The 2018 minimum wage campaign

The minimum wage for an able seafarer will rise by 27 USD over the next 3 years. The full text of the joint statement rebased at the conclusion of negotiations follows.

Subcommittee on Wages of seafarers of the Joint Maritime Commission (JMC)

Geneva 19/20 2018

The social partners, namely the International Transport Workers Federation (ITF) and the International Chamber of Shipping (ICS), convened in Geneva at the Joint Maritime Commission Subcommittee on Seafarers Wages to review the ILO Minimum Wage for an Able Seafarer (AB) provided for in Code B of the Maritime Labour Convention, 2006 (as amended).

Due to unforeseen circumstances, the meeting had previously been re-scheduled from June 2018 and the social partners, with the support of the ILO Office, were presented with the current consumer prices changes indices and the impact of fluctuation of the USD in the countries agreed to represent the basis for a formula for the calculation of the recommended minimum wage for an AB.

It was noted that during the period taken into account for the calculation the 614 USD, which is the current ILO minimum wage rate for an able seafarer, was below the purchasing power stated in the ILO report prepared for consideration at the meeting.

The Social partners provided reasoned arguments and economic forecasts to support their respective positions, including the volatility of the shipping industry, and the necessity to recognize the seafarers’ commitment and the need to agree fair and sustainable conditions.

The decision, following two days of negotiations, was to update the minimum wage for an able seafarer by 27 USD over the next 3 years. The wages will provide an overall increase of 4.5% on the current rate of 614 USD, with an increase of 4 USD as of 1 July 2019, followed by an increase of 7 USD as of 1 January 2020 and a final increase of 16 USD as of 1 January 2021.

“This was a difficult negotiation with two very different assessments about what the future holds for shipping and seafarers”, admitted Mark Dickinson, the Seafarers’ Group spokesperson. “We started slowly but gained momentum as the parties exchanged opinions and provided arguments to support their positions. There was strong opposition from the shipowners side for a significant increase. However, I am pleased that at the end pragmatism and common sense prevailed and the social partners worked their way forward to recognise the fundamental role seafarers play within the industry.

“The principles of social dialogue, which is the basis of a more efficient, fair and progressive industry, were once again demonstrated by the unity of the maritime industry in securing an outcome which was acceptable by all parties.” He added, “It is an example the social partners should be pleased with.”

“We will continue to work together to find ways to ensure that the ILO formula used as the basis for these negotiations is fair and reflects the reality for seafarers, but the impact of this session of the JMC negotiation on the global seafaring community is undoubtedly a good and equitable result.”

Max Johns, the Shipowners’ Group spokesperson explained that “Following active discussions on the current difficult challenges facing our industry, and the importance of preserving future employment for seafarers, I am very pleased to advise that we were able to work together to come to an acceptable result for both parties”.

The world’s biggest pay talks are set to benefit the world’s worst paid seafarers

Originally published 16 November 2018

The world’s lowest paid seafarers could get a boost in the basic wages as a result of talks taking place in Geneva on Monday. Seafarers are the only employees covered by a global minimum wage, the biannual talks on which, could see a rise of nearly $50 a month on ships around the world.

Since 1970, the minimum pay received by ship’s crews has been determined by a minimum-wage agreement between ship owners and trades unions. Both sides meet every other year at the International Labour Organisation (ILO), based in Geneva, Switzerland.

The current minimum wage is $614 a month for a basic 48-hour week. However, most seafarers work overtime and can end up working around 90-hours per week. Many of the world’s seafarers earning the global minimum wage sign on for 9-month voyages, although these can be extended by up to two months.

Ships crews are mainly drawn from labour supply countries from around the world, including the UK. The greatest numbers, and those most likely to be contracted on global minimum terms, come from China and the Philippines.

Mark Dickinson, General Secretary of trades union Nautilus International will lead the trades union negotiating team on behalf of the International Transport Workers’ Federation. He says:

“The talks are based around an assessment by the ILO Office of how seafarers spending power has changed since the last talks. The current assessment makes it clear that in more than 90% of the countries from which crew are drawn, the value of their wages have fallen – in several cases by more than 15%. The underlying economics of the shipping industry are currently strong, so we will be pushing for a significant rise.

“The last time the talks were convened, in 2016, shipowners successfully argued that so challenging was the economic backdrop

they faced, that no increase was possible. Across the board, their gloomy predictions proved wide of the mark, so there is an expectation among ships’ crews that a different approach will be applied in these talks”.

Dickinson will lead a team drawn from seafarers’ unions from around the world. He promises that they will be making a moral as well as an economic case.

