Maritime HR - Wage and benefit creation, role of unions and employers organisations

7/21/2019 Maritime HR - Wage and benefit creation, role of unions and employers organisations

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International Maritime Human Resource Management textbook modulesModules author: Maria Anne Wagtmann, PhD,[email protected]

1

You have opened a document with a module of a planned textbook to a course in International

Maritime Human Resource Management. The course and textbook were not completed however.

Therefore, one of the planned authors, Maria Anne Wagtmann, wishes to share the course modules she

wrote with the public, while still retaining the copyright. Thus, these materials may be downloaded by

anyone interested and information about the URLs at which they are placed may be passed on to others.

The overview of entire envisioned course was as follows (total course content: 7.5 ECTS; total 4.0 ECTS

based on external content):

1. Shore-based HRM (1.5 ECTS, 0.5 ECTS based on external content)written by Maria Anne Wagtmann

2.

HRM on board ships and in the ship-shore interface, including occupational safety, psychological and

health issues (1.5 ECTS, 1.0 ECTS based on external content)to be written by another author

3. Wage and benefit creation, role of unions and employers organisations (1.5 ECTS, 1.0 ECTS based on

external content)written by Maria Anne Wagtmann

4. Labour conditions regulation on land and on board ship (1.5 ECTS, 1.0 ECTS based on external content)

partially written by Maria Anne Wagtmann, part to be written by another author

5.

Personnel selection, retention and career planning, planning and investment in education and training(1.5 ECTS, 0.5 ECTS based on external content)written by Maria Anne Wagtmann

Elaboration of each course element written by Maria Anne Wagtmann1. Shore-based HRM (1.5 ECTS, 0.5 ECTS based on external content)

A. Role of HRMideal and true roles, operational tasks, possible strategy implementation

B. Organisational structure and culture

C. Variation according to maritime firm type, with focus on ports and port firms

D.

Variation of HR practices across regions and firms

E.

International HR and HR coordination

F. Ethical issues

3. Wage and benefit creation, role of unions and employers organisations (1.5 ECTS, 1.0 ECTS based on

external content)

A. Neo-classical wage equilibrium models

B. Wages and benefits as motivation factors

C. Performance-based pay

D. Unions in general, in maritime transport, national variations and ITF

E. Employers organisations in maritime transport, national variations and

F. Collective bargaining at national level and in the international bargaining forum

4. A Labour conditions regulation on land and on board ship (1.5 ECTS, 1.0 ECTS based on external

content)A. ILO, EU and national regulation of labour conditions on land, including the roles of occupational

health and safety authorities and other authorities and institutions

B. ILOs 2006 Maritime Labour Convention(partially written by Maria Anne Wagtmann)

5. Personnel selection, retention and career planning, planning and investment in education and

training (1.5 ECTS, 0.5 ECTS based on external content)

A. Variations in selection processes and legislation for shore and ship-based positions

B. Assessing personal and professional qualifications, including psychological, cognitive and skills tests

C. Employee retention and career planning plans

D. Planning education and training

E.

Investing in education and training at home and abroad, with focus on MET in economies oftransition and developing countries
mailto:[email protected]:[email protected]:[email protected]:[email protected]


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MODULE 3, MARITIME & PORT WAGES, BENEFITS, LABOUR RELATIONS- BY MARIA A. WAGTMANN

Date: 04/06/2010 Wages, benefits, labour relations Page 1

1 INTRODUCTION TO MODULE 3

This module focuses on labour market economics and employment circumstances in the maritimetransportation industry, with special focus on the labour market for persons employed as seafarers,dockers or in shore-based administrative positions. Section 2 deals with the economics of labourmarkets in general and then in the maritime industry in particular. It also contains some summarystatistics about the global supply and demand for seafaring officers and ratings. Section 3 moveson to discuss whether wages and benefits are to be regarded as potentially motivating factors foremployees and to also discuss performance-based pay. In Section 4, we move on to discusslabour relations, starting with a general discussion of the varying types of unions and labourrelations regimes in various societal contexts, before we move on to discuss the dockers andseafarers unions organised in the International Transport Workers Federation (henceforth: ITF). InSection 5, we discuss national employers and national employers federations in maritime transportand, for the case of shipping, also the role of the International Shipping Federation (ISF) and theInternational Maritime Employers Committee (IMEC). Finally, in Section 6, we discuss the ITFs

seafaring collective bargaining agreements and global means of seeking to enforce these as wellas our expectations concerning maritime labour market developments in the near future.


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2 LABOUR MARKET SOCIO-ECONOMICS, WITH SPECIFIC FOCUS ONMARITIME TRANSPORT

2.1 General remarks about supply and demand in labour markets

In neo-classical economics, a key exercise is finding an equilibrium market price at which themarket clears, meaning that supply equals demand. This is also the point of department in much

neo-classical labour market economic work. Moreover, it is assumed that the firms demandinglabour are seeking to maximize their profits, whereas the employees supplying labour are alsoseeking to maximize their wages, and that all actors are small, so that there is free competition,instead of a situation of either monopoly, monopsony, oligopoly or oligopsony.

The Wikipedia (2010b) article Labour Economics gives a general overview over labour marketeconomics. You must therefore read it at this point in time, before continuing on with this text. Thearticle is found at:http://en.wikipedia.org/wiki/Labour_economics.Please read the entire article, butfocus especially on understanding Sections 2 (Demand for labour and wage determination) and 5

(Neoclassical microeconomics of labour markets).

2.2 Labour markets for dockers who work in ports

Concerning the labour market for dockers, the potential supply of dockers is usually composed ofthose persons in the immediate region of employment who are qualified to work as dockers. Here,the required education for working as a docker is usually relatively low, compared to, e.g., whitecollar positions. However, educational requirements have still been rising in most countries in theworld, as new, expensive automatic machinery has been put in place and due to the increasingglobal focus on workplace safety and port security.

In many ports of the western European Union countries, one will find a number of foreign-bornemployees who have come from the poorer, newer EU member states to seek work in the westernEuropean Union countries. In some cases, e.g. when the EU member state was at a level ofemployment below the macroeconomic natural rate of unemployment (see Wikipedia 2010b), theports in the EU member state and even the EU countrys employment services offices may haveactively sought to bring in port labour from abroad. This occurred in several instances in, e.g., EUmember state Denmark in 2006-2008, because at this time Danish national employment ratesactually went below the natural rate of unemployment.

The immediate demand for docker labour is derived from the maritime and multimodal transportproviders demand for the use of the ports facilities. Thus , the demand for docker labour is highly

variable in the short term and depends on the extent to which the terminals in the port are beingutilized by maritime and multimodal transport providers. On this basis, port employers all over theworld generally show preference for flexible employment agreements, which allow them to senddockers home in times in which business is slow at ports, and conversely, to call in dockers onshort notice in cases of above average use of capacity in the ports.

On the long term, the trend is that employment in ports has been global decline because many ofthe tasks formerly performed by humans are today performed by machines. However, as theinvestment in new machinery or other labour-saving facilities are huge capital investments, suchinvestments usually come at specific points in time in a specific port, after which a restructuring, re-education and usually also reduction of the workforce is also carried through. For further

information on these dynamics, you are referred to some of the readings from Module 1: Heseler(2000) and Productivity Commission (1998) which were used in connection with Structured
http://en.wikipedia.org/wiki/Labour_economicshttp://en.wikipedia.org/wiki/Labour_economics


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Assignment 1.14; Snchez et al. (2003), which was used in connection with Structured Assignment1.11; Vezzoso (2000), which was used in connection with Structured Assignment 1.4b; and WorldBank (2008a), which was used in connection with Structured Assignment 1.4a.

For persons with specific docker qualifications, who are not qualified to and also required to takework in other fields of work, the regional labour market that they are faced with is not one of manycompetitive employers, but rather of one or a limited number of potential employers. In economicterms, it thus can be said that these dockers face a monopsonist or oligopsonist market with regardto the demand for their labour. The supply and demand characteristics of a monopsonist andoligopsonist market are rather similar, as in both cases, the employing side has more power toinfluence employment and the price of labour. Therefore, for the sake of simplicity, both cases aredepicted in Figure 1.

