Change at the top of Luxembourg's EU institutions
New leaders were appointed in 2022 at three of Luxembourg's key EU institutions, where staff recruitment is still a struggle
It was all change at the top of three important European institutions based in Luxembourg last year, with chiefs stepping down and other high-level reshuffles.
It started with former Luxembourg Finance Minister Pierre Gramegna running for the role of managing director of the bloc’s €500 billion bailout fund. The European Stability Mechanism (ESM) is based in Luxembourg’s Kirchberg district of EU institutions, which also includes the European Court of Auditors (ECA) and the European Investment Bank (EIB).
At the end of 2021, Gramegna stepped down from government saying he wanted to spend more time with his family. Months later, he was in the running for the job of ESM chief Klaus Regling, who retired in October.
But Gramegna's route to heading the ESM was no plain sailing. None of the candidates garnered enough support from the 19 finance ministers of the countries of the euro area who make up the ESM’s board of governors. The last two candidates in the race – Gramegna and his Portuguese rival João Leão – dropped out simultaneously in September.
The ESM still had not found a replacement when Regling retired in October. Christophe Frankel, who has been Regling's deputy since the ESM was created in 2010, stepped in temporarily.
But in November, Gramegna stepped back into the picture as the sole candidate. He was approved by the board of governors and started his five-year term on 1 December.
New president for EU auditors
Just down the road from the ESM, the European Union service which verifies how the EU budget is spent also gained a new leader. Irish citizen Tony Murphy became president of the ECA, replacing Klaus-Heiner Lehne, who stepped down after six years in September.
The organisation's 26 members – one from each EU country but Portugal, which has left the position open after its member died last year – cast a vote in a secret ballot.
Any of the existing members were able to put themselves forward for the three-year presidency mandate and five of them did so. None of them gathered enough votes in two first rounds of polling, and four of the five pulled out ahead of the final vote.
European Investment Fund's new CEO
There were also changes at the helm of the European Investment Fund (EIF), which is part of the EIB and aims to help small- and medium-sized businesses access finance.
EIF Chief Executive Officer Alain Godard resigned in September. EIB Secretary-General Marjut Falkstedt replaced him on from 1 January. Finnish national Falkstedt was previously the EIF's deputy chief executive from 2013 to 2015.
Godard’s departure confirmed an earlier Luxembourg Times report stating he would step down before the end of 2022 after what a source said was conflict with EIB President Werner Hoyer. Godard left after almost three years, two years before his mandate expired.
Godard became managing director and chairman of a new EU tech fund called the European Fund for Digital Sovereignty. It is part of the European Scale-Up programme, which aims to make the EU home to at least 10 tech giants valued at more than €100 billion by 2030. The fund will back promising high-tech companies that want to grow from start-ups to more developed ventures.
European Investment Bank reshuffle
Also at the EIB, Nicholas Barclay – the brother of former British Brexit Minister Stephen Barclay – was promoted into one of the most senior positions at the EU lender.
As a director general, the British national will report directly to the EIB's management committee, which Hoyer leads. Barclay will oversee cybersecurity, data systems, building management and staff as head of the corporate services directorate. Directors general also often represent the bank at meetings.
In 2020, Barclay took over the EIB’s embattled compliance department. He succeeded 20-year EIB veteran Gerard Hütz, who left office shortly after a damning internal audit report and whistleblowing complaints revealed a disregard for anti-money laundering rules.
Barclay's rise comes as the number of Britons at EU institutions is dwindling, given the bloc can no longer recruit UK citizens after Brexit. That has led many to acquire EU nationality, for instance in Ireland or Luxembourg.
Struggle to recruit
EU institutions in Luxembourg continue to struggle to hire staff, with its leaders blaming the Grand Duchy’s high cost of living and the fact that jobs pay the same salary as in Brussels, where housing is cheaper.
EU staff also could miss out on their regular pay increase over the coming years - a move that could make Luxembourg even more expensive and less attractive - as inflation makes the bloc tighten its purse string.
Under normal circumstances, the EU ups the salaries of its small army of staff annually, in line with that of civil servants in countries across the bloc. But EU leaders ordered an assessment into whether the bloc can afford bumping up wages without dipping into emergency funds, a note from the European Council’s budget committee to the European Commission stated.
Employees at the EIB received no pay increase when Luxembourg raised wages and pensions by 2.5% in April, two people familiar with the bank’s payslips told the Luxembourg Times.
Some EU administrative and IT staff earn less than Luxembourg’s national minimum wage, the European Court of Auditors said in a letter to the Commission.
A possible housing allowance to buffer the strain on those considering moving to the EU's second administrative centre had been discussed by representatives of Luxembourg’s EU institutions and Johannes Hahn, the European Commissioner responsible for the budget. But the Commission dismissed the prospect of raising salaries in the Grand Duchy and shelved plans for a housing allowance for new starters.