“Over 90% of the world’s good are delivered by sea – including most of the things that we have round us all the time, televisions, cars and clothes among them. If the shipowners do not recognise the hard work that has made their businesses successful, then I fear that consumer concern could start hitting them where it hurts. No one is comfortable thinking that the goods in their shopping baskets have arrive on ships whose crews are being exploited.”

A pay rise for seafarers would promote sectoral growth

Originally published 24 May 2018

Over the past two years the vast majority of the world’s 1.6m seafarers have endured a drop in the purchasing power of their already meagre minimum wages. That is the result of the failure to reach an agreement to increase seafarers’ minimum wage in Geneva in 2016.

The background document for the forthcoming ILO negotiations prepared by the Office of the International Labour Organisationlays this out in stark terms. The current global minimum of $614 per month, set four years ago, has fallen woefully behind. Seafarers in 47 countries have seen the purchasing power of their wages fall – in the case of 19 countries the drop has been by more than 10%, in some countries it has been by as much as 15%.

For four fifths of those currently serving at sea, inflation and exchange rate variations mean that the value of the minimum wage in their home countries has fallen. Tens of thousands of seafarers remit pay to their families every month. The falling value of their remittances home means that as well as enduring the dangers and privations of life at sea, when they have been able to speak with loved ones, it has been to lean of an increasing struggle to make ends meet.

In only eight countries has the value of seafarers’ wages not fallen – and the vast majority of those have seen purchasing power no better than standstill.

At the last wage negotiations of the ILO Joint Maritime Commission the shipowners painted a lurid picture of the state of the world economy and the consequent challenges facing the shipping industry. It is instructive to check against their indices and see just how wrong they were.

Earlier this year the IMF lifted its global growth forecast for 2018 and 2019 from 3.7% to 3.9%. It called this the ‘broadest synchronised growth since 2009?’

The IMF’s optimism is echoed by most mainstream economists.

Here is PWC’s assessment for the world economy in 2018. “Global economic growth on track to be the fastest since 2011: In our main scenario, we project the global economy will grow by almost 4% in purchasing power parity (PPP) terms, its fastest since 2011, adding an extra $5 trillion to global output in current value terms. More importantly, we expect growth to be broad based and synchronised, rather than dependent on a few countries. The main engines of the global economy – the US, emerging Asia and the Eurozone, which comprised 60% of world GDP in 2017 – are expected to contribute almost 70% of economic growth in 2017 in PPP terms compared to their post-2000 average of around 60%.”

Unsurprisingly strong GDP growth has its roots in a healthy global trade position. According to the World Trade Organisation, trade growth in 2017 was ‘very strong’ – merchandise trade grew by 4.7%. In the same year, developed economies’ exports and imports grew 3.5% and 3.1%, respectively, while developing countries recorded export growth of 5.7% and import growth of 7.2%.

The director general of the WTO, Roberto Azevêdo told a press conference in April how he saw the next couple of years: “World merchandise trade volumes will grow nearly as fast in 2018 as they did in 2017, with growth of 4.4%. And we expect that growth will remain quite strong in 2019 at around 4.0%. It represents the best run of trade expansion since before the crisis, supporting economic growth, development and job creation around the world.”
That goes some way to explaining the fundamentally upward trajectory of indices such at the Baltic Dry Index over the past couple of years.

A strong economy brings its own challenges, of course, not least tightening labour markets. Unemployment in developed countries is expected to hit a 40-year low during 2018. And recruitment is not the only challenge the maritime industry faces. The ongoing consolidation of shipping lines is evidence of that. Quite apart from the promising economic backdrop there are other changes afoot that offer the possibility of dramatically reduced costs for the sector.

At industry events today, much of the talk is of the benefits of making trade digital – or paperless, to be more precise. The benefits from doing so will be staggering. According to a UN report, putting all the Asia-Pacific region’s trade- related paperwork online could slash the time it takes to export goods by up to 44%, cut the cost of doing so by up to 31%, and boost exports by as much as $257bn a year.

That prospect holds the potential for an invigorating future for the sector – but one in which there will potentially be losers as well as winners. There are no shortage of wolves at the door – giants such as Amazon are already looking enviously at the global logistics industry as a potential future avenue for growth.

But there will only be losers if players in the existing sector don’t act – to modernise, to adapt and build the workforce needed to enjoy the huge potential offered by a buoyant economy.

At the heart of any strategy to achieve this there must be a clear vision of the importance of high quality, well-motivated, loyal staff. Building effective teams has many dimensions. MSC, for example, has massively improved staff retention in recent years by creating a training culture within its ranks.