Figure 1: Income level & docker demand on a monopsonistic or oligopsonistic port labour market

In the lower right hand corner of Figure 1, one finds the theoretical perfect market equilibrium,

e.g. the number of dockers that would be employed (N0) and the corresponding income level foreach docker (W0) if there had been full, atomistic market competition between many smallemployers for the labour of the dockers. As this is the ideal welfare position, seen from theperspective of neo-classical economics, the boxes that concern this situation have been markedwith green. However, as we are either in a monopsonist or oligopsonist market, meaning that thereis only one or a few firms/organisations demanding the services of the dockers, the dockersbecome price takers in relation to the monopsonist or the price determining forces in theoligopsony. The monopsonist or price determiner in the olipogsony will seek to maximize its profits,by only demanding dockers to the point at which the marginal cost of the production factor dockerlabour is equal to the marginal revenue product curve. Thus the point fixation of docker income and

employment levels has been marked with a yellow box, as have the areas of the so-calledmonopsonist or oligopsonist profit, and the corresponding numbers of dockers employment in themonopsony or oligopsony situation (N1) and their corresponding income (W1).


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The total monopsonist or oligopsonist profit can be calculated using the following formula:

Total profitmonopsony or oligopsony=(W2-W1) * N1

W2is the theoretical income level at which there would be no monopsonist/oligopsonist profit forthe monosonist itself or the oligopsonists themselves and at which level all of the monopsonist or

oligopsonist profit would in effect be given to the dockers. It corresponds to the y-axis coordinateon the demand or MRP curve for the dockers at which the monopsonist or oligopsonists stop intheir fixation of docker income and employment levels.

Finally, it is a defining characteristic of many regional markets for dockers that docker labourunions stand relatively strong. In the monopsony or oligopsony situation, the marginal revenueproduct curve does not necessarily move to the right if a union-negotiated collective agreementhas been put into effect. However, through the power of collective bargaining the lowest level ofacceptable wages may be raised. Moreover, in some instances, a labour union or several labourunions in cooperation may also be able to restrict the numbers of dockers on the market, thususing the force of a monopolist or oligopoly to attempt to counteract the usual monopsonist or

oligopsonist forces of the employer side of the labour relation. The potential effects of one or moredocker labour unions are depicted in Figure 2.

Figure 2: Possible Income level & docker supply effects on a monopsonistic or oligopsonistic port labourmarket with an active labour union

In Figure 2, it is seen that the collective agreement sets a higher wage level of W 3, compared tothe level at W1, which would be achieved by the combination of an atomistic supply market andmonopsonist/oligopsonist demand market. In this situation, the monopsonist or oligopsonist profit isalso divided among the employers and the dockers in that the dockers receive the following totalportion of this profit:

Dockers total profitmonopsony or oligopsony=(W3-W1) * N1

In turn, the employers monopsonist or oligopsonist profit is reduced to the following:

Employers total profitmonopsony or oligopsony=(W2-W3) * N1


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Should the labour union(s) may also be able to restrict the numbers of dockers on the market, thususing the force of a monopolist to attempt to counteract the usual monopsonist or oligopsonistforces of the employer side of the labour relation, this will result in the limitation of the number ofdockers on market, as indicated by N2in Figure 2. Such a limitation could be achieved by, e.g., aclosed shop agreement, in those non-EU countries where such agreements are allowed (see,

e.g., Wikipedia, 2010a), but it could also be achieved more indirectly over the short- and medium-term through, e.g., the implementation of entry barriers such as requirements concerningeducational or occupational safety courses for docker labour. In this case, it would not be possiblefor the employer side to expand their business beyond the number of potential qualified dockers onthe market.

In Figure 2, the levels of W3 and N2have been set rather arbitrarily, for the purposes of illustrationonly. Thus there is no reason why the level of W3 necessarily has to be below level W0; if thelabour union side had sufficient power, it might well be able to raise the level of wages W 3abovelevel W0as well. Moreover, were the labour union or labour unions in possession of the power tolimit the number of dockers on the market, it is likely that they could raise the level of W 3more than

would be the case if they did not have this power.

However, in recent years, labour unions have only very rarely had the power to limit the number ofdockers on market to an extent that N2actually falls at or below N1. In the case that N2= N1, thedockers would be able to achieve the usually hypothetical wage goal of wages at level W 2, whichis the income level at which there would be no monopsonist/oligopsonist profit for the monosonistitself or the oligopsonists themselves; instead all of the monopsonistor oligopsonist profit wouldbe passed on to the dockers. Were the dockers in power to limit the supply of docker labour suchthat N2were to fall below N1, this would mean that also the MRP curve of the employers would alsomove to the right, to reflect this cost increase, similar to what most often occurs if a collectiveagreement raises wages in an otherwise atomistic and competitive labour market situation (see

Wikipedia, 2010b).

In relation to this possible shift of the MRP curve to the right, in some of the port regions of theworld, there may be multiple stevedoring and other port services firms among one large or manyneighbouring ports that all use the services of dockers. In this case, it is possible that the demandside will be something between monopsonistic or oligopsonistic demand for labour and the neo-classical ideal of atomistic and competitive demand. In this case, one or more labour unions ableto organize monopoly power might have more power than would be the case in the normalinstance that the individual dockers and their labour union(s), if existent, are met withmonopsonistic or oligopsonistic demand for labour.

However, in all circumstances, it is also to be remembered that the demand for port labour isderived from the demand for port services. Whereas the dockers of the port may not be willing tocommute more than some 50 or 80 km to another port, which sets limits on their labour marketmobility, shipping companies and multimodal transport providers operating in regions with a well-developed road and/or railway infrastructure such as Western Europe, Japan or the West or EastCoast of the United States may in fact be willing to move 7 or 8 times as far as the port workers, toget the port services that they need in the most cost-efficient manner. This, in turn, sets limits onthe bargaining power of unions, as they have to protect the local jobs of their members. However,this aspect lies outside the immediate labour market dynamics models of Figures 1 and 2, as thisaspect is related to the derived nature of the demand for port labour.


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2.2.1 St ruc tu red Ass ig nment 3 .1. Dock Wo rk Supp ly and Demand a t the Por t o f

An twe rp

For this structured assignment, first read the following article: Suykens, F. R., 2000. TheTransformation of the Seaport of Antwerp. In Heseler, Heiner, Ed. Seaports in the Context of

Globalization and Privatization, Bremen, Germany: University of Bremen,pp. 67-73. Available at:http://www.maritim.uni-bremen.de/ports/.

1. Write (a), (b) or (c) to indicate whether the Antwerp dockers faced (a) monopsonic demand fortheir labour, (b) oligopsonic demand for their labour or (c) competitive demand market for theirlabour in the years before the early 1970s, in which the Port of Antwerp was part of themunicipal administration: ________________

2. Write (a), (b) or (c) to indicate whether the Antwerp dockers faced (a) monopsonic demand fortheir labour, (b) oligopsonic demand for their labour or (c) competitive demand market for theirlabour from the beginning of the 1970s until the mid-1990s, when the Port of Antwerp

operated as a municipal enterprise: ______________

3. Write (a), (b) or (c) to indicate whether the Antwerp dockers faced (a) monopsonic demand fortheir labour, (b) oligopsonic demand for their labour or (c) competitive demand market for theirlabour from the early 2000s and on, after the Belgian law of March 1999 on port managementof seaports in the Flemish region came into effect and had been implemented in the Port ofAntwerp and other Flemish ports: ______________

4. Discuss the possible effects on labour supply, labour demand and wages of the law passed on8 January 1972 which stipulates that port work only should be carried out by recognised

dockworkers. Here you may write up to 600 words in your answer. In addition to your answer,you may also include own full bibliographical references to other relevant literature you haveread, if your considerations have also been based on other relevant literature that you haveread.

2.2.2 St ruc tu red Ass ignment 3 .2 . The economic bene f i t s o f inc reased labour

p rod uc t iv i t y and f lex ib i li t y and var ious in d i rec t cos ts re la ted to dock

labour

For this structured assignment, first read Sections 3.3 35, i.e. pp. 45-51 in the following report:Notteboom, T., 2010. Dock labour and port-related employment in the European seaport system.

Key factors to port competitiveness and reform.Antwerp, Belgium: ITMMAUniversity of Antwerp,Report prepared for European Sea Ports Organisation (ESPO) [online]. Available at:http://www.porteconomics.eu/index.php?option=com_docman&task=doc_download&gid=331&Itemid=61.

1. Based on Section 3.3 of this report., draw a figure on a full sheet of paper in which you showthe relationships between the various factors mentioned in Section 3.3 that are stated toinfluence labour productivity. For each factor, write a short definition of it in your figure.

