional equivalent of dependent tax
exemptions. 


   1995 PAY COMPARED WITH PUBLIC
   AND PRIVATE SECTORS P75
---------------------------------------------------------- Chapter I:8



   (See figure in printed
   edition.)

Private sector pay in both the United States and surveyed European
markets has an upward influence on Bank and Fund pay, while
relatively low public sector pay rates exert a downward influence. 
Disaggregated data shows that pay rates at the Bank and the Fund are
about equal to those found among European private sector comparator
organizations, and so do not provide the desired competitiveness
margin for recruiting purposes.  The data may also overstate the
margin that is provided over European public sector pay because of
incomplete information on civil service bonuses in France. 


   1995 PAY COMPARED WITH U.S. 
   AND EUROPEAN AVERAGE
---------------------------------------------------------- Chapter I:9



   (See figure in printed
   edition.)

Since the Bank and the Fund benchmark their pay system to the P75
level among comparator organizations, their pay is generally higher
than average levels among the surveyed organizations.  P75 levels are
about 12 percent higher than average levels among the European
comparator organizations.  The difference between P75 and average
levels among U.S.  comparator organizations is about 8 percent. 


   1995 PAY COMPARED WITH U.S. 
   PUBLIC SECTOR AVERAGE
--------------------------------------------------------- Chapter I:10



   (See figure in printed
   edition.)

Bank and Fund pay is higher than U.S.  public sector average pay,
particularly when the relatively high pay rates at the Federal
Reserve Board and the Federal Reserve Bank of New York are excluded
from the analysis.  Consistent with other tables provided in this
report, this graph displays average public sector salary information
plus 10 percent.  A display of actual averages would show an even
greater disparity between Bank and Fund pay rates and U.S.  public
sector pay. 


   1995 PAY COMPARED WITH SELECT
   INTERNATIONAL ORGANIZATIONS
--------------------------------------------------------- Chapter I:11



   (See figure in printed
   edition.)

Bank and Fund pay is higher than base pay in the international
organizations that we reviewed (the Co-Ordinated Organizations and
the United Nations).\5 However, the Co-Ordinated Organizations pay
expatriate premiums (20 percent for employees with dependents) that
elevate pay to Bank and Fund levels.  Officials at the Bank and the
Fund also pointed to other European institutions with higher pay
(e.g., the European Investment Bank) as valid comparator
organizations.  U.N.  pay rates are substantially lower because they
are derived by adding a premium of at least 10 percent to U.S. 
government rates.  The U.N.  system does not take private sector
practices into consideration. 


--------------------
\5 At each displayed level, except upper management, the Bank and
Fund's system divides employees between two grades that are contained
in single grades in the U.N.  and Co-Ordinated Organizations systems. 


   PAY ADJUSTED FOR TAX ALLOWANCES
--------------------------------------------------------- Chapter I:12



   (See figure in printed
   edition.)

Note:  Dependent and tax allowances are based on a non-working spouse
plus two children. 

Adjusting pay rates to represent the income that U.S.  taxpayers
would have to earn to realize equivalent net earnings provides a
clearer point of reference.  Excluding highest level management, the
average tax-free salary among professional employees at the Bank and
the Fund is about $86,000, which provides a before-tax equivalent
income of about $114,000.  The midpoint of the pay scale for grade
21/A11, the normal entry level for professional employees,\6 provides
a before-tax equivalent of nearly $84,000.  The equivalent figures
for all grades above this level are higher than $95,000--e.g.,
$121,500 for the most commonly held grade (24/A14).\7


--------------------
\6 "Entry level" positions are normally filled by recent recipients
of advanced degrees (often doctorates) with some work experience. 

\7 Newly hired professional staff generally receive salaries about
6.2 percent below the midpoint for their grade at the Bank and about
8.4 percent below the midpoint at the Fund. 


   BENEFITS COMMENSURATE WITH
   COMPARATOR MARKETS
--------------------------------------------------------- Chapter I:13



   (See figure in printed
   edition.)

