Employers and seafarers’ unions expressed confidence that they will be able to reach a new agreement on wage levels from the beginning of 2012 at negotiations due to take place next month in Miami.
This optimism follows the recent successful agreement secured at the International Labour Organisation to set new minimum wage levels for able-bodied seafarers through to the end of 2014.
Under the deal reached at the ILO, the minimum basic pay for an AB will increase from the current $545 per month to $555. There will be a further increase to $568 from the beginning of 2013 and to $585 from the December 31, 2013. The minimum rate has been frozen since 2006.
Giles Heimann, secretary-general of the employers’ organisation International Maritime Employers’ Committee, told Lloyd’s List: “The end result was both credible and mutually acceptable to both sides.”
In reality the ILO pay rate is more symbolic than real as the actual level is far below what is actually paid on ships subject to union agreements involving the International Transport Workers’ Federation.
But the fact that both sides were able to reach an agreement at a time when unions are pressing for substantial rises after a period of overall wage freezes, while employers are keen to keep wage costs down when shipping markets and earnings are struggling, has given some encouragement that the current gap between them can be bridged.
“It is an interesting and necessary benchmark, the relevance of which I am sure will be considered during the build up to and during the negotiations in Miami,” Mr Heimann said.
The ongoing negotiations at the International Bargaining Forum between the Joint Negotiating Group of IMEC with other national employers’ organisations and the ITF, are tougher as they relate more closely to actual wages and costs. The negotiations concern the wage costs for the model ship defined in the agreement.
This overall wage model does not dictate detailed wage levels for each rank but allows some flexibility to reflect supply and demand for different shipboard positions. In recent years this has resulted in officers’ salaries increasing and many ratings’ pay stagnating.
The ITF is keen to see a meaningful increase in wage levels this time around, after it conceded overall freezes since the global economic crisis. But both sides expressed optimism that an agreement would be reached and the importance of reaching a solution. It is expected that a new agreement will be for two years covering 2012 and 2013.
The outcome is important for shipowners because crew costs comprise the single biggest component of vessel-operating costs. And with some spot rates close to operating cost levels a significant change in wage costs can have a big impact on vessel earnings.
“I do not believe that a deadlock is on the cards,” Mr Heimann said. “I think there is a will on both sides to reach an agreement and firmly believe that with some pragmatism by all parties this will be achieved and we will come out of Miami with a settlement.”
The ITF shares his optimism, even though their respective views on a desirable outcome are different. ITF negotiator Steve Cotton stressed “the importance of reaching a conclusion on this round”.