ECB staff committee protests over bank’s ‘misuse’ of powers

The European Central Bank’s staff committee has accused its president Christine Lagarde and a fellow member of its executive board of not abiding by the principles they recently professed to hold dear.

The four-page letter, sent yesterday (July 28) and seen by Central Banking, reflected on an opinion piece by ECB president Christine Lagarde and a speech on June 7 by Frank Elderson, both of which extolled “European values” such as the rule of law.

The letter – signed by the committee’s spokesperson, Carlos Bowles, on the committee’s behalf – pointed to what the committee saw as a lack of checks and balances on the way the bank operated – issues it said were a result of the ECB’s extraterritorial nature.

The committee said the bank’s executive board had taken an “anti-democratic turn” by “blatantly” rejecting the applicability of European directives giving it the option to negotiate with “social partners” over its employees’ working conditions.

The board, it said, was trying to undermine the ability of staff representatives “to challenge the ECB’s power structure”. This was in reference to a letter ECB director-general Eva Murciano had sent in February that sought to limit the amount of time employees were allowed to spend working as staff representatives.

An ECB spokesperson tells Central Banking that the bank plans to “increase the number and term of elected staff representatives, providing for a broader range of diverse perspectives”.

The proposed changes would increase staff committee terms from two to three years, and the number of representatives on the committee from nine to 10. Committee members would only be allowed to spend 50% of their time on representative duties, while the figure would be 75% for the committee’s spokesperson.

Elections for the staff committee would also change. The committee charged with overseeing the elections would be “chosen from all staff by random draw”, the ECB spokesperson says, and there would be no restrictions on candidates’ campaigns.

“The measures will enable staff representatives to pursue their professional careers and stay closely connected to the ongoing work and public mandate of the ECB while they advocate for staff needs,” the spokesperson adds, noting that staff representatives are being consulted on the changes.

The letter on behalf of the staff committee states that Bowles received another letter this year “instructing him not to mention the existence of a culture of fear within the ECB and its potential operational impact”. It said the board had suppressed the staff committee forum and repeatedly challenged “the legitimacy of the staff to speak with a collective voice, via intermediate bodies”.

The ECB does not deny the existence of this letter, and tells Central Banking its policy is to not comment on emails sent to individual staff members.

In a separate email seen by Central Banking, the staff committee calls on ECB employees to sign petitions urging the board to “realign its internal practices with its external statements and accept the necessary changes”.

No clear separation of powers

The letter sent by the committee took issue with the ECB acting as both “an employer and a legislator”. This, it said, should compel the bank to “show significant restraint when using its legislative prerogative”, which it had failed to do.

This “regularly” tilted the balance of power against employees, among whom there were “widespread concerns” about favouritism in hiring and promotion, and about “the abuse of precarious contracts”.

In January, a leaked transcript from a call hinted at nepotism in the bank’s hiring practices. In April, data from a staff survey suggested that most employees did not trust the executive board and had concerns over career progression, job uncertainty and the human resources department.

Another concern, according to the letter, was the “high level of burnout and suicidality” among bank employees. Last summer’s staff committee survey results pointed to a deterioration in employees’ mental health.

The letter stated that the bank’s behaviour was not in keeping with the “inclusive decision-making, system of checks and balances and respect for the rule of law” that Lagarde had celebrated in her opinion piece; nor with the “rule of law as a constitutional pillar of central banking” that Elderson had highlighted.

It also took issue with what it saw as the ECB’s lack of democratic accountability. Unlike other central banks, where mandates could be “refined and readjusted by an elected parliament”, the ECB could “skip the political domain” and issue instructions to elected governments “going beyond the monetary policy domain”.

The ECB spokesperson says that the bank is “firmly committed to the rule of law and [operates] within a clear employment framework that is closely aligned with EU staff regulations and is subject to European Court of Justice [ECJ] scrutiny”.

The letter stated that although, in theory, EU citizens “have the capacity to amend the ECB’s mandate and how it operates”, this would require changing the treaty regulating the central bank. This was “much more difficult to do than passing a law in a national parliament or even changing a national constitution”.

Not bound by European labour laws

As an employer, the ECB was acting like a “mini-state”, the letter said. It added that the bank was not bound by European labour regulations, which it could interpret on an ad hoc basis.

ECB staff had “practically no available mechanism” to remove the “legislators” when they “do not use that power responsibly, or misuse it”. This made employees dependent on the bank’s power and jeopardised their capacity to “independently express their expert views”.

The ECB spokesperson says the bank “has won the overwhelming majority of court cases before the ECJ on the ECB employment law framework”.

The letter said the significant powers afforded to the bank had been mainly set out in an annex to the 1992 Maastricht Treaty on European Union. It said it was “telling” that these powers had been drafted by officials who were either already central bank governors or who would serve on the ECB’s governing council and executive board.

The last time EU citizens had had a voice in the ECB’s internal functions was when they had voted on the treaty, the letter recalled, and those referendums had been framed as paving the way for the introduction of the single currency.

The letter concluded by recalling Elderson’s apologies from 2024 for having previously said that new staff required “reprogramming”. It said the ECB’s attempts to interfere with staff representation were “not much different” from a call to reprogramme staff.