2. Based on Section 3.4 of this report, first summarize key economic arguments why ports andport employers seek increased flexibility of the types discussed in this section. Thereafter,discuss possible advantages and drawbacks of granting each type of flexibility seen from the

perspective of an individual employee. Here, you may write up to 700 words in your answer.
http://www.maritim.uni-bremen.de/ports/http://www.porteconomics.eu/index.php?option=com_docman&task=doc_download&gid=331&Itemid=61http://www.porteconomics.eu/index.php?option=com_docman&task=doc_download&gid=331&Itemid=61http://www.porteconomics.eu/index.php?option=com_docman&task=doc_download&gid=331&Itemid=61http://www.porteconomics.eu/index.php?option=com_docman&task=doc_download&gid=331&Itemid=61http://www.maritim.uni-bremen.de/ports/


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Moreover, you may also include own full bibliographical references to other relevant literatureyou have read, if you choose to also use such references in your explanatory answer.

3. Finally, based on Section 3.5, discuss whether each type of possible indirect cost of docklabour has a negative effect on (a) labour productivity and (b) labour flexibility. Also here, youmay write up to 700 words in your answer. Additionally, you may also include own fullbibliographical references to other relevant literature you have read, if you choose to also usesuch references in your explanatory answer.

2.3 Labour markets for seafarers

2.3.1 Globa l supp ly issues

In relation to the remarks made in Subsection 2.1 and the assigned Wikipedia (2010b) articleLabour Economics, the following points must be made about the global market for seafarers:First, the assumption of labour supply homogeneity, i.e. that all educated persons with the sametitle (e.g. deck officer, machine officer, rating) have the same capabilities,is questionable. Thisis the case first on account of differences between individuals, which most often remain non-transparent for the individual employer before the potential officer is employed. Secondly, there aremajor differences in de facto educational quality between labour supplying nations and in somenations also between the individual institutions that educate seafarers (Amante 2007, Sampson2004a and 2003). This non-homogeneity results in non-transparent markets, meaning that to themaritime employer who is seeking new potential sources of seafarers internationally, maritimelabour may appear to be a credence good (see Leggate & McConville, 2002, p. 448).

The problem of the credence good is sought solved through regulation of educational

qualifications via, e.g., the IMOs STCW Convention with its subsequent amendments and the

official IMO white list of countries that allegedly fulfil the STCW Conventions requirements.However, these measures are imperfect (Sampson, 2004a; Short, 2004, Yamamoto, 2002; Zac etal., 2000). This issue will be treated in more depth in Module 5; however, we mention it alreadyhere because it contributes to a great extent to the current imperfections of the labour markets forboth seafaring officers and ratings.

Moreover, although various maritime actors in common parlance often speak of open flagregisters versus closed flag registers and flags of convenience versus quality shipping flags,

in efforts to categorise and simplify the plethora of regulation presented by individual nations thatregister ships, in reality the flag state labour market regulations are much more complex to bothprospective employers and seafarers. Issues such as whose seafarers are allowed to serve in

which positions on ships and the exact regulation of seafarers and employers rights andresponsibilities are in fact decided on a flag state by flag state basis (Leggate & McConville, 2004).This increases the non-transparency problems and also hinders the free global mobility of laboursupposed by neoclassical theory. All of this means that we have highly imperfect internationallabour markets for seafarers. Having said this, we now turn our focus temporarily to the demandside.

2.3.2 The demand fo r sea fare rs , seen g loba l ly and then na t iona l l y

Total global demand for seafarers is derived from total global demand for maritime transport aswell as influenced by financial sector, regulatory and technological changes, as indicated in Figure

3 below. Most directly and immediately, the current level of demand for maritime transportinfluences the number and size of existing ships in use, which then determines the total globaldemand for seafarers. This is the reason why actors such as the internationally known shipping


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labour market consultancy firm Drewry Shipping Consultants (2008) makes its seafaring officermarket demand projections based on assumptions about the total number of ships in use in aspecific cargo type segment as well as calculations of the average number of officers needed toman ships in the segment.

Figure 3: Global Demand for Seafarers (Figure 1 from Wagtmann & Poulsen, 2009)

Drewry Shipping Consultants 2008 projections for additional seafaring officer needs in 2012 arealso depicted on the next page, in Table 1. Here it is to be noted that in the 2009 manning report(see Drewry Shipping Consultants, 2009), which was published after the onset of the economicrecession, two scenarios are provided: (a) A base case with the net fleet growth of 14.6%, with a

resulting net growth in the demand for seafaring officers of 56,000 from 2009 to 2013 and (b) asecond case in which some ship orders have been cancelled, which results in a new growth indemand for seafaring officers for the same time

Table 1: Drewry Shipping Consultants (2008) Projections of additional officer needs in 2012

period of 43,000. Thus, the 2009 projection were more conservative than the 2008 predictions, dueto the downturn in the world economy.

In the case that the shipowner has ordered, owns or has leased too many ships for a giveneconomic situation, one can say that the shipowner has fleet overcapacity. Such a situation iscommonplace in economic downturns, and it is often difficult to sell ones ships during such a

downturn as well. In relation to the overcapacity situation, it is to be assumed that shipowners orship management companies, when they have extra ship capacity, put the most cost efficient shipsto use first, which in most cases are the more modern ships of the fleet in terms of e.g. fuel

Vessel type Projected net change in vessels, 2008-2012 Projected net change in officer demand, 2008 - 2012

Oil Tankers 742 8.088

Chemical Tankers 875 9.735

Gas Carriers 185 2.284

Total, liquid cargo vessels 1.802 20.107

Dry Bulk Carriers 2.400 26.160

Container Vessels 1.562 15.793

Total, dry cargo vessels 3.962 41.953Ot ers e.g. erries, cruise,

research vessels, etc.) 3.468 34.972

Grand Total 9.232 97.032


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efficiency and labour saving equipment. This, in turn, leads to the normally relatively large declinein the demand of seafaring labour in the overcapacity situation.

In relation to the ordering of new ships and the equipment places on new ships (see Figure 3above), the investment climate as well as market demand for maritime transport determine whennew ships are ordered, purchased or leased. In turn, (a) technical developments, including the costand technological feasibility of refurbishing existing ships or installing labour saving technology innew ships as well as (b) flag state regulations influences the use labour saving technology (withthe corresponding reorganisation) on board ship. Here, individual flag states may have varyingregulations that either enable or prohibit such reorganisation and also mandate varying numbers ofcrew members on ships of various types (Winchester, Sampson & Shelly, 2006, p. 2), which is yetanother factor that makes global shipping markets non-transparent. All of these factors takentogether influence the total number and size of ships in use, as indicated in Figure 1, on theprevious page, albeit less immediately and on a more long-term basis than the maritime transportdemand fluctuations.

Concerning national and regional demand patterns, shipowners may either chose to crew andmanage their ships themselves or to delegate some or all of these responsibilities to ship or crewmanagement firms. This means that there are variations in the party that is demanding theseafarers. However, regardless of whether ship management is taken care of in house ordelegated to external parties, UK and Greek empirical data (Mitroussi 2004a, p. 37) suggests thatshipowners usually retain control of the flag states used to register their ships, as was alsomentioned Module 1s Section 1.4.

In addition to flag state requirements concerning minimum crew requirements, which were coveredunder the discussion of the global demand for seafarers in connection with Figure 3, various flagstates have requirements about crew nationality and/or crew qualifications, which limit the selection

of national markets from which the shipowning companies or their chosen ship managing or crewmanaging firms may select crew members. In relation to the selection of the crew, there is alsoevidence that shipowners seek to retain control of the nationalities of the crew within the limitedthat a given flag state sets (ibid.), probably due to their uncertainty which may be related to thewidely varying quality of maritime education, as described in Subsection 2.3.1 of this module.

However, it must also be mentioned that shipowners seem not to be prone reregister their vesselsfor short-term crew cost reasons alone, as there are a number of cost and perceived benefit factorsthat influence flag state choice (see Jakobsen et al., 2004; Ready, 1998; Willingale; 1998). Figure4 below indicates some of the factors mentioned in these sources.