The foundation of mutually beneficial employment, however, is decent pay. That is why we are calling for a real terms rise in the seafarers’ global minimum wage of no less than $50 a month.
Agreeing such a rise would be a signal from shipowners to their crews. It will acknowledge that the global trading position does indeed look favourable for shipping, that there is a significant prize to be won in the coming years. This is a challenge to which all those who depend on shipping for their livelihoods can apply themselves so long as the ship owners act now to demonstrate that we all have a stake in the spoils.

Reward seafarers for the efficiencies they have delivered

Originally published 22 May 2019

One sunny Sunday in January 2018 Tonya Illman strolled along a beach near her home in Perth, Western Australia. An intriguing bottle poking from the sand caught her eye. She picked it up, imagining it enlivening a display shelf in her home.

A more careful survey of the glass vessel revealed something extraordinary – the oldest known ‘message in a bottle’ ever found. Illman’s bottle had been thrown from a German merchant ship in 1886 as part of a scientific experiment that sought to better understand the sea’s currents.

The purpose of such research is, of course, to enable ships to save money and time by harnessing ocean currents. And no less extraordinary than a 130-year-old note, is that intense research of this phenomenon is ongoing.

Today, needless to say, satellite images provide the raw material rather than oceanic flotsam. Scientifically-planned routing to optimise weather benefits remains a matter of intense scientific interest. Professor Vladimir Gershanik, a leading authority on marine propulsion efficiency, concluded a recent paper thus: “Rational weather routing increases ship safety….and helps cut the time and fuel consumption of ocean voyages”.

In practice this often means timing sailings to take advantage of both winds and currents that will partially propel ships in the right direction. Doing this has already led to significant reductions in the use of fuel by cargo ships – but at a cost to their crews. Sailing slower means that seafarers spend longer between ports, away from easy communication with family and friends.

It is just one of the approaches that has helped shipping lines to achieve significant efficiencies in recent years.

Maritime business consultants Moore Stephens, for example, undertake an annual survey that shows how operating costs are on a downward trajectory across all types of carrier. Richard Greiner, Moore Stephens shipping partner, says: “This is the fifth successive year-on-year reduction in overall ship operating costs”.

Localised studies reflect this. One by Maritime UK, for example, revealed that “over five years, the British maritime sector experienced a 12.7% increase in turnover, 6.6% increase in gross value added and 3.9% increase in employment”.

Other cost reductions have been driven by seafarers’ effort too. In the past decade the average size of cargo ships has risen significantly – the biggest now carry nearly 20,000 twenty foot containers. Crews have remained much the same size, however, usually between 12 and 24 seafarers, evenly split between officers and ratings.

Significant effort has been deployed to minimise time in port – in many cases just 24 hours. This contributes significantly to efficiency and thus profitability, but makes the job of seafarers even tougher. Most don’t have time for even a few minutes on dry land when they dock, so intense is the effort to load and unload.

No doubt further efficiencies can be achieved?

In an analysis of cargo shipping economics, McKinsey concluded that building better teams on board ships is a critical challenge to making them more efficient. The management consultants also noted that: “monetary incentives and recognition….energise a transformation journey…It is important to balance the right mix of monetary and non monetary incentives to achieve the desired behaviour”.

Happily there is an increasing recognition among shipping companies that the support and wellbeing of seafarers is crucial to commercially successful futures. Ulf Hahnemann, Maersk’s head of human resources told one of this company’s magazines: “What I’ve learned is that building trust in an organisation is the core challenge. If there’s trust between employees and the company, problem-solving follows. People will use their intelligence as they feel supported, not judged. They are not worried about being shut down or intimidated so ideas can thrive.

The ambition to succeed among seafarers themselves is also not hard to find. Arnold Sangabol Pestano is a Filipino who, in 2016, aged 26, was working for shipping line Hapag-Lloyd. He had already been going to sea for five years at that time: The seaman described his day in one of the shipping line’s internal publications. “I keep watch on the bridge 8pm until midnight, as well as from 8am until noon. During the rest of my working hours, I take care of all sorts of maintenance and repair jobs on board, such as painting and cleaning.”

He has keen ambitions to progress to more responsible work. “I hope to be a chief mate one day and maybe even a captain,” he said.

Pestano won’t be the first seafarer who aspires to improve his lot through career advancement. For the vast bulk of ships’ staff, however, this will happen only when ship’s owners pass on some of the efficiencies that their crews have achieved. The question is whether they will respond to the rational case for a minimum basic increase of at least $50 a month? Failing to do so runs the risk of allowing global trade to be tainted with a whiff of exploitation that could prove hard to shake.