According to Hewitt Associates, benefits received by Bank and Fund
employees are more valuable than among U.S.  comparator organizations
but less valuable than among European comparator organizations.  Bank
and Fund employees earning $80,000 obtain benefits worth about 45
percent of pay, compared with 39 percent in the United States, 50
percent in France, and 57 percent in Germany.  At this level,
employer-provided benefits in the U.S.  public sector are about 1
percentage point higher than in the overall U.S.  market.  Because
public sector employees generally contribute more toward their own
benefits, the difference is about 4 percentage points if employee
contributions are included.  These comparisons include employer- and
government-provided benefits.  When provided, retirement, health
care, death and disability benefits, workers' compensation,
separation grants, time off with pay, loan subsidies, and
miscellaneous benefits like company cars are included.  Not included
are benefits paid by the employees themselves and others that are
difficult to quantify.  Day care, for example, may be fully paid by
employees themselves.  On-site parking, among others, is difficult to
value. 

Employer-provided pensions at the Bank and the Fund are 1- to
8.5-percent lower than those in the three comparator markets.\8
However, employees make higher-than-average contributions to their
pension fund--7 percent of pensionable gross salary.  As in other
international organizations, pensions are based on a calculated gross
salary because pension income is taxed.  A Bank or Fund net salary of
$80,000 is assumed to be equivalent to a pensionable gross salary of
$126,000.  Retirement at this level after the maximum credited
service of 35 years may result in a (taxable) pension of $92,000. 
Departing employees are also provided separation grants--provided in
some countries but not in the United States.  Some Bank and Fund
officials regard this as equivalent to the employer-funded portion of
a 401(k) plan.  Health care is more generous than among U.S.  and
French organizations but less so than in Germany.  Leave policies are
more generous than in the United States and less so than in Europe. 
As in other public and private international organizations, moving
expenses are paid upon appointment and separation, and additional
assistance is provided to cover other relocation costs for new
employees.  Employees may also avail themselves of low- or
no-interest loans.\9 Such loans are rare in this country, but common
in the French and German financial sectors. 


--------------------
\8 This does not include Bank and Fund payment of the employer
portion of U.S.  Social Security taxes on behalf of American
employees.  The institutions do not pay into national systems on
behalf of expatriate employees. 

\9 Low-interest loans are made available for specific purposes like
tuition assistance and the initial purchase of a home at the duty
station.  Short-term emergency loans are available with no interest. 


   COST OF MAJOR BENEFITS AND
   ALLOWANCES IN FISCAL YEAR 1994
--------------------------------------------------------- Chapter I:14



   (See figure in printed
   edition.)

Of the benefits provided to all employees, the retirement plan
represents the single greatest expense.  In fiscal year 1994,
retirement costs were valued at over $16,000 per employee, with
participation mandatory for regular employees.  Separation grants
averaged about $28,500 for each departing employee.  Costs associated
with relocating new and departing staff averaged about $16,300 per
employee.  Tax allowances, provided to U.S.  employees, averaged over
$29,000 per employee in fiscal year 1994.  \10

Participating expatriate employees received an average of about
$9,000 for home leave and about $13,500 for their children's
education. 

International organizations, public or private, generally provide
extra expatriate benefits to (1) prevent a loss of real income or
living standards and (2) compensate for the monetary and
psychological costs of living abroad.  Cost-of-living and housing
allowances are common in the first category.  The second includes
payments for moving expenses, home leave, and continuing children's
education at home or in a similar system (e.g., local private schools
aimed at expatriates).  The U.S.  State Department provides all of
these benefits to its staff stationed overseas.  Many private and
some public organizations also provide expatriate premiums--typically
15 percent of base salary. 

The Bank and the Fund do not provide explicit cost-of-living and
housing allowances.  They are not necessary because pay is based on
the U.S.  market, where employers have already taken these factors
into consideration in setting pay.  Expatriate premiums are not
provided in the interest of internal equity.  The international
competitiveness margin maintained by the Bank and the Fund
accomplishes the same purpose. 

The Bank and the Fund provide two benefits specifically for
expatriates.  These are payments for (1) expenses incurred in home
leave and (2) a portion of the cost of educating employees' children
through university.  These two benefits are common among other
organizations.  The Bank and Fund believe that these benefits help to
maintain employee cultural links with their home countries and that
this contributes to maintaining the international character of the
workforce.\11


--------------------
\10 U.S.  staff are required by law to pay federal and state income
taxes and social security taxes in the same manner as self-employed
taxpayers.  Bank and Fund tax allowances compensate U.S.  employees
for these costs, so that U.S.  staff receive about the same net pay
as expatriates. 

