Unions and ship-owners unite in the struggle for the Swedish shipping industry

The modification of the EU guidelines for state aid in the maritime transport sector has caused Swedish trade unions and ship-owners to take common action, in respect both of their relations with each other and of demands directed at the Government. Among other measures taken in the autumn of 1997, the parties have signed agreements that for the first time could make it possible to employ foreign labour on Swedish-flagged vessels. However there are still many conditions to be fulfilled before the agreements can be realised.

Swedish ship-owners and the trade unions have been spurred to common action by the European Commission's May 1997 revision of the Community guidelines on state aid to maritime transport. The new guidelines make it possible for member states to exempt the maritime sector from the taxes and social charges which apply to the general labour market, or to reimburse ship-owners for these costs. The objective behind the revised guidelines is to prevent a further decline in the Union-flagged fleet and the loss of employment and maritime know-how which follows.

As a consequence, several countries within the European Union have revised their rules regulating the maritime sector. In the Netherlands for example, the tax system has been liberalised and provisions made for labour from low-wage countries. In Norway, a member country of the European Economic Area (EEA), where rules allowing low-wage crews existed previously, taxes within the maritime transport sector have been further lowered.

Common statement on shipping policy

Employers and trade unions agree that the changes in the EU guidelines as well as measures taken by other countries have served to undermine the competitiveness of the Swedish shipping industry. Therefore the Swedish Ship Owners' Association (Svenska Redareföreningen) and four unions - the Union for Service and Communication, Seafarers' Branch (SEKO Sjöfolk) which organises crew members, the Swedish Ship Officers' Association (Sveriges Fartygsbefälsförening), and the Salaried Employees' Union (HTF) and the Swedish Association of Graduate Engineers (CF), both of which organise staff working ashore - adopted a common statement on shipping policy on 21 August 1997. Two unions, the Swedish Engineer Officers' Union (Maskinbefälsförbundet) and the Sea Officers' Union (Föreningen Sjöbefälet) did not sign the statement but are known to stand behind it.

The statement concerns both measures which are meant to facilitate and improve future negotiations between the parties themselves, and demands to the Government in order to keep Swedish shipping companies in the country. These demands are that:

  • the Swedish maritime transport sector must be granted the abatement of company taxes and social charges allowed by the new EU guidelines;
  • the existing advantageous taxation of seafarers' wages, which the Government has decided to abolish at the end of this year, should remain;
  • the existing Nordic double-taxation agreement should not be altered in a manner detrimental to staff on board; and
  • the parliamentary decision to abolish tax-free sales on board as of 1 January 1999 is not carried out

Agreement on temporary employment

As a consequence of the common statement, SEKO Sjöfolk and Svenska Redareföreningen signed a common letter of intent - a resolution in principle - on 5 September, in which they declared that they intended to conclude a framework agreement on temporary employment on board ships. However, according to the letter of intent several conditions must be fulfilled for the framework agreement to be realised. First, the other trade unions organising staff on board must sign similar letters of intent with Redareföreningen. Furthermore, appropriate changes in the legislation must be made.

The letter of intent in effect means, if the proposed framework settlement is completed, that SEKO Sjöfolk sacrifices an important matter of principle and opens the door to foreign crews on Swedish-flagged vessels. However, the agreement is circumscribed by specific conditions concerning temporary employment. The conditions are that:

  • those employed on temporary contracts should be paid in accordance with Swedish net wages, which prevents the most extreme forms of low-wage labour in the maritime sector;
  • those employed on temporary contracts will be covered by Swedish collective agreements; and
  • the framework agreement on temporary employment will not cover vessels operating primarily in Swedish waters.

Hence, the union agrees to let ship owners hire foreign labour on a temporary basis if net wages are at the same level as Swedish wages. The ship-owners hope that the Government will enable them not to have to pay the proportion of salaries which normally goes on taxes, and that it will exempt them from the obligation to pay social security contributions for the workers concerned, as they can dispense with the Swedish social security system because of the temporary nature of their employment. These are both issues which require the Government to take a stand.

Agreements on application required

Once the framework agreement is concluded, the individual shipping companies have to sign separate agreements with the company trade union branches before it can be applied to a particular vessel. These application agreements must specify the number of temporarily employed workers allowed on the vessel in question. Ship-owners which want to employ foreign labour on a temporary basis must also guarantee that no permanent staff will have their employment terminated as a consequence of the agreement. The agreement will mean that there will be two types of employees on board: the permanently employed, whose employment conditions are regulated as before by the so-called "Big Sea Agreement"; and the temporarily employed, whose employment is regulated by the new agreement.

On 18 September 1997, Maskinbefälsförbundet signed a similar resolution in principle with Redareföreningen, and on 2 October Fartygsbefälsföreningen followed. This meant that one of the conditions for the realisation of the framework agreement was fulfilled. At this point, all parties concerned are awaiting the Government's reactions.


The move towards foreign crews on Swedish-flagged vessels has only begun, and there are many obstacles along the way. The first issue to be resolved are the legislative adjustments which have to be made. So far, the Government has not offered any concrete proposals in this direction, only vague promises. Furthermore, it remains highly uncertain whether the Government will comply with all the demands made by the parties. If it does not, the framework agreement will have to be renegotiated. The next step is then to implement the framework agreement through separate agreements on its application. The implementation timetable and the practical consequences of the agreement are thus very uncertain. (Jonas Bergström, NIWL)

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