Cheap labour conflict continues in merchant shipping

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Despite a government decision to grant subsidies to shipowners, tensions over "outflagging" and the use of foreign labour in Finnish merchant shipping continued in August 2000, with a shipowner hiring Polish seafarers. The Finnish Seafarers' Union considers these contracts of employment invalid and has boycotted the vessels concerned. The shipowner is considering legal action against the union.

In July 2000, after a tense spring and a cargo boycott by the Finnish Seafarers' Union (Suomen Merimies-Unioni, SM-U) in May (FI0005149F), the government agreed a package of subsidies for Finnish shipowners. Such measures had been sought by both shipowners and employees in order to ensure the competitiveness of Finnish merchant shipping and to prevent the hiring of foreign workers. These subsidies include tax breaks and the refund of some social contributions paid by employers (FI0007154N). However, by August it became apparent that some employers found these measures insufficient, and one shipowner started to recruit Polish seafarers for its cargo vessels. In response, SM-U has started to boycott the company's vessels and has promised further action if its demands for Finnish employment contracts on the vessels are not met.


Behind the dispute lies the trade unions' fear that Finnish seafarers' jobs will disappear because it has been possible since the beginning of 2000, following a reform of Finland's Maritime Act, to transfer Finnish ships to the flag of another European Union (EU) or European Free Trade Area (EFTA) country without the ownership being transferred from Finland. According to the Finnish Shipowners' Association (Suomen Varustamoyhdistys, SVY), such "outflagging" can be prevented only by increasing state subsidies and by bringing tonnage taxation to the same level as in other EU countries.

During the sectoral collective bargaining round in spring 2000, SM-U sought an agreement that would have prevented the outflagging of Finnish ships (FI0002135N). In March, SM-U and SVY did indeed conclude a framework agreement providing for the competitiveness of Finnish ships to be guaranteed through collective agreements. Linked with this agreement was a call by the social partners for state subsidies for the maritime sector.

The government responded to the demands in July. According to the ministerial committee for economic policy, the government would submit a proposal to parliament for a law amending income tax legislation, so that shipowners will be exempted from paying income tax on the results of shipping activities. A fixed tax, based on net tonnage, will be introduced instead of the current company taxes. Normal company taxes should be paid on the companies' overall profits. The government would further propose an amendment to the Act on the Register of Cargo Ships in Foreign Transport so that, as from 1 July 2000, owners of cargo ships registered in Finland's foreign merchant ship register will receive, in addition to the amount of the present subsidy for cargo ships, a subsidy equivalent to certain employers' pension and social insurance contributions.

Battle continues

Now it looks as if the subsidy package has not been sufficient, even though it was believed that peace would return to the Finnish merchant fleet after the granting of subsidies. Despite the subsidies, a shipowner has now started to hire cheaper, foreign labour for its vessels. What makes the situation awkward is that the internal solidarity of the Finnish trade union movement seems to have broken down. In the latest move, the Finnish Ship Officers' Association (Suomen Laivanpäällystöliitto, SLPL) and the Finnish Engineers' Association (Suomen Konepäällystöliitto, SKL) - both affiliates of the Finnish Confederation of Salaried Employees (Toimihenkilökeskusjärjestö, STTK) - have agreed employment contracts for the Polish seafarers, thus bypassing SM-U - an affiliate of the Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK). SM-U considers these contracts invalid. The employer considers, based upon the collective agreement concluded in the spring, that is possible to hire foreign workers for its vessels. In response, SM-U has now boycotted several vessels in Finnish harbours. Also, following a proposal by SM-U, the Federation of Transport Workers Union (Kuljetusalojen Ammattiliittojen Federaatio, KAF) has expelled SLPL and SKL. Furthermore, the Finnish Transport Workers' Union (Auto- ja Kuljetusalan Työntekijäliitto, AKT) has supported the boycotts by refusing to load and unload cargo. The shipowner is considering legal action against SM-U.

The SVY chair - also the managing director of the shipowner that is the object of the boycott - has stated that the company has agreed with the Finnish ships officers' unions on the partial use of foreign labour, in order to be able to safeguard Finnish seafarers' jobs and to support the competitiveness of vessels sailing under the Finnish flag. According to the managing director and the officers' unions, the alternative would be "outflagging". Both SLPL and SKL have joined the shipowner concerned in condemning the industrial action against it. The shipowner and SM-U disagree on the content of the current collective agreement as regards use of foreign labour. SM-U is afraid that this practice will spread to other shipowners and, through its industrial action, seeks to prevent the hiring of foreign labour on Finnish vessels.

In mid-August 2000, the vessels concerned had arrived in Germany, the other end of their routes. The German public services and transport workers' union (Gewerkschaft Öffentliche Dienste, Transport und Verkehr, ÖTV) has also started to boycott the vessels.


Finnish shipping is going through a critical period as the pressure of competition increases. Cheaper, foreign labour is inevitably making its way into the Finnish vessels. It may be difficult for the Seafarers' Union to prevent this development, under the threat of "outflagging" vessels, which would make it possible to recruit foreign labour without any restrictions. However, the union is fighting for the goals of the trade union movement while trying to retain the benefits and jobs of its members.

SM-U has traditionally been a militant union, which readily embarks on large-scale action. It has the capacity to strike at the heart of Finnish business activity by hampering cargo transportation. The current industrial disputes in sea traffic will presumably be handled in court, if the disagreements remain as sharp as at present. Relations between SVY and SM-U are quite inflamed at present, even if negotiating contacts are still open. Furthermore, the internal solidarity of the trade union movement seems open to question, with the officers' associations undermining SM-U by bypassing it to agree contracts. The issue will certainly be thrashed out further between the unions concerned and their confederations. (Juha Hietanen, Ministry of Labour)

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