Pressure grows for EU ferries Directive to combat social dumping

In August 2005, a major unresolved dispute over the outsourcing to an employment agency of crewing at Irish Ferries led trade unions and opposition politicians in Ireland to lobby the government to push for an EU Directive to combat 'social dumping' on ferries and set minimum labour standards.

The contentious issue of 'social dumping' and outsourcing has gained notable public prominence in Ireland in recent months, given a bitter conflict generated by a seemingly intractable dispute between Irish Ferries and trade unions, which has now become a European dispute, not just an Irish one, having affected French ports.

The specialist publication, Industrial Relations News, reports that, in an attempt to respond to the threat of outsourcing, Ireland’s largest union, the Services Industrial Professional and Technical Union (SIPTU), and opposition Labour Party politicians, in particular, have been lobbying the Irish government to push for a EU Directive to combat 'social dumping' in the ferries sector. Trade union bodies, including the International Transport Workers’ Federation (ITF), and politicians are also lobbying at European level for a EU 'ferries Directive'.

The dispute

In the continuing dispute over outsourcing at Irish Ferries, the unions claim that employment agency staff on the Irish Ferries vessel, MV Normandy - who were brought in to replace unionised directly employed labour - are only being paid an average of EUR 3.57 per hour, and work 12-hour shifts seven days a week, with no holiday pay. The MV Normandy - which sails between Rosslare in southern Ireland and northern France - is now registered in the Bahamas and flies a 'flag of convenience'. It was formerly an Irish-registered ship.

The unions recently expressed anger as a result of yet another row over low wages aboard the MV Normandy, claiming that a Latvian worker worked 84-hour weeks over a two-month period and ended up receiving what amounted to just over EUR 1 per hour. This is just above the Latvian minimum wage of EUR 0.71 per hour (TN0507101S), but far below the Irish minimum wage of EUR 7.65 per hour. According to union sources, the directly employed unionised crews that previously worked on the Normandy earned approximately EUR 10-EUR 11 per hour.

The threat of 'social dumping'- the phenomenon whereby employers seek out the lowest possible labour costs and standards - is commonly associated with outsourcing, and has driven Irish, French and British trade unions into combining their efforts to resist this trend in the Irish Ferries case, in an attempt to avoid a 'race to the bottom'. If the company wins in the current dispute, then the ramifications for the European ferry sector, and possibly beyond, could be wide-ranging. In view of this, a number of instances of 'wildcat picketing' have taken place in French ports in the last few months in protest at the outsourcing of crewing on the MV Normandy to the employment agency at the centre of the furore, Dobson’s, whose headquarters is in Limassol, Cyprus. These protests are set to continue.

Outsourcing inevitable?

From its perspective, Irish Ferries maintains that, faced by intense competition, especially from low-cost airlines, it has little choice but to go down the low-cost road if it is to stay afloat - and outsourcing is part of this competitive reality. The employers' position more generally is broadly that, in the face of intense market pressures, outsourcing and contracting-out are a fact of life and are here to stay - and trade unions have been unable to embrace this inevitability.

In an attempt to find a way out of the conflict, SIPTU and Irish Ferries management appointed two independent assessors in summer 2005 to conduct a comprehensive review of the company’s operations - encompassing both the Irish Sea and the continental corridor. The assessors have not yet issued their findings.

Government position

Meanwhile, the government’s response to the high-profile dispute has been quite muted. A Department of Communications, Marine and Natural Resources spokesperson said that industrial relations issues are a matter for the Department of Enterprise, Trade and Employment. He added that it is up to each company to decide where it wants to register a vessel. There are no regulations governing this, he said. However, he stated that vessels in Irish ports can be boarded by maritime inspectors to check working conditions and safety issues.