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Figure 4: An overview of the factors that influence flag state choice

Whereas Jakobsen et al. (2004) state, based on their empirical work of the competitiveness of thefive Northern European nations Denmark, Germany, Netherlands, Norway and UK, that there isevidence that cost factors play a relatively larger role than cluster-related factors in flag statechoice decisions, Ready (1998) and Willingale (1998) do not rank the labour cost factors are being

the most important cost factors in flag state choice. For example, Wallem Group managing directorRob Grool notes that on big merchant ships the daily cost of lubrication oils alone is almost aslarge as the total daily crewing costs (Lloyds Ship Manager, 2008a). However, crewing costs arestill an important percentage of total operation costs (Llacr, 2003, p.520) on all but the largest shiptypes. Thus it is not surprising that DeSombre (2006, p.222) notes that while there is a group ofopen register flag states that have succeeded in marketing themselves to the shipping industry aspromoting a higher level of environmental standards on board ships, no group of open register flagstates has differentiated itself by exceptional adherence to labour rights. Finally, Haralambides(1991) economic research indicates that demand for seafaring labour from a specific country issensitive to wage increases, which increase the employers propensity to employ lower-cost crews

from other countries. This last claim is also supported by a large amount of statistic data onmaritime labour markets. For example, Bloor, Thomas & Lane (2000, p. 331) indicate that due toflagging out to lower labour cost countries, the average wage for ratings in 1999 was only roughly of the wage paid in 1992.

However, there are individual differences between shipowners in the propensity to optimise labourcosts alone as opposed to broader attempts to optimise labour efficiency and costs on board aswell as secure a long term source of labour. For example, recent research indicates that someshipowners and ship and crew management firms mainly based their crewing decisions on shortterm labour costs alone, whereas others seek to take other factors, e.g. future labour supply, thequality of education or the professional competencies of the seafarers, into account as well (see,

e.g., Goss, 2008, Theotokas & Progoulaki, 2007).


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Also, the current shortage of seafaring officers may be felt by different segments of the shippingindustry and also different regions in different ways. In relation to this, Lloyds Ship Manager

(2007d, p. 26) noted:

The shortage of trained crew is nowhere more acute than in Scandinavia, where

shipping has developed in recent years around quality and modern tonnage requiringhighly trained recruits.

2.3.3 The supp ly o f s eafa rers

Although we started with a global perspective in our treatment of the demand for seafarers, whencovering the supply side, we take our point of departure from the opposite perspective, i.e. thenational or even country region level, because, as indicated in Figure 5 on the next page, thesupply of seafarers from each nation is in part derived from the general labour market conditions inthis nation and specific local conditions, which, in turn are influenced also by demand conditions atthe global and national level, as discussed in the previous section.

Figure 5 on the next page indicates that the features of the national and other accessibleeducational systems (e.g. the cost of education and the possibilities of financial support for studies)as well as the local labour market conditions (e.g. expected wage levels if one completes a certaincourse of study) influence the opportunity costs of taking part in a particular course of study.

Moreover, general cultural patterns in the country in question (e.g. the presence of one or twocareer families and the role of male and female spouse in relation to taking care of young childrenand/or elderly relatives) as well as the individuals lifestyle choices (e.g. whether to remain single or

marry and whether one chooses a spouse supportive of a career at sea) influence the individualspreferences for careers and time-off, in relation to the local collection of career and time off-possibilities. These factors in turn also influence the individuals more subjective opportunity cost

function, as do the costs of education that must be covered by the individual or his/her family aswell as the wages that can be earned after attaining a specific rank on board. These educationcosts vary vastly from country to country, as, at one extreme, in some countries (e.g. DenmarkNorway, Sweden), education is free and either all or qualifying students can earn a governmentliving expenses grant and/or loan, whereas in other countries (e.g. China, Philippines), substantialeducation fees and living costs must normally be covered by the student and his/her family.Similarly, average wages earned by seafarers vary greatly across countries, with the most well-paid seafarers earning more than 225% of the wages of the less well-paid seafarers; however, thiscalculation does not take into account living cost expenses, which may make up for some differ-ences. Table 2 below depicts various levels of wages for the turn-of-the-millennium years, it takes

its point of departure in the so-called Wage grade B, which is the minimum wage specified by theinternational transport union trade secretariat ITF.


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Figure 5: Factors influencing a country or a region of a countrys supply of seafarers (Figure 3 from Wagtmann

& Poulsen, 2009)

.

Table 2: Wage levels for seafarers from various countries (Figure 3 from Wagtmann, 2010, original source of

data: OECD, 2003, p.51)

However, even if an individual chooses to get education which qualifies him or her to work as aseafarer either at the rating, junior officer or senior officer level, this does not necessarily mean thatthe same individual will enter into the seafaring profession at all or remain at sea very long, as in anumber of countries there are ample possibilities for finding shore-based employment for personswho have completed maritime studies (see, e.g., Southampton Solent University, 2005). Here,Haralambides (1991) econometric work on the Greek labour market indicates that supply of sea -going labour is sensitive to changes in wages vis vis wages for shore-based labour, as ceterisparibus, employment ashore is preferred to employment at sea. Based on the work of Glen (2008),Pourzanjani et al. (2002), Southampton Solent University (2005) and Zarach (2008), we believe

that Haralambides conclusions are generally applicable on other national labour supplyingmarkets.

Wage grade Master Countries AB Rating Countries

Grade B (ITF base

rate) USD 4080 USD 1300

Croatia, India, Philippines, Poland,

Russia, Ukraine

Grade C (+ 0-25%) USD 4081-5100 India, Philippines, Russia, Ukraine USD 1301-1625 South Korea

Grade D (+26-50%) USD 5101-6120 South Korea, Croatia USD 1626-1950

Grade E (+ 51-75%) USD 6121-7140 Greece, Poland, Spain USD 1951-2275

Grade F (+76-100%) USD 7141-8160 Italy, the Netherlands USD 2276-2600 Greece, Italy

Grade G (+101-125%) USD 8161-9180 Germany, UK USD 2601-2925 Germany, the Netherlands, Spain

Grade H (+125%) > USD 9180 Denmark, France, Japan, Norway > USD 2925

Denmark, France, Norway, Sweden,

UK


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Wu and Morris (2006, pp.34-38) note based on the comprehensive quantitative data of the Sea-farers International Research Centres Global Seafarer Databasethat in the developed countries,there are a seafarer shortages, whereas a number of economies-of-transition and developingcountries, which are marked by a lack of job opportunities on land but also possess some maritimeeducation opportunities, e.g. the Philippines, India, China, Russia, Poland, etc., supply a relatively

large number of seafarers to the world market. Moreover, there are developing countries such asNigeria (Essiet, 2008) and Ghana (Amanhyia, 2008) as well as developing country flag states suchas Jamaica (Lloyds List, 2008b) that are seeking to increase their ability to generate income bysupplying seafarers to the world market; also this last group of developing countries suffers from alack of land-based employment opportunity.

Aside from the main patterns, which are depicted in Figures 3 and 6 and Table 2, it must also bementioned that discrimination may also decrease the supply of seafarers in various countries.Here, there are a number of types of relevant discrimination. Sexual discrimination is found inChina and on the Indian subcontinent in that many MET institutions in these regions are notallowed to recruit females to seafaring study programs (Carbone 2004, p.71, Zhao & Amante 2005,

p.549), yet may be presented in European countries as well (see Thomas, 2003). Moreover, sexualsegregation of males and females in work and public life in many Arab countries precludes mostpotential female seafarers from this region from working on commercial ships.

Age discrimination is believed to be present in a number of developing countries who either havenot ratified legislation against such discrimination or do not have sufficient resources or marketpower to combat such discrimination. An often cited example is that relatively few Filipino seafarerswork for global maritime employers beyond the age of 45; the main cause of this is commonlystated to be that the costs of ensuring them while at work increases markedly at 45, making olderFilipino seafarers less wage competitive on the world market (Leggate & McConville 2004, p.456).Related to age discrimination is the issue of discrimination on the basis of non-job related medicalconditions (such as mild obesity or Hepatitis B- or HIV-infection). Non-job related medicalconditions may in this maritime context be defined as conditions for which there is no general riskrelated to vessel safety or to disease transmission on board and also no general risk in relation to apotential need for ship evacuation or ship diversion. According to the former president of theInternational Maritime Health Association, Dr. Tim Carter, in countries where employment oversightinstitutions do not prevent this, some shipowners, ship and crew managing companies and P&Icompanies are overly cautious and will not accept seafarers that have such non-job relatedmedical problems (Wagtmann 2008, p.128).