Seafarers – frontline environmental guardians

Originally published 20 May 2018

The importance of oceans to human life is the stuff of primary school lessons. They cover three quarters of the planet, produce most of our oxygen, and absorb the majority of atmospheric carbon. Half the world’s population lives in the coastal zone; oceans are a vital source of food; and marine health underpins our weather.

The sea is, quite rightly, protected by laws, institutions and international treaties. It is seafarers, however, who are the most numerous and arguably the most significant guardians of the sea. They are responsible for moving $12 trillion worth of goods in containers and nearly two billion tonnes of crude oil on the surface of these vulnerable waters. So, the decisions that seafarers make, both large and small, are critical to ensuring that we all continue to benefit from our greatest natural resource.

Conventions and regulations governing how ships should operate that safeguard the environment resemble an alphabet soup of acronyms and initials. How they are applied, however, in ports, oceans and shipping channels around the world is a product of millions of decisions made by ordinary, often exhausted humans.

Captain Pankaj Bhargava spent 35 years at sea, 12 as a ship’s master working for companies such as Teekay, BP, Maersk, OMI and Seaarland. He lists numerous, every-day examples of ways that he has seen ships damage the oceans.

In a Latvian port, for example, he saw oil sprayed into the sea when a hose was switched from supplying one tank to another. Such a spillage, can lead to further issues as oil soaks into a ships hawser (the very thick ropes used to tie up ships), which then leach oil wherever they make contact with the water. In a US port, Bhargava noticed that heavy rain had caused hydraulic oil to flood from a mooring winch and cascade down the ships side. Elsewhere, badly stowed maintenance oils polluted a harbour.

Incidents of this kind pale in emotional impact beside tragedies such as those that befell Torrey Canyon, Exxon Valdez or an Amoco Cadiz. The cumulative effect of apparently minor mistakes is arguably more significant – not least as minor incidents are rarely followed by ‘clean up’ operations.

“Most of these incidents (that I have described) were a product of human error resulting from lack of knowledge to handle engine room machinery or while handling deck machinery equipment and procedures,” says Bhargava. “Any ship is only as good as its crew”.

The professionalism of seafarers is something on which we all depend. When it comes to motivating tens of thousands of seafarers to go the extra mile on our behalf, consider for a moment what we provide by way of incentives?

An able seafarer’s (AB) global basic minimum wage is currently equivalent just £2.12 an hour – coupled with which, most are away from their families for most of the working year, undertake dangerous, and arduous work, and often go for months on end without shore leave.

Norwegian anthropologist Gunnar Lamvik has spent much of his professional life studying seafarers – particularly those from the Philippines. He has interviewed more than 150 and spent several months on board ships over a couple of decades. He paints a complex picture of their life at sea, but says that it is very common for seafarers to speak of their ships as ‘prisons’ and the time the voyages for which they have signed on as ‘sentences’.

“It became apparent to me during my field work that seafarers see themselves (as occupying) a deprived and secluded universe: a place which might leave you with the sense of being separated from real life”, he says. “Some of the seafarers I met instructed their wives not to give them any negative news since they were unable to respond anyway”.

If Lamvik is right, it begs the question, what can be done to better motivate those who endure such hardships?

A recent study by three British Professors of Economics, suggests a potential answer.  Marian Rizov, Richard Croucher, and Thomas Lange crunched aggregate output data from the entire British economy after the adoption of the National Minimum Wage in 1999.

“Our analysis illustrates that minimum wages positively affected (aggregate productivity) in low-paying sectors,” they wrote in the British Journal of Management. “These findings highlight increased wage incentive effects. (Increasing minimum wages can) be productivity enhancing”.

Their evidence buttresses what has become increasingly mainstream economic thinking. Janet Yellen was, until recently, head of the United States Federal Reserve Bank. Working with her husband, the noble-prize-winning economist George Akerlof, she concluded: “if people do not get what they think they deserve, they get angry. Workers who receive less than what they perceive to be a fair wage will purposely work less hard as a way to take revenge on their employer.’

No one would suggest that seafarers would deliberately damage the marine environment, however angry they felt. Most are passionately committed to the seas that provide so much of their living environment. Given how much our planet relies on the assiduousness with which seafarers undertake their work, it does beg the question, is it wise or sensible for them to be rewarded so poorly?

Let’s hope that the world wakes up to this before poverty pay is exposed as a catastrophic false economy. Seafarers demonstrate their commitment to the marine environment through the way they do their work. The time has surely come for us to demonstrate how we value that work by ensuring that they receive something approaching a decent wage?

