Distinguished colleagues, ladies and gentlemen,
Good afternoon and Happy New Year. My best wishes to you and your families.
2013 was an exceptional year for the Union, and I expect 2014 will be even better.
This is the last year I will be with you as Secretary General. Having spent the last 15 years of my life as an ITU elected official, I feel both honoured and privileged to have led this great organization.
ITU may be one of the oldest organizations in the UN system, but we are also one of the strongest, and that is because of all of you.
Many colleagues have left us and new faces have joined us – but we have always remained strong. And we will continue to be strong. This organization has a bright future ahead.
I have just returned from Davos, where I was delighted to see the attention ITU is receiving in all the debates related to our work, and even more importantly the recognition that ICTs are being given - by world leaders and corporate executives - as enablers of overall economic and social development.
One of my purposes of asking you all to join me here this afternoon is to take a moment to outline what lies ahead in 2014.
Tomorrow we will hold our 6th and final senior management retreat during my tenure as ITU Secretary General. We will be focusing on the road ahead as we gear up for ITU’s 19th Plenipotentiary Conference.
We will then kick off our series of Council working groups where a number of key issues will be finalized before they are tabled to Council itself later in May.
One of the major items for discussion is of course our Strategic Plan for the period 2016-2019. Francois has been successfully leading the inter-sectoral coordination group on this activity, and I look forward to presenting the plan to the Council Working Group later in February.
A related item is of course ITU’s financial plan. Let me assure you that we are working hard to present a balanced plan. We are also looking to improve our working methods in order to create further efficiencies. I will say more about finance in a moment, but let me just outline some of the key events that will shape the next twelve months.
In March, we will have the spring meeting of the Broadband Commission in Dublin where the new working group on Financing and Investment will meet for the first time. The Commission will hold its fall meeting in September just before the UN General Assembly.
The end of March is of course the major event for ITU’s Development Sector – the 6th World Telecommunication Development Conference. I am pleased that we were able to successfully conclude the consultation process on the change of date and venue for the WTDC. It will now be held in Dubai from 30 March to 10 April, at the kind invitation of the UAE, and I appreciate the efforts of all colleagues across the Union to ensure the smooth transition to the new venue.
Just after WTDC we will have the last meeting of the WSIS+10 Preparatory Process in Egypt. We are working to identify an alternative venue for the high level event, and hope to be able to organize it in June.
On the 24th of April we will once again celebrate Girls in ICT day. I was pleased to see that one of the two main issues of the UNSG in Davos was the need to erase gender inequality and harness “girl power” to reach development goals. I could not agree with him more. I am pleased with the work that has been carried out by the gender task force in developing an action plan to implement our gender policy, which was approved last Council. I have already taken steps this year to ensure inclusion of both genders in statutory committees and on all short lists. I have also decided to have all staff trained on gender mainstreaming. In addition:
- Draft Gender Guidelines will be elaborated for recruitment; staff management; programme management; communication; and training.
- HR will intensify outreach activities in order to attract qualified women to take up employment opportunities in ITU.
- We will also be launching a gender award externally to ITU Members to recognize and celebrate individual contributions and leadership examples to promote gender equality.
In May, we will have the ITU Council as well as the WTISD celebrations. This year we hope our Councillors will stay with us for this celebration, around the theme of Broadband for Sustainable Development.
Dear colleagues, as you know 2015 will be a very special year for ITU, as we will be celebrating our 150th anniversary. During Council, we will be putting forward our plan to celebrate this special occasion. This celebration will be a unique opportunity to celebrate the unique contribution of ITU to promote a connected world, and to refresh ITU´s image to continue engaging the broader ICT ecosystem so they continue engaging with us for another 150 years of innovation in ICTs.
At the same time I want ITU 150 to be a celebration of the contribution of all of you to the work of the union. ITU staff over the years have made of this organization what it is, and should have a special role to play in the activities to be organized throughout years.
