Transcript of a Conference Call by a Senior IMF Official on IMF Restructuring

Washington, D.C.
Tuesday, April 29, 2008

MS. LOTZE: Welcome to this conference call on the organizational restructuring of the IMF. I'm Conny Lotze of Media Relations, and I have a Senior IMF Official here, who will answer all your questions on this. Let me turn the floor over to him.

SENIOR IMF OFFICIAL: Thank you very much, Conny, and thank you all for joining us. Let me just take five minutes to bring you up to date on where we are and essentially walk you through what's already in the press release that you should be getting momentarily or have already received. First, just to say that we are now at an important phase in the restructuring process of the IMF, because we have completed last week the deadline window for the voluntary separations packages, which, as you know, was an important clank of this restructuring. I want to share with you the results of that process and work we do next with it.

The first thing I want to say is that we had two objectives for this separations and downsizing effort: first, to rely as much as possible on volunteers rather than on mandatory separations to achieve the needed reductions of 380 positions; and second, to achieve this reduction in a way that would better align our staff profile with the future business needs.

And I'm happy to say is that at the end of this phase, we think we will be able to achieve both of those objectives. We have 591 eligible staff who have volunteered for this separations package, and this will enable us to obviously meet the 380 positions without relying on a generalized mandatory phase.

And at the same time, the profile of the staff who have volunteered enables us to do so while also achieving our refocusing objectives, because the volunteers are proportionately higher in both the senior staff group, where we have determined the fund was too top heavy, and amongst the administrative and support staff, where are numbers were larger relative to other international organizations. So we will be able to adapt to that newer profile, as well.

Now, since the total number of volunteers, 591, is larger than the 380, we are going to proceed in two ways. First, we will be able to accommodate some of the request for voluntary separations in excess of the required 380, because this will facilitate the reskilling of our staff even as we reduce our total numbers. But for some of the staff volunteer, and in particular for the staff at the middle level of the organization, we expect that somewhere between 100 and 125 out of the total of 591 will be asked to stay.

This is something that we had built into the framework from the beginning, so it's clear, and then the rules as to how this will be done have been set out. But that is an important dimension of going forward, because our objective is to achieve all of this within the budget that had been allocated for it, so we want to stay within that budget constraint.

The final point I want to make to you is that as part of this restructuring process, six of the IMF department heads, which is the most senior level of staff, have also decided to volunteer to leave the Fund, in some cases bringing forward their retirement, and I can give you their names—they are all in the press release.

Of course, while the percentage is a proportion—about the same as for other senior staff, they have made important contributions, and the Managing Director has—as is in the press release—has gone out, expressed his thanks to this group for the service they have provided and the leadership they have provided for the Fund.

It does mean, of course, that this will now be a process of changing renewal at all levels in the Fund. And this was very much tied in with the refocusing agenda, because ultimately, we see the downsizing and reskilling as being building blocks for the refocusing of the Fund to better meet the needs of its members, and that's where the renewal and change agenda is heading.

So I wanted to give you that background, and I'm very happy to answer any questions or clarify any issues that you have. We can now move to the Q and A session.

QUESTIONER: I understand that you guys had originally targeted cutting costs by 100 million; how much of that was going to be from staff cuts? And what kind of cost cuts do you expect to achieve from letting go nearly 500 people?

IMF OFFICIAL: We have, indeed, targeted cost reductions of about 100 million, and we are still aiming to achieve that 100 million cost reduction. And we had anticipated that about two-thirds of that would come from a reduction in stock of about 400, 380 to be precise, and the remainder would come from other non-stock related cuts that we have been undertaking.

So we will be reducing our stock by 400. But as I said, by allowing 500 to leave, that enables us also to reskill and bring in the kind of expertise. So the reduction in staff that we envision remains the same, which is about 380, and the net reductions in cost that we had anticipated and budgets remain the same.

QUESTIONER: Could you expound a little bit about the total size of the work force there, and also whether or not all of these jobs will be cut from the Washington headquarters, or is this something that's going to be also heading field offices?

IMF OFFICIAL: Thank you. First of all, just to give you the numbers on the size, the eligible employees that could participate in this process are 2,901, and that includes both the staff who work in the Fund, as well as employees and staff who work in the offices of the executive directors who comprise the Fund Board.

Now, these cuts are going to, and reductions in numbers, are going to take place over a two to three year period, but the majority of them will take place during the course of the next 12 months. They're going to be spaced out over the next 12 months because we are trying to meet both the business needs of the institution, and obviously the preferences and needs of the individuals who are volunteering, and we expect a lot of this will take place over the next 12 months or so, and we are still working on precisely when and how.

The vast majority of these cuts will be made in the headquarters of the Fund simply because the vast majority of the staff of the Fund is in headquarters. However, we do envision also, as some consolidation and reduction in some of our staff overseas, but as I say, that's a very small single digit percentage number for the total staff, and the majority of the cuts will be in Washington.

QUESTIONER: What is the total employee base right now at the IMF?

