Could conditional maritime subsidies boost employment and training for European-based seafarers?

24 May 2019

At the ITF-OECD Summit on “Transport Connectivity for Regional Integration”, we discussed subsidies and non-European investment in the maritime and port industries. Subsidies are needed to protect Europe’s shipping sector from unfair competition, but they should be tied to the creation of jobs, decent conditions, training and the greening of the sector.

Maritime transport creates a vital connection between countries and regions, enabling people and companies to communicate and trade with each other. Seafarers are the human core of this sector. It is their daily work which powers maritime connectivity. In order to voice their concerns and to defend their interests, ETF is attending the ITF-OECD Summit on Transport Connectivity for Regional Integration, which is held in Leipzig, Germany, on 22-24 May.

On Thursday 23 May our Political Secretary for Maritime Transport Philippe Alfonso took the floor at a panel session called Maximising Regional Value through Maritime Connectivity Investment. His main subject was the current system of maritime subsidies for shipping. While such subsidies can be a useful tool to stimulate the employment of European-based seafarers, we believe much more needs to be done to fully unleash this potential. We consider that their allocation should be made conditional upon a stronger commitment by the industry to active job creation, training and the greening of the sector.

It is important to take a pragmatic stance on subsidies. Maritime subsidies – such as the tonnage tax – are necessary for reasons of unfair competition, mainly due to the widespread use of Flags of Convenience (FoC) within European waters. FOC vessels are often manned with seafarers from non-EU/EEA countries under international working and living conditions. This is clear example of social dumping, which entails the loss of jobs for EU/EEA seafarers and leaves all workers in European waters at risk of poor working conditions. This situation calls for a fundamental change in the EU policy, which is why the ETF has launched its Fair Shipping campaign. These subsidies should be maintained, but the ETF believes they should be directed to shipowners employing domiciled EU/EEA seafarers. This is crucial in order make those seafarers competitive with seafarers from third countries. Furthermore, EU/EEA seafarers are mainly employed on ships flying the flag of a Member State, so this conditionality would support Europe’s strategically and economically vital maritime industry. However, to maximise the benefits for the broader economy, it is not enough to increase the number of vessels registered under European flags because the shipping companies that get subsidies do not necessarily employ domestic seafarers. Indeed, it is deplorable that tonnage tax schemes do not require the shipping lines which benefit to employ domestic seafarers. As a matter of fact, an increasing number of countries in Europe provide subsidies to shipowners that use international registries, including FOCs.

Thus, we call for reforms in State Aid Guidelines in order to improve their effectiveness in promoting EU/EEA seafarers and quality national registers. Any favourable fiscal treatment should actively support job creation and training for European-domiciled seafarers. Hence, employment, training and also the greening of the sector are the conditions to be attached by the Commission when validating any national State Aid scheme for maritime transport. Member States should be made accountable in that regard, in a transparent way. In the absence of such regulatory changes to correct major distortions in the market, European shipping will need direct financial support. However, public financial support to the sector should also be made conditional.

What is more, ETF is of the view that loopholes in the way State Aid schemes are designed and applied should be closed. Seafarers’ unions therefore reiterate that existing support schemes have not achieved their objectives. We urge once again that EU policymakers revise the State Aid Guidelines for Maritime Transport, so that EU taxpayers’ money is used in a far more effective way for the benefit of the broader economy. In this way subsidies will help rejuvenate the maritime clusters and enhance connectivity across the maritime logistics chain, whilst guarantying the socially sustainable development of the sector.

When it comes to foreign investment in maritime assets, and especially ports, ETF is not fundamentally opposed so long as operators are compliant with the provisions of the national legislation – in particular social legislation. Moreover, foreign investment should benefit sustainable and quality jobs for maritime professionals and port workers. However, ETF is very concerned that those investments are being made regardless of any common European position, in isolation from the EU policies on infrastructure (TEN-T – Connecting Europe), and without consideration for the EU’s strategic interests.

In addition, it should be stressed that the increase in foreign investment is happening against the background of port overcapacity. Hence ETF wishes to warn about the risks of aggravating the situation with all the negative implications this entails: increased competition between ports, downward pressure on prices, threats to job stability. We cannot accept that, in the end, port workers will bear the brunt and pay the price. ETF therefore calls for a concerted European approach to ensure that foreign investments are made for the benefit of our economy and our jobs.

The other speakers on the panel were Katherine Bamford, Port of Vancouver, Martin Dorsman, ECSA and Christophe Tytgat, Sea Europe. The chair was Pat Cox, a former President of the European Parliament. Pat Cox is also a Trans-European Transport Network (TEN-T) coordinator, and he ended the discussion by inviting ETF, ECSA and Sea Europe to engage in a constructive dialogue with the TEN-T coordinators. We agree that we should explore ways to work together and enhance further maritime connectivity to ensure the sustainable development of the sector.

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