I want you all to be actors of this celebration, not spectators. To achieve this, I have request the ITU Staff Council, the structure that represent you all in the organization, to collect your views, proposals and ideas on what kind of activity you would like to suggest for the anniversary. The best proposals will be selected and included in the official programme of activities, taking into account the available financial resources.
The ITU Staff Council will follow up on this idea and communicate with all of you to make you part of this special occasion. I thank you all once again for your commitment and contribution to the work of the Union.
Over the summer months, our work will not stop, with GSR and other events taking place. In September, as I mentioned, we will have the second meeting of the Broadband Commission. In October, we will head to Busan for the ITU Plenipotentiary Conference, which takes places from the 20th of October to the 7th of November. We are very pleased with the commitment of the Republic of Korea and are confident the event will be a great success. The Chairman-Designate Mr Min will be with us in March for another round of briefings. Our Member States are preparing at the regional level and we look forward to their constructive inputs.
In December, we will wrap up the year with World Telecom in Doha. And indeed there are many other events that I have not mentioned that will keep us all busy throughout the year, including the RRB, the Sectoral advisory boards and the preparations for next year’s WRC.
Let me now move on to ITU’s financial situation.
Before looking ahead, I would like to give you an update concerning the financial situation for the last biennium, covering 2012 and 2013.
The budget for 2013 was implemented successfully, thanks to the excellent level of cooperation and tireless efforts from all three sectors and the General Secretariat.
The final figures for 2013 will be available by end of March 2014, before the External auditors start their work.
Looking ahead to this biennium, covering 2014 and 2015, in Resolution 1359 the last session of Council approved a very tight budget of CHF 331 million, wherein ITU needs to absorb an additional CHF 5.5 million for various staff-related costs, as well as maintaining an ITU-wide 5% vacancy rate, which is equivalent to CHF 12.5 million.
Efficiency measures are currently being implemented across all sectors and departments which include paperless systems; the automation of processes; the external hosting of ICT commodity services; improvements in travel cost management; and improvements in the procurement system.
As you know, the staff parking subsidy has been eliminated effective January 2014, resulting in further savings in expenses, which amount to the equivalent of the annual cost of about three professional posts
Additional savings are envisaged when travel requests are submitted at least 20 days prior to departure, in order to take advantage of the lowest non-flexible air ticket costs. This is expected to generate savings of around 20% on the annual budget for official travel.
Following the UN Secretary-General’s recent announcements, we are also bringing ITU policy in line with UN policy concerning travel, and this will result in further significant savings for the Union.
The relevant Service Order concerning modifications to official travel has already been issued.
However, despite these efficiency measures, we still expect to see an excess in total Union expenses for 2014-2015 of CHF 5.6 million.
This is mainly due to revenue levels. The assessed contribution from a certain Member State is 9 contributory units less than foreseen. I am working with Elected officials to find these 9 units in collaboration with Regional Directors. Fortunately, Council 2013 granted me the flexibility, in Resolution 1359, to compensate overspend on categories 1 and 2 (Staff and Other Staff Costs) with savings on categories 3 to 9 (non-staff costs), and to make the necessary transfers, if required, while respecting the decision on the overall amount to be withdrawn from the Reserve Account.
This will entail a need for increased efficiency in the management of vacant posts, including recruitment delays.
I would like to add here that in the current climate our Member States would not likely approve any increase in ITU’s budget. Many of our administrations have themselves faced significant budget and staff cuts, and this has been highlighted frequently to us by our membership.
As senior management we have continued to work very hard to maintain staffing levels and keep financial impacts on staff to the minimum.
Furthermore, Council 2013 also authorized me to withdraw CHF 4 million from the Reserve Account to set-up the After Service Health Insurance fund, ASHI, as a first step towards addressing unfunded long-term liabilities.
Further measures contributing to the funding of ASHI include the increase in retirement age for new staff joining the Union from 1 January 2014 onwards, from 62 to 65 years, as well as the identification of alternative solutions to the current Staff Health Insurance Fund, SHIF.