IMF OFFICIAL: Well, as I said, the total employee base is 2,901, which includes both the staff working in the Fund, as fund staff, which is some 2,640 odd, and the remaining are staff who work in the offices of the executive directors who comprise the IMF board, and of the Independent Evaluation Office, which is attached to the IMF board.

QUESTIONER: Because you had said eligible employees, so that means that anyone was eligible pretty much?

IMF OFFICIAL: Yes, and the reason I use the term eligible is because it doesn't include on the one hand short term contractor who are working in the IMF, and at the same time, it includes people who are working in the offices of the Executive Director. Sometimes when we use the numbers for IMF staff, you will often hear a number of 2,600 or 2,640, because that's the sort of core staff working as staff rather than the others that I just mentioned, so that's why we wanted it to be clear.

QUESTIONER: I'd like to ask about the make-up of the people seeking redundancy. I think you made clear that you wanted to sort of strip down the people in management ranks, and particularly seeking redundancies from those who, for example, economists. Are you confident that you've got this balance right? And of those who were subscribing to the redundancy package that you've rejected, can you confirm whether most of those were, in fact, non-management economists?

IMF OFFICIAL: Well, two things; first of all, just a simple factual thing, we haven't actually made the decision yet on rejecting them. I mean you're ahead of the curve. This is simply how we are going to proceed, so just to be clear on where we are in the process.

But in terms of the substantive answer to your question, actually if you look at the numbers of people that have volunteered for the separation, in the three groups, which is the management, the administrative and support staff, and then the mid level professional economists primarily, but also some specialists, the percentages who have volunteered are about a quarter for the managers and for the support staff, but only about 16 percent for the mid level economists. So —

QUESTIONER: I'm sorry?

IMF OFFICIAL: One six, 16 percent. So, in fact, a smaller proportion of the economists have volunteered. The fact is that because they're a much larger number as a part of the Fund, of course, in actual number, that turns out to be larger. But the basic point here is that the pattern of the volunteers, in effect, reflect the overall refocusing agenda, which is that we would like to see higher proportion reductions at the top, and if you like, among the administrative staff, and middle management administrative staff, and that's what we're getting.

And even though a smaller portion of economists have volunteered, that is still higher than the even smaller percentage that we had anticipated in terms of reductions for that group. That's why the majority of the, or virtually all of the right of refusal would need to be exercised for that group.

QUESTIONER: Just to clarify: so approximately half of all applications, the number I'm talking about, came from mid level economists; is that what you're saying?

IMF OFFICIAL: I would say about 40—a little under half, about 40 percent, to be precise. And in terms of the total staff, they're, of course, much larger than that, so they comprise 1,700 out of the 2,900 figure that I gave you. So in a sense, because by virtue of the fact that this is the largest group, then not surprisingly, the largest number of applications came from that, even though a proportion of that group, they applied less because the message about what we were trying to do in terms of refocusing the profile of staff was clear from the beginning.

QUESTIONER: And just to clarify one more thing, so, even though you're not decided on if they will be rejected, you can say that it's likely that these are the people who are going to be told now you've got to stay?

IMF OFFICIAL: Some of the people in that group. Not all of them, obviously, but that some of the people from that group—even though they have the smallest proportions in terms of volunteering, they are the ones where we are going to have to exercise the right of refusal for the reasons that I have named.

QUESTIONER: You talk about the profiles of new people that the IMF is seeking. What is that profile? I mean, what are the qualities of these people?

Obviously, if the middle economists are leaving, are these kind of going to be some new—I mean, people in the financial world are particularly some of the premium to a lot of these institutions. Who are the people that the Fund is hoping to attract?

IMF OFFICIAL: Well, first of all, just to clarify, to make the point again, the majority of people who will be leaving are not mid-level economists. As I said, we have 591 volunteers. We expect that somewhere between 100 and 125 of them will not be able to take advantage of the package for the reasons that I've set out. We expect that almost all of them will be mid-level staff, some of whom are not economists, because we do have specialists in the building who are not economists.

So, the majority of staff who will be leaving will be either middle managers and senior managers or administrative and support staff. So, we expect that somewhere around 300, a little over 300 staff in those categories will be leaving.

Now, and also to make the point that the mid-level economists who are leaving are, as I said, a much smaller proportion of that group, which is the largest group in the Fund.

Now, what kind of staff are we looking to recruit, given that we anticipate that somewhere about 100 additional people over and above the 380 will be leaving, and, so, that gives us some space, along with natural attrition to bring in other people over the course of the next two or three years?

Well, we need to go back to what is the primary focus of the Fund, as set out in terms of the strategies as the Managing Director has laid out. What the IMFC and the membership is asking for, which is primarily, in the first instance, the focus on micro-financial issues, and what the Managing Director has said on this is that we do anticipate that we will need to bring in people who have a better understanding of financial markets. We think that that's where increasingly our membership is asking us for help, so that'll be one important area where we would want to bring in people.

And then the second issue is simply one of renewal. There I would make the point that a number of the people who will be leaving have been here quite a long time, and, so, there's a point where they are ready to move on. I think that we want to go out and bring in an organization which is static or declining at the moment in terms of numbers. It's very important to keep opening up the space for internal promotions for growth and to bring in people from outside because that's what will drive the kind of vibrant professional growth environment that will attract and retain the best people.

