Speech by Mark Dickinson, general secretary Nautilus International, at the ILO sub-committee of the Joint Maritime Commission, on the wages of seafarers, 19-20 November 2018
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May I begin by joining the shipowners in thanking you and the office for the preparations made for this session of the JMC Subcommitee on the Wages of Seafarers.
The subcommittee last met in 2016 - a meeting I did not attend but thankfully my distinguished colleague, the spokesperson for the shipowners, was at the helm of his team at that meeting, so it is of some comfort that we can fall back on his deep understanding of the issues, impeccable memory and now his knowledge of poetry, to guide us forward.
In 2016 the shipowners provided an extensive assessment of the economic backdrop at that time – a 'delicate juncture' I believe the shipowners spokesperson referred to. It is fair to say to say that the shipping industry today is grappling with many significant opportunities, as well as challenges. However, the picture is decidedly and more positive.
Global trade is fundamentally healthier than it has been for a decade and revenues are up. But there is change in the wind. We are on the cusp of a digital revolution that will streamline global freight utilising technologies such as blockchain to reap further benefits. Human-centred design promises to change how ships look and are experienced by their crews. And futurologists and tech purveyors constantly predict that soon there won't be any seafarers on ships at all.
For the most part we seem to have a consensus that the reality might be far less dramatic – there will be technological advances, but we will need seafarers – perhaps less of them but we will need highly skilled seafarers to crew ships.
But the prospect of technology advancement and the investments needed to sustain the industry requires those of us with most invested in our industry – the shipowners and those who earn their living serving on those ships – to decide what direction global shipping should take.
Our business here is fundamentally important in the consideration of that direction and which we think most likely to succeed: an industry with a highly-trained, motivated workforce who want to achieve their potential; or a workforce, scraping by on minimum wages, who burn with resentment at those on whose behalf they toil?
You don't just have to take my word for the importance of this issue as Professor Maurice Obtsfeld observed in his forward to the International Monetary Fund's World Economic Outlook 'the slow growth of workers' incomes, perceptions of lower social mobility, and, in some countries, inadequate policy responses to structural economic change' is the biggest secular challenge for many countries economies.
There is much in today's economic backdrop that makes this a fortuitous moment to address the wages of seafarers.
The World Bank's most recent Global Economic prospects report deploys a maritime metaphor. The global economy, it suggests, has 'turned the tide'.
'…the global economy seems to be leaving the legacy of the global financial crisis of the past decade behind. About half the world's countries are experiencing an increase in growth. This synchronized recovery may lead to even faster growth in the near term, as stronger growth in, say, China or the United States spills over to other parts of the world. All the consensus forecasts for 2018 and 2019 reflect optimism. And this growth is occurring for the right reasons – investment and trade growth, which had been declining, have risen. Furthermore, in the United States, Europe and Japan, unemployment has declined, while inflation has not picked up much, suggesting that policymakers may have found that "sweet spot" in the trade-off between unemployment and inflation.'
Other economic agencies agree.
The IMF is projecting global growth of 2.7% for the next two years.
OECD figures show that the value of imports and exports to and from G20 countries are more than 20% higher in the second quarter of 2018 compared with the same quarter in 2016. The OECD's harmonised unemployment rate index also continues to steadily fall.
Private sector economists are no less optimistic. PWC's Global Economy Watch predicts that global GDP will rise by 3.7% in 2019 and 2.5% in the four years that follow (purchasing power parity figures).
When last this meeting convened in 2016, I know that the shipowners were worried that there had been a fundamental change to the expected relationship between economic growth and trade. These concerns did not come to fruition.
Introducing the World Trade Statistical Review 2018 director general Roberto Azêvedo states:
'In 2017, world merchandise trade recorded its strongest growth in six years. Significantly, the ratio of trade growth to GDP growth returned to its historic average of 1.5, far above the 1.0 ratio recorded in the years following the 2008 financial crisis.'