Discrimination based on political activities (and here, especially, union-related activism) is also a

factor in a number of countries (Sampson, 2003). Here, seafarers of the high income countries ofNorth Eastern Europe, Australia, New Zealand, and North America are among the least vulnerable,as these commonly enjoy employment contracts which are not restricted to a single voyage. Incontrast, seafarers from the newer labour supplying countries, i.e. many developing and transitioneconomy countries, risk being blacklisted if they are associated with union activity. This practice isvery widespread in, e.g., the Philippines, and neither the ITF nor national Filipino unions, neithercivil rights organisations nor welfare organisations have been able to change this circumstance(Almazan, 1998; Tuazon, 2008).

Finally, in certain national markets there have been other phenomena that limit or skew labour sup-ply. For example, in India, seafarers have in specific previous incidents been subject to (a) past

North American-type closed shop union agreements with employers; these also may serve asmoney making schemes for greedy union bosses and to (b) unscrupulous recruitment agents whorequire payment for jobs on ship, yet manage to go bankrupt before wages are to be paid to


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seafarers, meaning that seafarers get trapped in a debt spiral (Sampson, 2003). Moreover, these issome evidence that government entities in the Philippines seek to thwart the possibility that Filipinomaritime employers and seafaring employees should be able to enter into more long-termcontracts, probably due to powerful vested interests in the Filipino seafarer employment agencieswho wish to continue to generate income based on voyage-based contrasts (ibid.). The last supply

skewing mechanism is the practice of double bookkeeping regarding wages. Especially seafarersfrom Asian developing countries have been subjected to an official contract wage, which typicallymirrors the minimum wage demands of the ITF, and a second, much lower paid wage, by anumber of shipowners from Asian and European countries, and the ITF has been able to do little toeradicate this problem, as many national court systems have not wished to address the issue(Northup & Scrase ,1996; Sampson, 2003).

2.3.4 St ruc tu red As s ignm ent 3 .3 BIMCO/ISF Sta t is t i cs o n Supp ly and Demand o f

Seafarers

For this assignment, please access and read BIMCO/ISF, 2005. BIMCO/ISF Manpower 2005

Update Summary. Coventry UK: University of Warwick, Warwich Institute for EmploymentResearch/BIMCO/ISF [online]. Available at:http://www.marisec.org/resources/Manpower2005UpdateSUMMARY.pdf.

1. Enter the total 2005 global demand for officer seafarers according to this reporthere:___________________

2. Enter the total 2005 global demand for ratings according to this report here:____________________

3. Enter the 2005 percentage global deficit or surplus of officer seafarers according to this reportin the following blank; if there is a deficit, indicate this by putting a minus sign in front of the

figure: _______________________

4. Enter the 2005 percentage global deficit or surplus of ratings according to this report in thefollowing blank; if there is a deficit, indicate this by putting a minus sign in front of the figure:_______________________

5. Based on your reading of Figure S.1 on p. 1 of the summary, calculate approximate theapproximate percentages of the shown seafarer categories for the various area of domicile

categories. Place your approximations in the table on the next page.

6. Based on your reading of Figure S.5 on p. 7 of the summary, please indicate if you believe thatthe particular used benchmark in the figure entails more than is written about benchmarks atthe top of p. 3. Please justify your answer regard of whether you believe (a) that the benchmark

Area of Domicile 2005 % of officers % of ratings

OECD countriesEastern Europe

Africa/Latin America

Far East

Indian sub-continent

Total numbers 100% 100%
http://www.marisec.org/resources/Manpower2005UpdateSUMMARY.pdfhttp://www.marisec.org/resources/Manpower2005UpdateSUMMARY.pdf


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only includes the variables mentioned at the top of page 3 of the report or (b) that thebenchmark includes more variables than those mentioned at the top of page 3 of the report.You may use up to 300 words in your answer. Beyond this, you may also include own fullbibliographical references to other relevant literature you have read, if you choose to draw onthis literature in your answer.

7. Li & Wonham (1999, p. 296) mention two alternative ways of measuring the seafaring supply,of which the BIMCO/ISF makes use of the second qualification:

a. Active seafarers are those qualified seamen, including both those who are currentlyemployed and who are looking for jobs at sea, but excluding those qualified seafarers notseeking work on board ships

b. Qualified seafarer is `one who has an appropriate official (Government approved) sea-mans discharge book, enabling him/her to be a bona fide member of a crew agreement

[...], which forms the supply in the survey

Discuss which measure would be the preferred measure (i) for a shipping industry employer and(ii) for your home countrys unemployment placement services. In relation to (ii), please state your

home country and take the perspective of a government agency which monitors the job seekingactivities of the unemployed, if such as institution exists in your country. You may use up to 400words in your answer to this question. Beyond this, you may also include own full bibliographicalreferences to other relevant literature you have read, if you so choose and if you actually draw onthese references in your answer.

2.3.5 Globa l long- term d ynamics o f the supp ly o f sea fare rs

Before we begin to discuss age distribution and the future global labour market changes, based onremarks about inflows and wastage, it is a good idea to supplement our discussion with morespecific national statistics about the seafaring labour market supply. These are supplied in Table 3on the next page, which stretches itself over multiple pages.

Although statistics for most of these countries and even more countries were available from the fullBIMCO/ISF (2005) report, we chose here to prefer sources available from the free internet and theacademic article databases available in the university systems of north west Europe. Here, theBIMCO/ISF (2005) are used in, e.g., Glen (2008) and EU Commission, DG Fisheries and MaritimeAffairs (2006a); these latter two works seek to cover seafarers who work in the national f leet inlocal and regional shipping as well as seafarers who work in global shipping, which is also oftencalled deep-sea shipping. We believe this is the correct way to measure things, as most seafarers

can potentially switch from one area to another, although among certain groups of employees, e.g.older Filipino seafarers (see Leggate & McConville 2002, p.456) and women seafarers with youngor school-age children (see Lloyds Ship Manager, 2008b, p.18; Lloyds List, 2007c), theremaybe a strong preference to work closer to home.

In cases where we do not have BIMCO/ISF (2005) figures, we will usually revert to estimates fromthe SIRC Global Seafarer Database, which are based on a novel survey methodology in whichcrew lists are inspected in a number of international ports (see e.g. Winchester, Samp-son &Shelly, 2006 and Wu & Winchester, 2004 for methodology information). The SIRC data is probablya bit less of an accurate estimate of the total supply of seafarers in that it is based on seafarersactually employed and sometimes capture patterns from countries in which there are a substantial

number of seafarers who sail locally or regionally less well, in cases where seafarers do notfrequent the sampled ports. The following works are based on sampling from the SIRC database:


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Table 3: Supply of seafarers from selected countries

Rating Jun. officer Sen. officer

Belgium 590 15,6%

Canada 739 5,1% 48,7% 46,1%

Cyprus 3.800 57,9%

Denmark 9.654 43,2%

Finland 6.500 69,2%

France 9.740 69,4%

Germany 6.650 27,8%

Greece 32.000 46,9%

Ireland 3.541 58,99%

Italy 20.950 54,4%

Japan 1.869 7,1% 20,0% 73,0%

Luxembourg 905 48,1%Netherlands 4.860 20,6%

Norway 4.763 4,3% 21,4% 74,3%

Portugal 2.221 81,1%

Spain 10.000 60,0%

South Korea 7.429 21,0% 30,1% 48,8%

Sweden 13.819 64,6%

UK 18.725 24,4%

USA 3.471 28,6% 33,5% 37,9%

Cumulative figures

for included

countries

162.226 45,4%

% of BIMCO (2005)

OECD Figure54% 43,4%

Information about sources: Ellis & Sampson (2008)

EU Commission DG Fisheries & Mari. (2006)/ BIMCO/ISF (2005)

52,1%

54,6%

Part 1. High Income Countries

51,9%79,4%

18,9%

40,0%

35,4%

75,6%

30,8%

30,6%

72,2%

53,1%

41,0%

45,6%

Country of origin Estim. no.

