Nationality-based pay in the UK shipping industry is under threat

When the government announced a six-month consultation into the law that currently allows ships sailing under the UK flag to pay foreign seafarers different rates on the basis of their nationality, it started a process that could result in the biggest overhaul of the UK shipping industry for decades.

The consultation follows union complaints to the European Commission that section nine of the Race Relations Act – which allows the shipping industry an exemption on having to pay people equal rates regardless of their nationality – must be altered or overturned altogether for the UK to comply with anti-discrimination laws.

“The discrimination is based on nationality and where the seafarer lives,” said Mark Dickinson, assistant general secretary at maritime professionals union Nautilus UK. “That is not allowed in the EU.”

The consultation proposes three options:

  • Do nothing
  • Require ship owners to extend UK rates to staff who hail from countries in the European Economic Area and 11 other designated states with which the EU has trade agreements – the government’s preferred option
  • Abolish the shipping industry exemption in section nine altogether, and require ship owners to pay British wages on UK-flagged ships across the globe.

Estimated cost

The government estimates the second option would result in an extra £8.8m a year to the industry in wages. If the exemption is scrapped completely this would rise to £21m. But ship owners’ trade association the Chamber of Shipping said these were conservative figures.

However, if the second option is adopted, it could have a negative effect on the people the EU is seeking to protect – seamen from member states – as operators are likely to turn to non-European labour. It would also create the unpalatable scenario of it being legal to discriminate against workers from outside the EU on the grounds of nationality, arguably creating more, not less, race discrimination.

If, as seems likely, the government is forced to amend section nine in some way, there are fears that ship owners will withdraw from the UK and switch allegiance to another country, despite there being advantages to their reputations in flying the UK flag.

“If you force owners to pay UK rates to everybody, it would have an absolutely catastrophic effect on the UK shipping industry,” said Ian Livingstone, director of marine employment agency Clyde Recruitment.

The current situation has been building since the entry to the EU of 10 nations – mainly from Eastern Europe – back in 2004. But unions such as the International Transport Workers’ Federation, the RMT, and Nautilus UK have long campaigned that paying people different rates on the grounds of where they come from is morally unacceptable.

“It is disgraceful that legislation aimed at ending discrimination should specifically allow it,” Bob Crow, RMT general secretary, told Personnel Today.

Economic impact

It’s not quite that simple, however, as ships flying the UK flag can be found all over the world, and some may never go near UK waters. Paying UK wages to crew from, say, the Philippines or Korea, could create wage inflation in local economies and result in a flood of well-qualified professionals suddenly seeking a life at sea.

The main gripe for the UK unions has been that British jobs have been lost to workers from low-cost nations such as Latvia and Poland. “There are now just more than 9,000 UK ratings [non-officers] left in the UK maritime industry, compared with 30,000 in 1980,” said Crow.

But according to Tim Springett, head of labour affairs at the Chamber of Shipping, the global nature of shipping means ship owners are only using market forces to run profitable businesses. “The basic reason why they lost their jobs was because it was uneconomic to employ them,” he said.

The net result is that there is now a shortage of suitably qualified British seamen.

In any case, foreign seamen are paid very well compared with their national averages as there is a global shortage of such labour, according to Livingstone.

“Rates are spiralling. There will be a single European rate eventually, but there’s no need to pay all these seafarers extravagant salaries,” he said.

Storm in a teacup

It remains to be seen whether the consultation period will result in an agreement that is acceptable to all parties. It is possible the problem will turn out to be more of a ripple than the tidal wave some are predicting. For example, one major UK-flag-flyer – P&O Ferries – claimed the vast majority of its staff were on the same contracts regardless of nationality.

Of the two major UK unions, Nautilus is making the more conciliatory noises, while the RMT demands total abolition of section nine. “UK ships are UK workplaces,” said Crow.

But the Chamber of Shipping is not optimistic about the long-term outcome, should any changes be made. “It is inevitable that a large number [of ships] will either change flag or replace their crew members with seafarers from outside the EU,” said Springett. “And there will be no resultant increase in employment opportunities for EU seafarers.”

The nationality of ratings and officers

  • The worldwide population of seafarers serving on internationally trading merchant ships is estimated to be 466,000 officers and 721,000 ratings.
  • Eastern Europe has become an increasingly large supplier of seafarers, with high numbers from countries including the Ukraine, Croatia and Latvia.

Source: International Chamber of Shipping

By Nick Martindale

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