Azêvedo went even further at a press conference earlier in the year when he said: 'World merchandise trade volumes will grow nearly as fast in 2018 as they did in 2017, with growth of 4.4%. And we expect that growth will remain quite strong in 2019 at around 4.0%. It represents the best run of trade expansion since before the crisis, supporting economic growth, development and job creation around the world. "We expect that growth will remain quite strong in 2019 at around 4.0%. It represents the best run of trade expansion since before the crisis, supporting economic growth, development and job creation around the world.'
Such an economic backdrop has, of course, been good for shipping.
UNCTAD starts its 2018 Review of Maritime Transport thus: 'Global seaborne trade is doing well, supported by the 2017 upswing in the world economy. Expanding at 4%, the fastest growth in five years, global maritime trade gathered momentum and raised sentiment in the shipping industry. Total volumes reached 10.7 billion tons, reflecting an additional 411 million tons, nearly half of which were made of dry bulk commodities.
'Global containerized trade increased by 6.4 per cent, following the historical lows of the two previous years. Dry bulk cargo increased by 4.0 per cent, up from 1.7 per cent in 2016…'
During 2017, UNCTAD reports that shipping capacity increased, but not a quickly as demand for shipping services. As one might expect, this has impacted beneficially on the value of shipping services. The underlying trajectory of the Baltic Dry Index, for example, has been upwards since 2016. Its rate today is nearly 300% higher than it was two and a half years ago.
UNCTAD also predicts that volumes will continue to grow until 2023 across all cargo categories.
It is clear from the preparatory papers for this meeting just how hard the decision, taken by this meeting two-and-a-half years ago not to increase the minimum wage has hit seafarers. Within the 55 major maritime countries, seafarers have seen the spending power of the minimum wage fall in all but seven of them. In some cases, the falls have been dramatic – seafarers in seven countries have experienced their minimum pay fall in value by more than 15%.
Madam Chair, we were due to meet in June, and whilst I fully understand the importance of the Pope's visit to this city, the postponement of the meeting means the delayed review of the wages of seafarers has been a testing one for a great many seafarers. What keeps them going through the long hours, the danger and the isolation, is the thought that their families are well provided for.
That is why we are calling on the shipowners now to agree to a significant upward revision of the minimum wage. I think we can all agree that we want Fair Pay at Sea. Sadly, the last time the seafarers had a real increase in the minimum wage was 2001.
As we look forward to a decidedly more optimistic future, as we reflect that the past two years produced good business, let's reward the seafarers for the sacrifices they have made and the contribution they will make.
By doing so they will be signalling clear the kind of industry they aspire to lead. With a motivated, determined, and properly remunerated workforce, we can work together to build an industry that is fit to meet the challenges of the future, as well as one in which both sides of the industry receive the benefits that their efforts deserve.
One final general point, if I may Madam Convenor. In my time on the back benches, with my friends and distinguished colleagues to my left and right, I observed over the years the shipowners talk about this process as if it has no real significance to seafarers. It's just some mathematical exercise of little real-world importance. Well let me state clearly that is just not so, for many seafarers an uplift in the ILO minimum wage feeds directly into their pay packets and directly into the mouths of their children.
But sadly, minimum wages become maximum wages for many seafarers. For the majority even, those who do not benefit from collective bargaining, or the international negotiations that take place in other contexts.
Too many flag states pay no or little attention to the ILO recommended minimum wage, even the most significant of labour supplying countries. And there are insufficient sanctions for those who transgress.
I think it is time we address that, time to consider the merits of a mandatory application and enforcement of the wages of seafarers. Time for an ILO mechanism that delivers real increases not merely maintaining purchasing power – effectively no increase at all. Only then will we be contributing to decent work of seafarers to real and continuous improvement in their living standards.
Only then will we have Fair Pay at Sea. As the ILO approaches 100 years striving for social justice and decent work that seems to me to be an appropriate goal.