Role of Collective Bargaining Agreements in Shipping

by Oleksandra FEDKO

The maritime shipping industry is peculiar in many aspects. However, it is virtually unique thanks to one feature: its bargaining system. Global union and employers’ associations negotiate over crucial terms of employment of seafarers and the result of such negotiations lead to immediate effect to the whole industry regardless of borders and nationalities.

FOCs

However technological our prospects may be, still, it is all about people: about their professionalism, efficiency, endurance, and, of course, wage and welfare expectations. The labor market in shipping industry is multinational and its regulation depends on ship registration: seafarers work on vessels under flags of traditional maritime nations (national registers); on vessels under flags of developing countries; on ships under flags of convenience and international second register flags. In the first and second cases seafarers usually share a vessel’s nationality and/or their employment is governed by national legislation. Obviously, standards of employment strikingly differ in traditional maritime and in developing countries, so do the levels of wages, injury, disability and death benefits. However, the point is that the percentage of both groups of vessels in connection with vessels flying flags of convenience is really low. Flags of convenience, which are the means of cheapest and minimally regulated running of business, have attracted, as per UNCTAD’s statistics, 76% of global registrations in terms of tonnage. Thus, the majority of the world’s seafarers, including Ukrainians, are employed in accordance with legislation which is convenient for shipowners, but not safe for seafarers. So, the latter appear in conditions where their home countries can do little to protect them and shipowners’ actual domiciles have nothing to do with employment relations, as there is no “genuine link” between the real owner of a vessel and the flag the vessel flies, as it should be in accordance with the United Nations Convention on the Law of the Sea.

Transnational bargaining in historical aspect

Flags of convenience as a maritime regulatory regime appeared after the Second World War, when former colonies started enjoying their independence and sought sources of revenue. On the other hand, adherents of low or non-existent taxes and avoidance of costly labor regulations were found from all high-wage countries. So, the number of vessels under a jurisdiction different than the shipowner’s began to grow steadily.

As a response, a flags of convenience campaign was launched by The International Transport Workers’ Federation (ITF), which is an international trade union federation of transport workers’ unions. Initially, this campaign was aimed at eliminating the flag of convenience system and re-establishing a “genuine link”. Within years, the campaign became consistent and coordinated: a standard ITF collective agreement was formulated; the ITF sanctioned the appointment of inspectors, who inspected ships calling at their ports and organized actions against flags of convenience vessels without ITF-approved collective agreements. Action was secured by boycotts conducted on a regular basis by seafarers and dockers.  Thus, by the means of the power to strike, employees managed to fight with the concept of de-unionization under flags of convenience.

The reaction of employers was not instantaneous. They did not unify at once, and nor did they soon acknowledge an expressed readiness to negotiate over wage rates of seafarers, because as soon as they were negotiated, they were agreed upon and should have been followed. However, seeing benefit in institutionalized collective bargaining arrangements, employers created The International Maritime Employers’ Council (IMEC), which is the sole international employers’ organization dedicated to maritime industrial relations.

As a result of bargaining between ITF and IMEC, they reached a balance, where ITF got a systematic increase in the cost of labor and IMEC managed to shift ITF’s flags of convenience campaign from putting flags of convenience shipowners out of business to wage bargaining for seafarers who worked under flags of convenience.

Bargaining today

Today, negotiations are held within The International Bargaining Forum (IBF) which was created on 9 May 2003 to facilitate collective bargaining between maritime employers and maritime unions.

The body representing the employers is known as the Joint Negotiating Group (JNG). Parties to the JNG are IMEC and the International Shipping Employers’ Group (ISEG) which in turn incorporates the International Maritime Managers’ Association of Japan (IMMAJ), the Taiwanese shipping company Evergreen and the Korean Ship Owners’ Association (KSA). The JNG, therefore, represents a coordinated view of employers from across the world.

The representation of employees is carried out via The International Transport Workers’ Federation. ITF is an international trade union federation of transport workers’ unions. According to ITF data, they represent 684 unions in 140 countries, including maritime affiliates throughout the world representing more than 600,000 seafarers.

Negotiations take place every two years for the IBF framework agreement. Once the framework agreement has been negotiated, ITF affiliated unions begin local negotiations with companies in their country, which result in national and company level IBF agreements. IBF Agreements vary in content but all fulfil minimum criteria. Employers negotiate their own IBF Agreement with local unions, normally once a year.

At this time, the focus of negotiations has become a lot broader and from negotiating only the wage scale, it moved to negotiating social, professional and financial elements.

Obviously, the terms and conditions of the IBF Agreement are applicable only to seafarers serving on any ship owned or operated by a Company in membership with the JNG. There is a range of benefits for shipowners of vessels covered by IBF agreements in comparison to the ITF Standard Agreement and Total Crew Cost (TCC) Agreement, which are not negotiated at  international level. The views of its members are coordinated and represented in negotiations over wages and conditions of employment for seafarers; IBF crew contracts and wage scales covering the principal labor supply countries are more cost-effective than the non-IBF versions; ITF issues a special card to ships covered by IBF Agreements which identifies the ship as entitled to enjoying the privileges available through the IBF system; the number of visits made to members ships by ITF inspectors is reduced.

So, IBF is a unique mechanism that does not exist in a similar form in any industry except for maritime shipping. Its approach to negotiations is the only example of international collective bargaining. It is beneficial not only for seafarers individually, who are protected working on flags of convenience ships, and for shipowners who get more favorable treatment from ITF for sitting alongside on IBF, but for the industry in general. The negotiated level of welfare and financial aspects is a device for protecting employees via unions from high-wage countries from low-wage competition. Moreover, labor supplier country unions are spared from competition between each other. Thus, jobs are saved. Bargaining did something what could not have been done on a cross-national level without a symbiosis of certain factors: it led to the equalization of wages, death and disability compensations, and welfare conditions for a large multinational number of seafarers. It all results in the stability of the truly globalized maritime industry being maintained. 

Oleksandra Fedko  is an attorney at law at Sergeyevs’ Law Office