LOGBOEK  - JOURNAL DE BORD

Crew wage law change could spark UK flag flight

Exit could happen rapidly should Equality Bill become law

Janet Porter - Thursday 21 January 2010

THE UK flag could lose several hundred ships if the government penalises shipowners through a new law that would make the cost of employing foreign seafarers prohibitively expensive, and the defections could happen very rapidly.

The Chamber of Shipping estimates that the imposition of British rates of pay on all seafarers working on UK-registered vessels calling at UK ports would increase crew costs by more than 20%.

Approximately 300 UK-registered ships owned or managed by member companies are at serious risk of being flagged out, the shipowner association said.

The risk of driving ships away from the UK flag was highlighted by Chamber of Shipping president Jesper Kjaedegaard, who told an audience of government ministers and other members of parliament that the Equality Bill now before parliament could have serious implications for the country’s shipping industry.

“The government’s proposal in the present consultation on the regulations relating to seafarers under the Equality Act runs counter to standard practice in other countries, including in Europe,” said Mr Kjaedegaard, who is also chairman of Maritime UK, which launched its first manifesto this week.

“If it goes ahead, the imposition of high-cost UK pay levels for all seafarer nationalities employed on UK-flag ships will undo all the success that has been achieved as a result of the tonnage tax over the last decade and is likely to drive more than half of UK-flag tonnage away from the UK.”

“This will happen within a matter of months, rather than years,” he said.

The UK fleet now stands at around 1,550 ships of 17.5m gt, with Zodiac Maritime and Maersk two of the largest shipowners operating under the red ensign.

In recent months, new arrivals to the flag include 10 newbuildings, with a containership, a vehicle carrier and three supply ships among the registrations. Carisbrooke Shipping, Wilhelmsen Lines and Rio Tinto Shipping all flagged ships in the UK during the last quarter.

But the flag has lost much of its gloss in recent years, with concerns about the tonnage tax adding to uncertainty about the future of the register.

The latest potential setback emerged just before Christmas with publication of the draft Bill, which aims to bring genuine equality to the workplace by ensuring the minimum wage is applied throughout.

Mr Kjaedegaard expressed doubt about whether the proposals had been directed at shipping, but said the consequences would be considerable unless the industry successfully lobbies for an opt-out.

While not wanting to be seen to oppose paying fair wages, the industry nevertheless is lobbying hard to draw attention to the impact on shipping if owners are required to pay UK wages to foreign nationals whose country of residence is elsewhere.