\11 Many staff are U.S.  permanent resident aliens.  Since 1985, new
staff in this status have not been eligible for expatriate benefits,
but those on board at that time were permitted to maintain their
eligibility. 


   RECRUITMENT AND RETENTION
--------------------------------------------------------- Chapter I:15



   (See figure in printed
   edition.)

Although we found no accepted standards in this area, the
organizations appear to recruit and retain staff with only modest
difficulty.  Professional job offer rejection rates in 1994 were
about 21 percent at entry level and about 6 percent at mid-career
levels.\12 Bank and Fund officials point out that rejections for
mid-career hires understate recruiting difficulties, however, because
those who are not interested often withdraw before receiving offers. 
Excluding retirements, voluntary separations average just over 2
percent, which is in line with experience in the U.S.  government and
the international organizations we reviewed. 

Recruitment and retention difficulties center on certain scarce or
highly paid professionals (e.g., investment bankers and environmental
economists) and candidates from some other countries (e.g., Germany
and Japan).  Bank and Fund officials commented that recruitment is
complicated by the institutions' attempting to find individuals who
possess specific educational backgrounds and skills, developing
country experience, and English language ability while also
addressing national diversity and gender recruitment goals. 

Pay is a factor in recruiting difficulties.  About 13 percent of Bank
offers in recent months were increased above normal levels to
convince candidates to accept positions.  Offers at the International
Finance Corporation (mainly investment officers) were rejected at
three times the overall Bank rate.  European, Japanese, and private
sector candidates often view pay as inadequate. 

The following factors, among others, are also cited as deterrents,
particularly for expatriate candidates:  disrupted spouse careers,
removal from established career tracks,\13 inferior benefits compared
with those available at home, removing children from the home
culture, and the perceived danger of living in Washington.  The joint
committee that conducted the last overall systemic review recommended
that consideration be given to a system of additional incentives to
attract staff with critical skills, but no action has been taken due
to concern that such a system would be difficult to administer
fairly. 


--------------------
\12 These rates exclude information for one unit of the Bank
Group--the International Finance Corporation.  The Corporation
experiences much higher rejection rates than other Bank Group members
because its staff is concentrated in the relatively high-paying
investment and finance fields. 

\13 Concern about disrupting established careers is elevated by
limited promotion potential for mid-career employees and by the
increasing use of term appointments.  This is more of a concern at
the Bank than at the Fund because the Bank recruits a higher
percentage of its employees at the mid-career level. 


   COMPARISON OF STAFF NATIONALITY
   AND VOTING POWER (SELECTED
   COUNTRIES)
--------------------------------------------------------- Chapter I:16



   (See figure in printed
   edition.)

Note:  Part I countries are the United States, the United Kingdom,
Japan, France, Germany, Canada, Italy, Australia, Austria, Belgium,
Denmark, Finland, Iceland, Ireland, Kuwait, Liechtenstein,
Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Russia,
South Africa, Spain, Sweden, Switzerland, and the United Arab
Emirates.  Part II includes all other member countries. 

There are no official staffing quotas by country at the Bank and the
Fund.  However, voting power, which is allocated according to each
member's financial support for the two institutions, is used as a
rough indicator of appropriate staffing levels by country.  While the
United States, the United Kingdom, and developing countries in
general are overrepresented in relation to their voting power in the
two institutions, Japan, Germany, France and other relatively
high-salary countries are underrepresented.  Some Bank and Fund
officials commented that reductions in Bank and Fund compensation
would exacerbate existing difficulties in recruiting from these
countries. 


COMPARATOR ORGANIZATIONS
=========================================================== Appendix I


   PROFESSIONAL STAFF SALARIES
--------------------------------------------------------- Appendix I:1

The Bank and Fund 1995 professional salary scale is based on
information gathered by Hay Management Consultants from the following
organizations: 


      UNITED STATES
------------------------------------------------------- Appendix I:1.1