Current PSI affiliation fee system

Payment by Euro

Fixed amount (0.87Euro/member/year)

Minimum affiliation fee (650Euro/union/year)

Index (100%, 75%, 50%, 25%, 10%)

Problem of payment by Euro

Fluctuation of foreign exchange　　　　 Fall of exchange rate = Increase of

fee

No union can forecast fluctuationDifficult to buy EuroRemittance charge is expensive

Exchange rate against Euro

Country Sep.1

2002

Sep.1

2003

Sept.1

2004

Sept.1

2005

July 6

2006

Change

Australia 1.78 1.70 1.73 1.64 1.72 + 3.4%

Bangladesh 58.85 66.20 74.22 80.40 92.12 - 56.5%

Japan 116.40 128.46 133.02 136.57 147.00 - 26.3%

Malaysia 3.73 4.18 4.63 4.66 4.66 - 24.9%

Nepal 78.80 85.01 90.62 89.70 97.65 - 23.9%

Fixed amount system

Fair to the unions in the same countryUnfair to the unions in different countriesBig burden to the developing countriesFixed and stable only for Euro countries

Minimum affiliation fee (1)

Some unions don’t have financial foundation to pay the minimum affiliation fee of 650Euro because;

membership is too small, union due is too low, difficulties in collecting union dues from all members, etc. These problems are caused by their peculiar

natural, historical, cultural, political and organizational backgrounds.

Minimum affiliation fee (2)

Some unions tend to think it doesn’t matter if they pay only 650Euro even if they can pay more. It happens occasionally where such unions request reduction.

The unions who are intending to affiliate to PSI tend to apply with the membership whose affiliation fee is 650Euro despite having a bigger number of members.

Minimum affiliation fee (3)

Unions who can not pay 650Euro have to submit the request for exemption or reduction till the system to be abolished.

There are unions that have to give up affiliation to PSI because they are not able to pay 650Euro. This disturbs recruitment.

Minimum affiliation fee (4)

Minimum affiliation fee has brought neither the merging of small unions nor the increase of the total income to PSI.

In fact the income from affiliation fees fell even though the number of member organizations affiliated to PSI grew.

Minimum affiliation fee (5)

Decrease of minimum affiliation fee can not resolve essential problems as long as it is fixed amount.

Probability to expand further the gap between true membership and affiliated membership.

Index

Difficult to reflect accurate solvencyGDP might be more reasonable and

clearIndex of Australia = 100Index of Nepal = 10

GDP of Australia = 25,370 GDP of Nepal = 1,310

Vague definition, no up-dating

Arrear

50% affiliates are in arrears in 2005Many requests for exemption,

reduction, delayed payment, etc.Difficult to reject the request to join

PSI activities and to expel from PSI.

Less-registered membership

Big gap between affiliated membership and true membership

Increase free-ridersDiscourage unions from paying full

membership affiliation feesErode mutual trust and solidarity

Who really bears heavy burden?

Need to investigate actual financial condition of affiliates

Whose burden is heavier, Japanese or Nepali?

What is the fair burden?

Principles of new system

International solidarityFairnessTransparency

Our option

Introduce fixed ratio system based on the average salary of members

Pay by EuroAbolish the minimum affiliation feeAbolish the index

Conditions for introducing new system

Definition of average salaryCollecting and updating accurate dataRegister the true membershipProper ratio (reasonable and realistic)Secure enough income for PSIStrict rules for exemption and reductionStrict rules on arrears and expulsion

Trial calculation on Nepal

Current formula 0.87Euro x 10,000members x 10% = 870Euro

New formula ratio: 1 / 50,000, average salary: 612Euro

612Euro x 10,000members / 50,000 = 122Euro

ratio: 1 / 40,000

612Euro x 10,000members / 40,000 = 153Euro

Trial calculation on Malaysia

Current formula 0.87Euro x 10,000 members x 50% = 4,350Euro

New formula ratio: 1 / 50,000, average salary: 3,447Euro

3,447Euro x 10,000 members / 50,000 = 689Euro

ratio: 1 / 40,000

3,447Euro x 10,000 members / 40,000 = 862Euro

Trial calculation on Japan

Current formula 0.87Euro x 10,000 members x 100% = 8,700Euro

New formula ratio: 1 / 50,000, average salary: 40,816Euro

40,816Euo x 10,000 members / 50,000 = 8,163Euro ratio: 1 / 40,000 40,816Euo x 10,000 members / 40,000 = 10,204Euro

Actual burden ratio

Nepal: 1 / 7035

(0.87Euro / 612Euro x 10%)

Malaysia: 1 / 7,924 (0.87Euro / 3,447Euro x 50%)

Japan: 1 / 46,915 (0.87Euro / 40,816Euro x 100%)

Other potential options

Introduce fixed ratio system based on GDP and abolish both of index and minimum affiliation fees

Probably any others

Discussion of Steering Committee (1)

An extensive proposal for a coefficient for a fees level based on average wages

The need for simple, fair fees system The need to use a system based on a single currency The possibility of two tiers of membership in PSI The need for any system to be based on trust The need for financial stability and sustainability for

PSI The possibility of keeping the present system for those

affiliates on the 75-100% indexed rates but to look for a simple and fair system for others – the majority of affiliates but the minority in terms of payment

Discussion of Steering Committee (2)

The need to look for growth at the ‘rich’ end of the membership

The possibility of reviving the former ‘Development and Aid Fund’

The need for PSI to present a better case to show the added value of PSI to affiliates, especially to the major payers

Perhaps a consideration of setting different fees regionally

End

Thank you for listening