Agreement boosts pay of Estonian ship workers

On 29 January 2014 Estonia’s largest shipping company, Tallink, signed an agreement with the largest seafarers’ union. Wages for workers on Tallink’s ships will increase by an average of 8.2% from 1 January 2014 and those in junior positions will get an increase of more than 10%. Those working on shuttle-type vessels in the summer will receive an extra increase of 5%. The agreement was signed after five months of intense negotiations mediated by the National Conciliator.

Background

The Estonian Seamen’s Independent Union (EMSA) has more than 2,000 members, more than 1,400 of whom work on ships owned by the AS Tallink Group (Tallink), the biggest shipping company in Estonia. The first collective agreement between Tallink and the EMSA was concluded in 1997 and since then negotiations between them have sometimes been difficult. A wage agreement for the years 2008–2010 (EE0810019I) was preceded by 10 months of intense negotiations. In 2010 a dispute between Tallink and the EMSA led to a court hearing because EMSA argued that Tallink had not complied with the agreement. The most recent collective agreement for 2013 was also signed only after several months of negotiations.

Difficult negotiations

Negotiations for a new collective agreement between Tallink and the EMSA started on 6 September 2013. The EMSA demanded a wage increase of between 20% and 37%, depending on occupation. The union argued this was justified because since 1997 the national average gross wage has increased 3.89 times while Tallink’s average gross wage has only increased 2.5 times.

Tallink was only willing to offer a 5% increase, arguing that its crews’ wages were already approximately 10% higher than the national average wage (€887 in 2012) and the company could not afford to pay the increase demanded by EMSA. The EMSA claiming its demands would not cause extensive financial damages to Tallink, a big international company making significant profits. The wage rise sought by the union would cost a total of €10 million set against Tallink’s estimated profits of €56 million in 2012.

Since December, negotiations have been mediated by the National Conciliator (Riiklik Lepitaja).

Although the parties were willing to take a step closer to each other’s demands – EMSA by reducing its demanded increase to between 15% and 27%, and Tallink by increasing its proposed wage rise to 5.5% with an additional pay rise of 3% in 2015 – EMSA was not pleased and announced that they would organise a one-hour long warning strike.

Since December, the negotiations were mediated by the National Conciliator (Riiklik Lepitaja). Tallink tried to argue that the warning strike was illegal, but the National Conciliator ruled that the industrial action complied with the law. On 13 January 2014, around 250 of Tallink’s workers took part in the strike, which according to the National Conciliator made negotiations even more difficult. However, at the end of January, the parties came to an agreement.

Agreement reached

The new collective agreement concluded on 29 January 2014 ended almost five months of negotiations. Its validity was backdated to 1 January 2014 and it will remain in force until 31 December 2014. It increases Tallink’s workers’ wages by an average of 8.7% although, when holiday and additional pay is included, the increase is 9.5%. Workers in junior positions, such as stewardesses and customer service staff, will have the highest wage rises of more than 10%. During the summer months, the pay of those working on shuttle-type high-speed vessels will increase by an additional 5%.

Commentary

The Finnish Seamen’s Union (SMU) supported the warning strike because lower wages in Estonia affect the Finnish labour market. Shipping companies have been keen to put their ships under the Estonian flag to reduce labour costs. The lowest wage paid to Estonian seafarers is €667, while in Finland the lowest wage is almost three times higher, at €1,870.

This is why, in January 2014, the company Viking Line put a ship under the Estonian flag and hired more than 200 Estonian workers. A similar situation occurred in 2006 when Tallink hired Estonian seafarers to reduce labour costs. However, after the SMU campaigned for a boycott of Tallink ships and Finnish dockers refused to handle their cargo, the company agreed to increase wages for its Estonian workers (EE0606019I).

Liina Osila & Ingel Kadarik, Praxis Centre for Policy Studies

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