Supplementary Memorandum by NUMAST (FUS
THE FUTURE OF THE UK SHIPPING INDUSTRY
Thank you for your letter and your request for
our view on comments made in paragraph 38 of the daughter document
In the past there have been very few occasions
where proposals have been put forward to remove UK officers and
replace them with non-UK officers. We have not therefore really
been put in the position of having to agree or not to the use
of foreign officers on UK registered ships.
This said, I think it fair to assume that NUMAST
would have demonstrated a reluctance to agree to the use of foreign
officers on UK registered ships in the circumstances prevailing
in the mid to late 1980s, when much of the flagging-out occurred.
It is certainly NUMAST's position that UK registered
ships should be crewed with UK officers. I believe it is clear
to everyone that we would not welcome a revival of the UK registered
fleet where all ships had non-UK officers onboard. Hence our position
on a link to employment and training.
What is being looked at by the government is
a coherent long-term strategy. NUMAST recognises that if there
was an expansion of ships on the UK registeras experienced
in the Netherlandsthere would be practical problems in
trying to crew the ships completely with UK officers. We recognise
therefore that any revival strategy has to have a relatively structured
approach, and this would include ships coming on to the Register,
crewed with non-UK officers.
We would suggest that the industry proposal
to the government to link a tonnage tax regime to employment and
training, would provide the necessary funding to increase officer
cadet intakes to the level we all know is required1,300
a year. This figure is for current needs, not the needs of additional
ships coming on to the Register. However when we are in the heady
position of having more than 1,300 a year coming in, "yes"
we would expect to start seeing crewing on UK registered ships
with UK officers increasing.
The situation with regards to ratings is quite
different, however I expect you have sought an answer to paragraph
38 from the RMT.
We would point out that NUMAST was involved
in many of the "flag-outs" of ships in the 1980s, and
only a few companies were able to establish the cost savings being
looked for were financially necessary. Many flag-outs were "copy
cat" actions, and many were by companies that have since
disappeared as companies and would have done anyway.
NUMAST considers that the report is over generous
in stating that UK companies flagged-out to open registers, employing
foreign seafarers at wages levels indicated by the ITF. Many,
in fact, utilised seafarers on much lower wage levels.
Finally, during the giving of evidence I indicated
we would provide some information on wage comparisons, etc. However
I would point outas it is very relevantthat it would
be a mistake to view employment costs comparisons as being the
sole issue of relevance in determining crewing arrangements.
During the hearing the question of international
seafarer wage costs was raised by members. We replied that we
would prefer to reply to this question with an element of accuracy,
rather than with "guesstimate" figures.
Perhaps the most telling guide to comparative
salaries is an annual survey carried out by the International
Shipping Federation, which represents employers in 33 different
countries. The most recent survey, published last May, was based
on research covering more than 300 collective agreements applying
to seafarers from 50 different countries.
According to this study, the wage rates of the
highest paid chief officers are around 10 times that of the lowest
paid. The highest paid Able Seamen receive wage rates more than
20 times that of the lowest paid.
Taking a nominal comparative rate of 100 for
the wage costs of a British officer, the ISF study showed Japanese
rates at 155, Finnish at 120, German at 114, Indian at 74, Brazilian
at 73, Croatian at 60, Polish at 54, Filipino at 47, and Chinese
at 37. Interestingly, the same study in 1993 showed Indian rates
to be at 41 per cent of UK rates, Polish at 36 per cent and Filipino
at 34 per centdemonstrating a trend towards narrowing of
international differentials in the officer grades. The ISF pointed
out: "Over the past five years, the average Indian chief
officer rate has increased by 66 per cent, Polish chief officer
rates have increased by 35 per cent, Filipinos by 27 per cent.
In the meantime, while individuals will no doubt have seen some
increase in pay to reflect inflation, average European pay rates
shown in the surveyfor example British, Danish and Dutchappear
to have increased in low single figures, if at all."
NUMAST suggests that this survey shows that
there is growing pressure for maritime expertise to be properly
rewarded, particularly at a time of increasing international shortages
of skilled and experienced officers and with increasingly strict
operational and regulatory requirements.
However, it is important that the Committee
is aware that although differentials have narrowed, they are still
large and exert considerable pressure upon the recruitment and
retention of British Officers. As we gave evidence to the Committee,
one of Britain's oldest shipping companiesStephenson Clarkebegan
discussions with us over proposals to re-register their ships
and to replace British officers and ratings with Polish nationals,
who are some 30 per cent cheaper to employ.
The Committee may also be aware that, just days
after we gave our oral evidence, P&O announced that it is
considering where to register two new "cruiseferries"
for the UK-Dutch route. NUMAST is concerned that this route provides
another example of the problems arising from the UK's "hands-off"
approach to the alleviation of labour costs. Just two years' ago,
it was shown that the £4.17 million operating cost of a British-flag
ferry on this route was undercut by the Dutch sistership's total
of £3.44 million. Even though British seafarers' take-home
pay was less than their Dutch counterparts, the Dutch package
of tax and social cost measures makes Dutch seafarers the cheaper
It is clear to NUMAST and, we hope, to the Committee,
that there is a strong case for further measures to improve the
competitive position of UK seafarers and to ensure that the tax
and social charge regime in this country is in line with foreign
competition and the EC state aid guidelines.
28 January 1999