Seafarers

Distribution by percentage

84,4%

42,1%

56,8%


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Bulgaria 10.855 35,6% 31,9% 32,5%

Croatia 7.992 17,2% 30,7% 52,2%Estonia 9.937 62,9%

Hungary 2.025 61,4%

Latvia 17.542 57,2%

Lithuania 1.916 34,1%

Poland 13.183 35,9%

Romania 10.855 35,6% 31,9% 32,5%

Russia 7.992 17,15% 30,7% 52,2%

Slovakia 576 55,2%

Slovenia 644 15,5%

Ukraine 45.607 48,80% 27.3% 23.9%Cumulative figures

for included

countries

129.124 43,4%

% of BIMCO (2005)

East Europe Figure62% 47,1%


EU Commission DG Fisheries & Mari. (2006)/ BIMCO/ISF (2005)

Wu and Morris 2006


China 122.208 61% 22% 17%

Honduras 739 74% 7% 19%

India 54.700 79%

Indonesia 41.750 81%

Myamar 12.519 56% 31% 13%

Pakistan 3.183 21% 36% 43%

Philippines 120.399 72% 19% 9%

Sri Lanka 1.472 54% 28% 18%Turkey 82.419 73%

Cumulative figures

for included

countries

439.389 70%

% of BIMCO (2005)

figures for rest of

world

65% 71,2%


Glen (2008) based on BIMCO/ISF (2005)

Wu, B. (2004) Wu, Shen & Li (2007) Zhao & Amante (2005)

19%

27%

30%

Part 3. Selected Developing Countries

Sampson (2003)

81,2%

53,6%

56,6%

Part 2. Eastern European Post-Communist Countries

Country of origin Estimated

no. seafarers


21%

38,6%

42,8%

65,9%

64,1%

44,8%

84,5%

37,1%

Country of origin Estim. no.

Seafarers



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Ellis & Sampson (2003), Wu (2004), Wu & Morris (2006) and Wu, Shen & Li (2007). As a controlelement, i.e. to elucidate this problem, for each of the three world regions used in Table 3, weinclude Cumulative figures for included countries for which we have been able to find free

statistical sources as well as academic data sources and also indicate the distribution bypercentage of ratings and officers for the included countries. After this, we then compare these

cumulative figures for the included countries in each world region categorisation to the comparativetotal figures from the BIMCO/ISF (2005) report. For Part III of our figure, our categorisationSelected Developing Countries most closely responds to the addition of the three BIMCO/ISF(2004) categories (i) Africa and Latin America, (ii) Far East and (iii) Indian sub-continent. We havetherefore chosen in Figure 3 to take these BIMCO categories i iii and re-label them as BIMCOsfigures for the rest of the world.

In relation to Table 3, it is estimated that the developed countries currently provide the globalshipping industry with of 13% of its senior officer manpower, yet only 6 % of its junior officermanpower and only 4% of the rating manpower (Wu & Morris 2006, p.37). This is consistent withthe demand pattern that shipowners in many developed countries seem to prefer officers from theirown home country for crucial positions on board ship, if available, regardless of the relatively high

wage they command, whereas, they are more likely to seek to employ seafarers from lower wagecountries for the other positions (see, e.g., Tsamourgelis & Tsagari, 2007). From the perspective ofthe seafaring employment seekers, especially the ratings of developed countries feel frozen outby this development and the resulting loss of possibilities for their employment in internationalshipping. Thus it is not surprising that the ITF, in which the developed country maritime unions playa disproportionately large role (Koch-Baumgarten 1998) expressed its content when theInternational Bargaining Forum established the IBF Developed Economy Rating Funds in 2007, toencourage companies to offer employment to seafarers from traditional maritime nations who hadsuffered major job losses during the past two decades (International Bargaining Forum, 2007). We

will return to this issue in Sections 4 and 6 of this Module.

Having set this foundation, we now remind the learner that figure 5 of the previous sectionpresented a model of the supply of seafarers in a nation or even a region of a nation. We nowmove to discuss global dynamics across time. For this topic, we once again turn to an external text,to provide our learners with an introduction to the issues of age distribution, inflows and wastageon the labour markets for seafarers. Therefore, you must now read p. 48 (from Section 5.5. AgeProfiles) to p. 51 (to the end of Section 5.7 Wastage) in: OECD, 2003. Availability and Training ofSeafarers. Report prepared for the OECD Maritime Transport Committee by Precious Associates

Limited.Geneva, Switzerland: Organisation for Economic Co-operation and Development [online].Available at:http://www.oecd.org/dataoecd/32/62/2489394.pdf.

As you should have learned from your answers to Structured Assignment 3.3, there is a surplus ofratings on the global labour market for seafarers, yet a shortage of officers. Therefore guaranteeingan adequate supply of officers is the main issue in focus, seen from the point of view of theshipping industry. Figure 6 on the next page presents nine pie diagrams of the age distributionsupply of officers for various countries or regions and one pie diagram for Norway, which presentsthe age distribution of all available seafarers in the country. (However, in Norway, over 95% of theseafarers on the supply market are in face officers.
http://www.oecd.org/dataoecd/32/62/2489394.pdfhttp://www.oecd.org/dataoecd/32/62/2489394.pdf


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Figure 6: Officer age distribution pie diagrams for selected nations and regions

It is evident from Table 3 that the seafaring officer age distribution profiles vary markedly acrosscountries and country categories. Moreover, within the country categories OECD Nations andDeveloping Countries, there are also huge variations.Moreover, despite substantial differencesamong countries, generally, the developed countries suffer from an ageing officer labour force,meaning that younger generations are underrepresented. However, of the countries included in theabove figure, it appears that Germany has the worst problem with a skewed age profile of itsmaritime officer labour force: well over half of its officers are over 51 years of age! In relation tothis, the Association of German Shipowners (in German: Verband deutscher Reeder) stated in2007 that its member companies need 650 officer graduates per year for the next decade; in 2006,only 160 people graduated with a German seafaring officer degree (Lloyds Ship Manager, 2007a).


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The other depicted OECD countries profiles lie closer to the average OECD officer age distributionbut there will still be major problems in maintaining the number of officers as the oldest officersretire in the coming decades. In relation to this issue, it is relevant to examine the OECD countries

policies concerning seafaring education, as this factor is so important in relation to inflows (OECD,2003).

In recent years, a number of traditional developed maritime nations have sought to use publicmoneys to improve maritime education and other infrastructural conditions, to ensure the future ofthe maritime sector in their country; in addition, a number of these countries have created tonnagetax regimes and also lessened income taxes for seafarers as well as sought to create quality open

registers (see, e.g., DeSombre, 2006; Jacobsen et al., 2004). Many of these policies have beenframed in the national political debate as reinforcing or ensuring the strength of the national

maritime cluster; the arguments for this have using been related to the arguments made popular

by the American professor of strategic competition Michael E. Porter in his book The CompetitiveAdvantage of Nations (Porter, 1990). In this work, Porter recommends that governments play areinforcing or catalysing role in relation to industry by providing high quality public service (e.g. in

the area of education), regulating to encourage companies to increase their performance,stimulating demand for advanced products and services, and enforcing rules about fair domesticcompetition, to ensure that companies also can compete on international markets.

In Norway, Porters concepts were put to use in recommending national industry policy for the

multiple Norwegian maritime sectors in Reve et al. (1992) and the maritime sector in particular inBjrndalen & Reve (1995). After this, a number of other actors in high national income Europeanmaritime nations demanded similar national maritime cluster studies and subsequent nationalmaritime cluster policies, which lead to the developments mentioned in the previous paragraph;also the EU Commission recommended the cluster approach in a 2006 white paper (EUCommission, 2006).

Moreover, as the cluster studies demonstrated linkages between sea-based employment on shipand shore-based employment, the resulting of maritime cluster policies were also catalysersconcerning investments in European maritime education, because stakeholders in many of thesecountries also wished to see positive employment effects of the general cluster investments (seeEU Commission, DG Fisheries and Maritime Affairs, 2006a). However, in many cases, theemployment effects did not surface to the extent wished, at least not in the initial years (see, e.g.,Klickauer & Morris, 2003, pp.550-1 for the case of Germany). Still, key aspects of the abovestrategy were also debated and promoted in other high income maritime nations such as Australia(see Griffet, 2004, pp.11-3).

Based on the above developments and the general high gross national income level, currentlymost maritime schools in Western Europe and other high income maritime nations enjoy ratherfortunate circumstances in comparison with their compatriots in the transition economies and thedeveloping world. According to Yamamoto (2002, p.66), the traditional organisation of maritimeeducation in traditional development maritime countries (in the citation TDMC) has been asfollows: The government of TDMC administered the domestic shipping industry [...] through

various policy tools [...] including the area of education and training of seafarers. In rela tion to thisstatement, for the region as a whole, it is a common characteristic that the public sector has soughtto varying extents to promote and indirectly support the home country shipping firms. However, theextent of public support has varied from country to country (see Mazzarino, 2005), with maritime

educational programs in some countries (e.g. Canada, Greece, Japan, UK, USA) being financedpartially by student fees and in cases of needy students varying amounts of scholarship moneyfrom various sources and other countries providing free education with either some need-based


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living expenses financing for students (e.g. Germany) or living expenses financing for all students(e.g. Denmark and Sweden). Additionally, the role of shipowners or ship and crew managementcompanies with regard to providing cadetships have varied somewhat from country to country,based both on political viewpoints and the strength of national fleets.