QUESTIONER: And this is kind of follow-up on this. If the Fund's aim is to attract the best of these people from varying financial markets. I mean, you have to offer some competitive packages. Is that not going to be more expensive? I mean, you got a falling dollar. To attract new recruits, obviously, that's going to be another exercise, considering you can earn more in euro. How does the Fund remain competitive?

IMF OFFICIAL: Right. I mean, absolutely right that the Fund needs to remain competitive, and that's why we have a competition system that does recognize that we have staff from all over the world and the design of this is to take that into account. But the challenge remains in our institution and in the Fund, particularly when you compete with financial markets. I think we see that there are people in financial markets, that we are able to attract and retain. They recognize that they're going to get less money at the Fund than they could make elsewhere, but they come to the Fund because the Fund can offer them a decent financial package, but, most importantly, it offers them an opportunity to contribute in public policy and public service in ways that they think are useful and attractive.

But to do that—and this is why I think this refocusing and downsizing is an important part of the agenda—it is not simply the packets that we're going to be offering, but it's the working environment within which younger people who come in, particularly from outside, feel that there is the opportunity for growth and for professional involvement. That's why the initial focus on targeting the very heavy, sort of comparatively heavy, middle management layer that existed here, and which we think that by slimming that down, we will provide actually the younger professional economists and other people opportunities for both growing and for contributing in ways that they and the membership find useful.

QUESTIONER: Yes, sir. I have a couple of more questions. First of all, are you concerned of the number of applications you've had for volunteer redundancies reflect in some way fall off in morale at the organization? And are you concerned that this is in some way, I guess, a testament to a lack of confidence in the organization from within the staff?

And, secondly, to what extent are we going to see the organization push for an income injection to accompany these job cuts, which was first entered into back in December?

IMF OFFICIAL: Okay. Well, I'll take these two questions from Bruce, and then take one more question.

The first one on morale, you know, let me give you a simple number. Eighty-five percent of the professional staff between A-9 and A-15 have volunteered to stay. So, if the numbers have been different, sure, we would have been very concerned about it because this organization's only strength is the staff and the support of membership.

So, the fact that 85 percent of the staff had an opportunity, were given to, say, take advantage of a separation package, if you think, at this point, you want to move on, and they said no, we want to stay here.

Now, second point is that, in fact, as I said earlier, the profile of volunteers is very much in line with the large reductions we want to see among the middle managers, where about a quarter, and about the secretarial and support staff, where, again, a little over a quarter have volunteered. That's perfectly consistent with what we think we would like to do. So, as the aggregate profile, I think it's a fine profile.

Now, the issue you raise though is that, clearly, the important thing is that we move now to delivering on the refocusing and the services that we offer and that the membership expects. If you look at the Spring Meetings, I would say that a lot of the analytical and policy that was done by the IMF during the Spring Meetings, and that is the World Economic Outlook and the GFSR or the discussions that took place during the IMFC, demonstrated for both staff inside, and I would dare say for a lot of leaders of your papers outside, that the IMF clearly has a

contribution to make in terms of helping the members to address issues. Some of the stuff that was in these documents had a pretty long shelf-life in some key publications. So, I think that's the kind of thing that will generate and sustain morale.

And the numbers and profiles of volunteers, frankly, we don't see at the moment as being a big issue, and I can also say that, in a way, you could have had a situation where you didn't have enough volunteers for the clear, major reductions, and then you would actually be in a much more difficult situation of a disruptive and much more difficult mandatory separations process. There is no reason why the two processes, one of which is to say we need 380 volunteers for our separations target, and the second is to offer a general call for volunteers, should automatically result in the same number on both sides. I mean, these are two completely separate equations. So, I think on balance, we are better off being where we are.

Now, on the second issue of income, absolutely. You know, we are very much focused on taking forward the agenda on income. In fact, as you know, the IMFC endorsed, at that point, an income plan, a new income proposal. We were very appreciative of the fact that there's a lot of support for it, including from the U.S. Treasury, where it's clearly set to go to Congress. It is now a governance resolution that is being voted on, and we expect this will be completed next week, which will then enable us to move forward on the income agenda because we do see the income and the expenditure side as being integral. It's two parts of the same packet, and it's applied for the refocusing of the IMF.

So, I'll take one more question if there is one.

QUESTIONER: Yes. Could you please say when were these voluntary packages first offered, and what are the other cost reductions that you're going to be making to reach that $100 million goal?

IMF OFFICIAL: The voluntary packages have been offered since the beginning of March. Of course, before that, there was a lot of discussion about it. There was a need to have ensured that people understood what they were and there was clarity about it, so, there was a lot of communication. But there has been an offer since the beginning of March, and it closed on April 21.

As to the other savings that we are planning, these are savings that are associated with both kind of internal workings, arrangements, things like relating to some of the consolidation of offices outside the IMF in other countries. We are also planning some savings on the travel arrangements that we are making, and some other administrative cost savings internally. I think the admin savings and external representation will together bring about the remaining savings.

MS. LOTZE: All right. Thank you very much everybody for participating.