The Department of Enterprise, Trade and Employment received legal advice at the end of June 2004 in relation to the applicability of Irish terms and conditions of employment aboard ships, both in respect of Irish-registered vessels and foreign-registered vessels. The legal advice obtained by the Department indicates that, in so far as the terms and conditions of employees on an Irish-registered vessel are concerned, if the owner of the vessel is an Irish individual or body corporate, then the employees on the vessel are subject to the provisions of Irish law whether in Irish territorial waters or on the high seas. The same would be true when an Irish-registered vessel is in the internal waters of another state. However, in relation to foreign-registered vessels (as noted above, the MV Normandy is now registered in the Bahamas), the legal advice received by the Department indicates that, as a general rule, the flag state (ie the state where the ship is registered) has the exclusive right to exercise legislative and enforcement jurisdiction over its ships on the high seas. The legal advice received therefore suggests that if terms and conditions of employment issues arise on foreign-registered ships, they are a matter for the flag state in accordance with international maritime law and practice.

EU ferries Directive

It is for this reason that trade unions and some politicians, in Ireland and at European level, are calling for a EU ferries Directive to be enacted to set uniform minimum pay and terms and conditions for the industry. The European Commission proposed a draft Directive on 'manning' conditions for regular passenger and ferry services operating between Member States in April 1998 (COM/98/0251), and the European Parliament approved the proposal in March 1999. However, despite being subject to much discussion, with the Commission issuing a revised proposal in 2000 (COM/2000/0437), no final agreement was reached in the Council of Ministers, and the Commission formally withdrew the proposal in August 2004. However, in December 2004, the Commission issued a working paper on a possible European-level social partner agreement on manning conditions for ferries. If such an agreement were reached, it could be implemented through EU legislation by the Council. It remains to be seen if the proposals will be resurrected.

A central point of the draft Directive, as revised in 2000, was that workers on a ferry operating between Member States should initially be from whatever two jurisdictions the ship is moving between, otherwise workers of any nationality on the route in question should be subject to the same national pay rates as all other workers in the state concerned. A key provision of the draft was its Article 2.2: 'If the vessel used is not registered in a Member State, the terms and conditions referred to shall be those applicable to the residents of one of the Member States between whose ports the service is provided and with which the service has the closest connection. The closest connection shall be determined on the basis of the place from which the service is effectively managed.'

If legislation along these lines were passed, then the implications could potentially be far-reaching. According to Norrie McVicar of the ITF: 'It is clear that we need to implement a ferry Directive, legally laying down equitable terms and conditions of employment for all workers in the industry … Until that happens we will carry on with our protests.'

Parliamentary question

In the Dail (Irish parliament), a Labour politician, Tommy Broughan, recently tabled a parliamentary question to the Minister for Communications, Marine and Natural Resources, asking when the draft EU ferries Directive is expected to come into effect. He received a short response from the Minister of State, Pat 'the Cope' Gallagher, as follows, 'The Department is not aware of any such proposal'. Not satisfied with this answer, Mr Broughan then issued the following statement:

Recent protests by trade unions against the Irish Ferries vessel MV Normandy have caused serious disruptions for Irish holiday-makers on the Rosslare to Cherbourg route. With no resolution to the dispute over the outsourcing of labour and the accompanying atrocious pay and working conditions in sight, the prospect of more disturbances for those travelling to France seems likely.

Ministers Noel Dempsey and Pat the Cope Gallagher have so far refused to get involved, even through there is an ongoing risk to Irish trade and tourism if this dispute is allowed to run indefinitely.

Over the last few months I have frequently asked both Ministers about the status of the proposed EU ferries Directive which would establish measures across Europe to regulate proper wages and conditions for maritime workers. Minister Dempsey has consistently feigned ignorance on such matters.

Commentary

The bitter conflict between trade unions and Irish Ferries over outsourcing has broader ramifications for the balance of power between management and unions/workers generally. The contested terrain of outsourcing/contracting-out is proving to be a more and more significant aspect of Irish industrial relations, and the events being played out at Irish Ferries symbolise the conflict between management and unions/workers over this issue. While employers are increasingly attracted to outsourcing/contracting-out as a means of cutting costs in the face of intensified global and domestic competitive pressures - for instance, by dividing their workforce up into core and periphery labour, unions and workers are concerned with resisting outsourcing and defending existing pay and terms and conditions of employment. Added to the mix, and driven by globalisation and EU enlargement, labour markets are becoming more and more open, with employers more likely to recruit from overseas, and workers freer to move between countries. (Tony Dobbins, Industrial Relations News)