Select Committee on Environment, Transport and Regional Affairs Appendices to the Minutes of Evidence


Supplementary Memorandum by NUMAST (FUS 1A)

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 on shipping.

  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 register—as experienced in the Netherlands—there 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 required—1,300 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 out—as it is very relevant—that 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 cent—demonstrating 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 survey—for example British, Danish and Dutch—appear 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 companies—Stephenson Clarke—began 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 to employ.

  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.

Brian Orrell

General Secretary

28 January 1999


 
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