We have also proceeded with a limited number of early separation packages, on a case-by-case basis, where this is beneficial for the Union, and where the staff members concerned are not going to be replaced.
We are now working diligently in the preparation of the draft financial plan 2016-2019, focusing in particular on ways of accomplishing ITU’s mission without increasing the number of posts.
It is my intention, as Secretary General, to propose that the contributory unit be maintained at the current level of CHF 318,000. As was done at the past Plenipotentiary Conference, this would be a good basis for discussion of the Financial Plan in good faith for all Members, and allow for adequate preparation before PP-14.
The Financial Plan is linked to the draft Strategic Plan for 2016-2019 and the strategic objectives and goals and the priorities identified therein. The draft Financial Plan thus provides a basis for setting the strategic objectives and priorities in terms of financial levels.
By a revised Decision 5, on Revenue and Expenses for the Union for the period 2016-2019, the 2014 Plenipotentiary Conference is expected to establish the framework and the directives under which the two biennial budgets for 2016-2017 and 2018-2019 shall be developed.
Concerning the revenue side, the main assumptions are:
- a) Assessed contributions from Member States, Sector Members, Associates and Academia are based on actuals at 31 December 2013 (345 units for Member States). Assessed contributions from Sector Members and Associates have fallen from CHF 47.0 million in 2008-2009 to CHF 33.8 million in 2014-2015, which is the base for 2016-2019.
b) Cost recovery revenue is to remain constant.
c) No withdrawal from the Reserve Account is foreseen in the draft Financial Plan.
It should be noted that the amount of the contributory unit has decreased from CHF 334,000 in 1997 to CHF 318,000 in 2006-2007 and has remained unchanged since then.
Concerning the expenses side, the main assumptions are:
- Extrapolation of the approved budget for 2014-2015 for the 2016-2019 financial period, adjusted for programme variations.
- Programme variation showing the number of main conferences is included in the draft Financial Plan.
- Staff cost calculations that include the actual cost forecast of each post, step increments, replenishment of repatriation fund, cumulated leave, installation costs and increases in education grants and health insurance contributions and possible variations in the conditions of service applied in the United Nations common system.
- Financial resources for medium and long-term maintenance or replacement of ITU buildings. The replacement of the Varembé building is anticipated.
- Financial resources for the replenishment of the ICT Capital Fund.
- Financial resources for long-term liabilities such as ASHI, repatriation grants, accrued annual leave. Steps have to be taken to gradually cover these requirements and the current negative net assets of the Union which amounted to CHF 228 million at 31 December 2012.
The difference between forecast revenue and expenses highlights a shortfall of CHF 88.4 million in the first draft 2016-2019 Financial Plan. I instructed the Financial Resources and Management Department, in collaboration with the financial controllers of the Sectors, to restore the 5% vacancy rate before the document will be submitted to the Council working groups.
The replacement of the Varembé building will be funded by a loan of CHF 150 million over 50 years that would be granted by the Swiss Authorities (managed via their delegated organ, FIPOI). The annual reimbursement would amount to CHF 3 million after completion of the construction, which is planned for 2018. A first loan settlement has been forecast for 2019 in the draft Financial Plan. Nevertheless, and within the total project budget, studies and design phases will be carried out during 2016-2019, for which the total annual reimbursement is estimated to be CHF 0.6 million over the 4-year period.
The replacement of the existing Varembé building would allow the ITU to save the maintenance and repair costs for the old building. Maintenance works on the Varembé building have totalled more than CHF 10 million since 2001, with much more needed for future upkeep. For instance, more than CHF 30 million would be needed for the obligatory façade replacement. The net result of renovation to the existing structure would still be a building that is not fully compliant with current standards for new buildings. FIPOI’s technical experts have assessed the existing building and the project vision, and have concluded that demolition and replacement is the appropriate strategy.
The adoption of IPSAS has resulted, among other things, in the recognition in the financial statements of the total liability for long-term employee benefits payable to active and former staff members.
