Settlement on maritime subsidies may lead to hiring of non-EU labour

In November 1998, an agreement was reached between the Swedish government, ship-owners and trade unions concerning state subsidies to the maritime transport sector. The settlement means that a 1997 collective agreement allowing the hiring of seafarers from outside the EU can be put into effect.

The modification in 1997 of the European Community guidelines on state aid to maritime transport led to Swedish trade unions and ship-owners taking common action both in their mutual relations and in their relationship with the government.

As a result, in a September 1997 framework agreement with the Swedish Ship Owners' Association (Sveriges Redareförening), the Union for Service and Communication, Seafarers' Branch (SEKO Sjöfolk) for the first time accepted the hiring of labour from outside the EU on a temporary basis on Swedish ships (SE9710143F). The condition was that the workers concerned were paid in accordance with Swedish net wages and that they were covered by Swedish collective agreements. Thus the most extreme form of low-wage competition was to be prevented. Employers wishing to hire non-EU seafarers on a temporary contract must also guarantee that no permanent staff would have their employment terminated as a consequence of application of the new rules.

SEKO Sjöfolk organises crew members. The ships' officers' unions signed similar agreements with the employers shortly after.

However, the agreements were not to be put into effect before the government was ready to propose changes in the maritime tax and social security systems. On 16 November 1998, a tripartite agreement on the issue was reached. The main features of the agreement, which runs for three years, are as follows:

• the ship-owners will receive a state subsidy of SEK 58,000 per year for each seafarer, which is equivalent to 70% of the payroll tax; and

• the income tax paid by non-EU seafarers employed on Swedish-flagged vessels will be reimbursed to their employers.

Employers and trade unions will now have to make technical changes in the 1997 framework agreement. Both Sveriges Redareförening and SEKO Sjöfolk believe that the fresh settlement will stop ship-owners from registering more Swedish vessels under flags of convenience.