Viewing page 107 of 474

This transcription has been completed. Contact us with corrections.

-99-

The implementation of the Canal Treaties has resulted in a significant shift from a subsidized American economic system to a heavy reliance on the local economy for the supply of basic items for both the Smithsonian activities and its employees. In order to meet this need, as well as to compensate employees for the loss of the tropical differential (called for in the Panama Canal Act of 1979), the Smithsonian has developed a new personnel system to compensate employees in line with the State and Labor Departments' standards for employees overseas. The new plan, consistent with Panama Canal Act provisions, will allow for a cost-of-living allowance and quarters allowance (to cover the cost of rent and utilities) to be paid to all U.S. employees. These allowances will replace the present 15 percent tropical differential.

The election of our own employment plan, versus the Panama Canal Employment System (PCES), being set up primarily for Panama Canal Commission employees, is based on management's decision that the PCES is an interim system designed only to meet the needs of the Panama Canal Commission, which will phase out of existence by the year 2000. Since the Smithsonian, under separate agreement signed January 5, 1977, with the Republic of Panama, expects to maintain a presence in Panama beyond the life of the Treaty, a separate and more permanent personnel system was deemed advisable.

In order to meet the costs of the new personnel system, as well as unforeseen costs of Treaty implementation, the Smithsonian submitted a supplemental request of $348,000 to the Office of Management and Budget on November 14 for consideration. We are hopeful that this request will be successful so that the Institution will be able to meet its full obligations under the Panama Canal Treaties.