In the absence of reserves dedicated to the absorption of these costs, the After Service Health Insurance (known as ‘ASHI’) long-term liabilities constitute the main part of the negative net assets of the Union, amounting to CHF 228 million at 31 December 2012. Health insurance costs, which are shared between active staff members, retirees and the ITU, have risen considerably over the years due mainly to the increased population of retirees, higher average life expectancy and the rise in actual and expected medical costs in Switzerland. Actuarial projections show that the ASHI liability will continue to grow over the next 10 years.
The following measures are under consideration and constitute the basis of a long-term plan to gradually cover the unfunded obligation:
a) 50% of the negative net assets are expected to be covered by:
Expected fluctuations in the actuarial assumptions in the long-term, such as an increase in the discount rate based on the long-term evolution of market yields on government bonds.
Reducing the related obligation through optimized cost containment and monitoring of the claims, and adapting, if so needed, the current benefits.
An increase in retirement age to 65, so that active staff members are contributing more to the health insurance program than retirees.
Ensuring effective balance in the pay-as-you-go coverage on the mid-term, by increasing the contribution rate of active staff, retirees and the ITU. The base contribution rate was 3.3% in the 2012-2013 budget, 3.91% in the 2014 - 2015 budget and is settled at 5.16% in the 2016-2019 Financial Plan, in line with conducted actuarial studies. An increase of CHF 18.0 million (CHF 9.2 million for retirees and CHF 8.8 million for active staff) is planned for health insurance in the draft 2016-2019 Financial Plan.
b) 50% of the unfunded obligation is expected to be covered by the progressive constitution of an ASHI Reserve Fund in the ITU Accounts:
- Council decided to create such a Fund at its 2013 session and to make a first payment of CHF 4 million coming from the Reserve Account.
- An annual payment of CHF 2 million is included in the draft Financial Plan to fund the ASHI Reserve Account.
- A percentage of any future ITU regular budget surpluses could also be allocated to the ASHI Reserve.
c) Voluntary contributions are most welcome to support the ITU in covering the unfunded obligation.
By implementing the above measures the current ITU liabilities would be significantly reduced if not entirely covered within a 50-year period. The evolution of the ASHI liability will be carefully monitored. Should the coverage of the negative net assets be reached within a shorter timeframe than planned, the contribution rate and annual payment into the ASHI Reserve Account will be revised and decreased accordingly.
The construction of the new Varembé building would also contribute in the long-term strategy to reinforce the ITU overall assets.
The financing of ASHI is common to many United Nations (UN) System organizations. The UN System Chief Executive Board for Coordination (CEB) High-Level Committee on Management (HCLM) has identified the need for a common approach to the funding of growing ASHI liabilities within its Priority Issues for 2013-2016. As it is a sensitive issue, a concerted approach for all the UN organizations is advocated in order to define a long-term solution acceptable for ASHI participants as well as for the Organizations and the Member States.
Ladies and gentlemen,
As I mentioned at the last staff meeting, the ITU will be changing to a new Health Insurance provider. This change is necessary for the Union to continue providing cost effective benefits to serving and former officials.
A Working group led by HRMD, with members representing serving and retired staff as well as management, has spent many months identifying the most viable option for current and former ITU staff.
Van Breda Cigna has been selected to provide us with medical insurance, and our contract with them will start on 1 May 2014. Van Breda Cigna has over 50 years’ experience and is well known for international health care benefits. This insurer is already used by other UN agencies and international organizations.
You may rest assured that the new scheme will provide similar benefits with some improvements, especially in terms of service.
The new scheme will be introduced shortly and information sessions will take place where you will be able to ask questions on any particular concerns you may have.
Dear colleagues, as I mentioned in the beginning, we are a strong organization and we will continue to be.
We will adapt to the changing global and ensure that our future is bright. In my last year as Secretary General, I look forward to working with all of you over the course of the year ahead. We will face these challenges together and I am sure we will be triumphant.