However, there are also some voices that suggest that the high income maritime nations shouldgenerally phase out of nautical education. E.g. Ruhallah (2004, p.28) states that he believes thatthe industry should be focused on training, recruitment and retention of seafarers from developingcountries. Any recruitment drive in maritime nations in unlikely, given the economic and socialexpectations of young people in advanced countries, to be successful. Similarly, Pourzanjani et al.(2002, p.53) pose the question of why Western Europeans do not fully outsource maritimeeducation and training to other countries.

Regarding the questioning of the pertinence of investing in maritime education in high wage na-tions to ensure seafarer officer labour inflows, there are a number of issues that can be raised:

o As concerns wages, although the high income maritime nations perceive a deficit in maritime

officer labour, many shipping industry actors in these countries are concerned about wagecompetitiveness of officers from these same countries, because the wages of officers in thesecountries are between 50% to 200% above the ITF baseline wage rate, as indicated in Table 2of Section 2.3.3. In attempts to decrease the wage burden, EU-member states are allow toreduce the taxation and social security payment rates related to seafarers income; this isjustified in public debate by the seafarers not being in their home countries for large parts of theyear and thus not being able to use the country in questions public services to the same extent

as other residents of the country. However, significant improvement in the sectors EU marineremployment creation rates have not been achieved by this tax and other payment reduction,and in recent years, some shipping companies in high income maritime nations such as

Norway and Denmark have also chosen to either reduce the number of home country officersin their fleet and/or to focus solely on the recruitment of foreign officers (Benson, 2009;Poulsen, 2008), thus affecting both inflows and wastage. Here, however, it must also beremembered that Norway is a unique Western European country in that it has enjoyed fullemployment at the natural rate of unemployment (in the neo-classical economic sense of theterm, see Wikipedia, 2010b), close to full employment or employment at a higher level than thatnatural level of unemployment than full employment (once again in the neo-classical economicsense of the term). Thus, it is conceivable that inflow and wastage problems in Norway havebeen especially severe.

o

Returning to inflows alone, employment as a seafaring officer simply does not seem attractiveto young Western European (Coleman 2007, p.34). Although there are a few empirical studiesand academic papers on the issue (e.g. Cahoon & Haugstetter, 2008; Danish Centre for YouthResearch, 2003), Sir Robert Coleman (2007, p.36) notes that many of the claims made in thepresent discussion of the reasons why young Western Europeans are reluctant to go to sea aremade on the basis of assertion and inference, meaning that policy recommendations that stemfrom this debate are not sure to be effecttive. Thus programs such as a Norwegian program inwhich a number of shipping companies in the Bergen region are offering maritime traineesinternships and job guarantees in efforts to attract and retain young Norwegians as seafaringofficers (Lloyds List, 2007c) are not guaranteed success on an a prioribasis. This problemalso affects non-European developed countries such as Australia (see Griffett, 2004; Lewarn,2009). Moreover, the Asian maritime hub Singapore maintains national seafaring schools andis also host to private firms such as NYK and A.P. Moller-Maersks training centres, but has


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still little success in attracting own nationals to the seafaring profession (Lloyds Ship Manager,2007b; Danish Maritime Authority, 2003b, p.17). On this basis, these aspects will be discussedfurther in Module 5, which concerns personnel selection, retention and career planning,including planning and investing in education and training.

o Concerning wastage alone, in some Southern European countries, officers typical retirementage from duty at sea may be perceived as more problematic (Adolfsson, 2008, p.40), e.g. inGreece, officers can retire at fifty (Waals & Veenstra, 2002, p.13).

Moreover, many shore-based maritime firms make use of employees with officer education andexperience and may also suffer from the shortage of experienced officer labour (see BIMCO. 2005,p.6; Gardner et al., 2001;Pettit et al., 2005). Here it must be mentioned that in a number ofcountries, e.g. the Netherlands (Waals & Veenstra, 2002, p.10) and Denmark, officers typicallyonly spend a few years at sea before moving to shore-based work; this circumstance is partiallyreflected in the above statistics. This circumstance will be addressed further in the coming sub-section 2.4, which concerns shore-based employment.

Concerning inflows from the formerly Communist countries of Eastern Europe, Russia and theEastern European countries are major suppliers of officers and ratings, as is indicated in Table 3.Moreover, maritime education and training in these countries generally has a good reputation ofbeing very detailed and scientific, despite the fact that many maritime education and traininginstitutions in the region also have to struggle with severe lacks of finance (Barzan, 2007; Zac etal., 2000).

However, there are some national differences, for in some Eastern European countries (e.g.Estonia and Poland), seafaring employment has also been in decline (Coleman 2007, p.35); thisdevelopment may probably be at least partially attributed to the lack of critical mass in the national

shipping industry of these countries as well as the severe decline of the Estonian shipping industryin past years (see EU Commission, DG Fisheries and Maritime Affairs 2006a, p.60), thesecircumstances probably influence both inflows and wastage. Polish seafarers are among the

oldest in all ranks (Glen 2008, p.852; Wu and Morris 2006, p.39), as is also evident from Table onthe next page. Moreover, recruitment, i.e. the inflow side, appears to be becoming more difficult inLatvia (see, e.g., EU Commission, DG Fisheries and Maritime Affairs, 2006a, Latvian countryreport, p. 11).


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Table 4: Age averages of officers from post-communist & developing countries

Since the end of the planned economic system, the cadets from this region are also increasinglytrained for employment in the international shipping industry (Pourzanjani et al. 2002, p.53). Re-cent sampling from the global seafarer database of the Seafarers International Research Centre(henceforth: SIRC) indicated that these countries plus China are the main supplier of seniorofficers, providing 47% of these to the shipping sector (Wu & Morris 2006, p.37). As concernsjunior officers and ratings, the figures for these countries are 36% and 26% respectively.

In the study of Wu and Morris (2006), which concerns seafarers from economies of transition,

China is considered an economy of transition and included in an analysis together with the EasternEuropean countries Poland, Russia and the Ukraine. However, in this paper, due to differences inthe per capita GDP of China compared to the per capita GDPs of the Eastern European countriesas well as the fact that other labour market studies, e.g. BIMCO/ISF (2005) and Glen (2008) do notcategorize China together with the Eastern European countries, we have chosen to move China tothe developing country category. Still, in our comparative Table 5, which shows the age averagesof seafarers from these four countries in the national and global fleets, respectively, we take all fourcountries together.

Table 5. Age averages of various staff categories in domestic and global fleets

In relation to work for domestic versus foreign employers, e.g., Ellis and Sampson (2008, p. 38)

indicate that while 37.3% of all Russian seafarers worked on vessels in the national fleet, thefigures for the Ukraine and especially Poland were much lower, at 16.0% and 0.2%, respectively;however there is also the trend that some Eastern European seafarers shift from the national fleet

Country Officer age average % > 40

Bulgaria 39.5 40.2%

Croatia 38.6 40.7%

Latvia 39.9 49.7%

Poland 41.2 52.4%

Russia 39,7 49.8%

Ukraine 39.3 48.4%

Country Officer age average % > 40

India 36.4 31.8%

Myamar 40 N.A.

Philippines 41.2 57.4%

South Africa 35.8 27.2%Information about sources:

Glen (2008)Ellis & Sampson (2008)

Eastern European Post-Communist Countries

Selected Developing Countries

Rating Jun. office r Sen. office r Rating Jun. officer Se n. officer

Poland 46.2 43.1 48.9 43.0 41.2 46.5

Russia 40.1 35.0 43.5 39.3 35.3 43.0

Ukraine 39.8 37.9 48.5 37.9 37.9 44.6

China 40.6 33.7 44.2 36.1 31.4 42.0

Source: Wu and Morris 2006: 38, 40.

Country

of origin

Mean age, national fleet Mean age, global fleet


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to an international operator, if such a switch can give them a higher salary (see EU Commission,DG Fisheries and Maritime Affairs, 2006a, p.71).

Seafarers from Russia and Eastern European countries work predominantly for employers ofWestern European origin (Wu and Morris, 2006); thus a number of Western European shipownersseem prone to recruit officer labour from countries near to them. For the case of the EasternEuropean countries that are now members of the EU, this may indeed by easier for the WesternEuropean employers, as certain issues related to employment are facilitated and navigation or dualpurpose officers from EU countries may also be promoted in all EU member states flag registers toshipmasters, provided that they are qualified, whereas some restrictions on this exist in a numberof European flag registers for non-EU nationals.