The realities of life at sea

Originally published 30 March 2018

The ship was clearly old, remembered the Chaplin. Paint peeled from the handysize bulk carrier’s hull and the smell of its fertiliser cargo hung on the air. The crew seemed nervous of the stranger making his pastoral rounds during their few hours in the rainy port on Britain’s west coast. None returned his smile. Eventually he came upon a Turkish man in his mid-60s slumped in the eating area who was willing to exchange a few words.

“I retired after more than 40 years at sea”, he told the cleric.  “But times are hard where my family live, so I had to leave home for the sea once again. My wages are vital to my children and my grandchildren, but the work is much harder than when I was young”.

The Turk, and the rest of his crew mates, two Russians and four Filipinos, had been at sea for nearly a year.  During that time, their ship had rarely been tied up for more than 24 hours. Because of highly efficient loading and unloading in modern docks, none of the crew had actually stepped off the ship in over a month.
The Chaplin asked the seafarer what was their last port. A listless shrug was the response. Long periods of unbroken toil has a well-documented disorienting effect on the memory.

The visitor’s jokes about the surrounding docks and the weather were politely received. Then he reached inside his jacket and took out two modest gifts – a bar of chocolate and a £15 telephone sim card. The Turkish sailor was suddenly effusive in his thanks and embraces, before hurrying off to seek out news of his latest grandchild, word of whose safe arrival he had been denied for weeks through lack of access to a telephone.

The Chaplin – who requested anonymity for fear that publicity might make his work impossible – visits around 60 ships each month. This was among the worst – but was not remotely unusual. The Chaplin estimates that about a quarter of the ships he visits, he would rate as ‘good’ with a similar proportion falling into the ‘bad’ category. On all merchant ships, however, hard, dangerous work in return for scant reward for ships’ crews is an all too common characteristic.

Some aspects of this harsh environment are easy to enumerate. Typically seafarers sign on for nine-month voyages but trips can stretch to as long as a year, if, at the end of nine months, their ship is not somewhere from which an inexpensive flight home is possible.

Hours of work on ships are regulated by the ILO Maritime Labour Convention, 2006 as amended. On a ship operated to its precise specifications, seafarers can be required to work for 91 hours a week – although companies who demand more from their crews are not uncommon.

The combination of heavy manual work, and the challenges of the sea itself, makes seafaring among the most dangerous ways to make a living.

A report in the UK Journal of Occupational Medicine completed in 2012, for example, found that seafarers are 21 times more likely to die as a result of a workplace accident than the general UK workforce. The most at-risk, are those seafarers who work on deck. Being hit by mooring or towing ropes, being struck by other moveable objects on board and falling overboard are the most common causes of death at sea.

Then there is the risk of armed attack and piracy.  The International Maritime Organisation maintains a register of notified incidents of this kind around the world. They average slightly more than 20 each month. It is a far greater problem in some parts of the world than others, but anyone who spends a career at sea is likely to experience this kind of attack at least once – just one more of the unique stresses involved in a life at sea.

Because any one of a ship’s crew can perform roles that could affect the safety of the entire crew, there are strict international medical standards for seafarers. All must obtain a medical certificate before joining a ship. This wholly necessary regulation creates a jeopardy for many who make their living at sea, however, particularly as they reach middle age. Impaired hearing or eyesight, as well as non-critical conditions such as diabetes can mean a sudden end to their careers.

Perhaps unsurprisingly, given their harsh working lives, suicide is also disturbingly prevalent among maritime crews. According to marine insurers the UK P&I Club, seafaring is the second most suicide-prone occupational group globally. As many as 15% of all deaths at sea are the result of suicide.  Anju Velankar, a senior loss prevention advisor with the insurer told a conference last year: “Depression, fatigue and overwork are the most common causes”.

Fleeting access to news from home, is also an issue, says Valankar. A few moments on social media every few days is enough for seafarers to know that there are issues at home, without being enough time to fully participate in virtual family life.
The greatest proportion of the world’s seafarers come from the Philippines (approximately 250,000 of the total), with China, Indonesia, Russia and Ukraine also supplying significant numbers of seafarers, according to shipowners’ organisation BIMCO.
Regular, hard-currency payments, directly to their families is the main motivation for accepting separation from loved ones in favour of the tough conditions most endure at sea. And low-wage cultures and troubled economies probably mean that will always be a ready supply of seafarers.
According to Phil Parry, chairman of marine recruiters Spinnaker Global, however, there are humanitarian reasons to pay seafarers better: “Salaries don’t motivate, but if you pay your staff unfairly, they can be incredibly demotivating”.

Given everything else that ships crews endure to fill our larders and supply our shops, surely a modest increase in basic pay is the least we can afford them?

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