In the preceding paragraphs about the high income countries, it was mentioned that in some of themost developed maritime nations, seafarers are in high demand in land-based positions, whichleads to increased wastage. Here, for most of the Eastern European countries, the home countryshore-based demand seems to be somewhat lower, both due to general unemployment-related

problems and due to the circumstance that in these countries sectors such as maritime servicesand ship equipment are not as well-developed as in the most high income maritime nations (seeEU Commission, DG Fisheries and Maritime Affairs 2006a, Country report of Estonia, Latvia,Lithuania, Poland and Slovenia; Southampton Solent University, 2005, pp.77-86 for the case ofLatvia and pp.99-107 for the case of Poland). This means that wastage caused by seafarerstaking maritime positions in their home countries is probably less less in these Eastern Europeancountries.

However, for many of the Eastern European seafarers, here especially ratings and personnel incontact with passengers on ferries and cruise ships, their employment seems contingent on theirsalaries not rising too fast because Polish salaries for work at sea have fallen to a level

comparable to salaries for shore-based work and some Polish seafarers have also been replacedby seafarers from the developing world (see, e.g., EU Commission, DG Fisheries and MaritimeAffairs, 2006a, p.71, which also treats the case of Latvia and the Country report of Estonia, p. 11).This would suggest that there is a potential for increased wastage if these seafarers begin toseek shore-based employment in other industries in their home countries. However, there areEuropean seafarer labour unions that monitor the issue of equal wages for equal work verycarefully and seek to take strategic legal action to ensure greater wage equality on ships betweencrew members from Western and Eastern European EU member states; therefore we will return tothis issue in Sections 4 and 6 of this Module 3.

Turning now to the developing countries, currently, it is estimated that these countries provide the

shipping sector with 40% of the senior officers, 60% of the junior officers and 70% of the ratings(Wu and Morris, 2006, p.37); with especially Asian developing countries such as the Philippines,China and India providing large numbers. With regard to the African continent, Japan InternationalCooperation Agency (2000, p.313) forecasted the total 2005 supply of seafarers from Egypt at4680 and the total supply from all of Africa at 24,732.

In tables 4 and 6 (the latter comes on the following page), it is seen that developing country officermean ages are generally lower than is the case for the high income maritime nations


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Table 6: Mean ages by seafarer rank for selected Asian developing countries

and the Eastern European economies of transition. However, the percentage of seafarers servingas officers are also generally lower, as was evident from Table 3. For the case of China, there are

also statistics about the mean age that are subdivided into the national state-owned enterprisesand the international fleet, in the aforementioned Table 5. From the above mentioned tables, it isseen that the average age of Chinese seafarers in the global fleet is younger than that of thenational fleet. Explanations for this might be that the global fleet is more attractive to youngerChinese seafarers (Wu & Morris 2006, p.40), or, conversely, that there are also age discriminationbarriers to older Chinese seafarers, as previously discussed in Subsection 2.3.3. With specificrelation to China, a third factor must be mentioned: As is the case also in Burma and North Korea,the Chinese seafarers do not have full freedom of movement from one employer to another. Ifemployed by a state-owned firm or organisation, a Chinese seafarer must apply for permission toleave and may only do so if permission is granted (ibid). This circumstance can be regarded as a

legal impediment that reduces the wastage problem in state-owned firms and organisations. More-over, there are relatively large numbers of unemployed or underemployed older Chinese ratings,due to the modernization of the Chinese fleet from old ships requiring large crews to modern ships(Zhao & Amante 2005, p.538).

In relation to these demographics, we must also remember not to rule out age or non-job relatedhealth condition discrimination on the part of some maritime employers (see the end of Subsection2.3.3), which may in fact increase wastage. However it is also been observed that a number ofFilipino seafarers, officers or ratings, transfer to the national Filipino fleet after reaching the age of45 (Leggate & McConville 2004, p.456). Moreover, some seafarers from a variety of developingnations may simply perceive that they have earned better than many of their peers on shore, and

they therefore chose to retire early (see, e.g., BIMCO/ISF 2005, p.6), thus also contributing to thewastage problem. Beyond this, there may also be impenetrable glass ceilings in some placesofemployment, as some maritime employers from the developed nations seem to prefer to employown nationals or own region nationals in senior officer positions, and some EU flag state regimessuch as the Danish DIS register specify that the shipmaster must have EU nationality. Some ofthese glass ceilings may also be perceived by employees and potential employees from

developing countries as racial or ethnic prejudice. In this case, this probably also has a negativeeffect on inflows and wastage. Unfortunately there is too little certain knowledge about the extent ofdiscrimination; however a need is perceived to progress more officers from developing countries tosenior positions (BIMCO/ISF, 2005, p.6).

As concerns seafarer labour market inflows from developing countries, for both ratings andofficers, finding potential seafarers seems to also become more difficult if other sectors of the local


China 37.4 31.4 42.1

India 38.6 30.6 40.4Indonesia 37 34 41

Myamar 36 38 45

Philippines 36.1 37.8 46.5

Turkey 35 31 41

Sources: Ellis & Sampson (2008)

Wu, Shen & Li (2007)

Country of

origin

Mean age by rank


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economy experience high growth. For example, certain regions of India and China, which haveenjoyed relatively high growth rates, have also experienced that the number of potential recruits toseafaring education and jobs has fallen. For these countries, this has mainly occurred in urbanareas, probably due to the other choices offered to young people in these areas (Lloyds ShipManager, 2008b). However, here, Bernhard Schulte Shipmanagements CEO Rajaish Bajpaee

believes that seafarers from all parts of the developing countries, rural or urban, might take shore-based employment, if given the choice (Hand, 2008). In connection with these arguments, somemaritime researchers (e.g. Wu & Morris, 2006) work with the hypotheses that (a) a lack of afunctioning land-based job market in a country or country region drives inflows into the seafaringprofessions and minimizes wastage and that (b) should the land-based job market situationimprove in the country or country region in question, inflows to the seafaring professions willdecrease and wastage will increase.

For the case of India, the taxation situation has also skewed the situation somewhat, as Indiaofficers serving in the domestic fleet pay higher taxes and often also earn less in gross wages thanIndian officers in foreign fleets. Thus India faces national shortages of seafaring officers, due to the

fact that their officers are recruited to serve in foreign fleets who can offer better wages andconditions than the national shipowners can (Taharakan, 2005); this has incidentally alsohappened in other developing countries as well, as as Malaysia (see Osnin, 2001, p.21). This, inturn, lead India to ease its ban on the employment of foreign-trained officers (Lloyds List, 2008e);however Indias Director General of Shipping has refused domestic shipowners demands to allow

the recruitment of officers from more wage competitive countries such as Bangladesh, Hong Kong,Indonesia, Myanmar, the Philippines, Singapore, Sri Lanka, Thailand and Vietnam, insteadfocusing on Western and Eastern European sources of officers (ibid.).

Concerning China, understanding recruitment inflows presupposes knowledge of the Chinesesocietal division between urban and rural inhabitants. As noted by Zhao & Amante (2005,pp.539,40):

In China, hukou registration defines individuals as having either an urban or ruralstatus and this is important in determining the individuals life-chances because urbanresidents have far more opportunities than rural people do. In the SIRC survey of activeChinese seafarers 80 per cent were registered as urban residents whereas moststudents in maritime training and education (80 per cent) were registered as ruralresidents. In 2000, Dalian Maritime University recruited 746 new students amongwhom 70 per cent originated in inland provinces. In the same year, neither DalianMaritime University nor Shanghai Maritime University was able to recruit any student

from Dalian or Shanghai. [] The new generation of Chinese sea farers seems to bedrawn increasingly from families where parents are likely to be less well-educated andemployed in less prestigious occupations.

However, maritime education is very expensive by Chinese income standards; the total tuition feefor an officers program corresponds to the average annual income for 17.5 Chinese peasants(ibid., p.553), and the government grants that use to pay the tuition for all students have beenabolished, so that today there are only very few scholarships and study loan scholarshipsavailable (ibid.).

In contrast, in the comparatively wealthy Hong Kong Special Administrative Region of China, whichwas not considered to be a developing region when it was under British rule, the

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Maritime HR - Wage and benefit creation, role of unions and employers organisations