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UK to block ferries that don't pay seafarers a minimum wage

Transport secretary seeks disqualification of controversial P&O Ferries chief executive and instructs ports to refuse access to ferry companies that pay below the land jobs threshold

‘My message to P&O Ferries is this; the game is up. Rehire those who want to return and pay your workers — all of your workers — a decent wage,’ Grant Shapps tells parliament

BRITAIN will approach the International Labour Organization to push for an unspecified international minimum wage for seafarers.

Transport secretary Grant Shapps told parliament the move is part of a nine-point package drawn up in response to the decision by P&O Ferries to sack 800 UK seafarers.

The company, which is owned by DP World, has replaced the workers with cheaper agency crew earning less than the legal minimum threshold for any shore-based occupation.

Peter Hebblethwaite, the chief executive of P&O Ferries, has openly admitted that its tactics were probably illegal, doubling down by telling MPs last week that he would do the same again if he had to.

“P&O Ferries can derive no benefit from the action they have disgracefully taken. That cynical attempt will fail,” Mr Shapps told the House of Commons. “My message to P&O Ferries is this; the game is up. Rehire those who want to return and pay your workers — all of your workers — a decent wage.”

The proposals will be watched closely by shipowners, who have for over a century availed themselves of low-cost seafarers from British colonies and — more recently — less developed countries, citing the pressures of international competition.

Other measures announced by Mr Shapps include the negotiation of  ‘minimum wage corridors’ for ferry services between the UK, France, Denmark, the Netherlands, Ireland and Germany, negotiated bilaterally with those governments.

He also promised legislation to give ports statutory power to refuse access to regular ferry services that do not pay the national minimum wage through primary legislation to amend the Harbours Act 1964.

In the interim, has written to ports instructing them to implement that provision immediately, pending the law’s passage.

In addition, he has written to the Insolvency Service, to urge it to disqualify Mr Hebblethwaite as a person not fit to be a company director.

HM Revenue and Customs will get new resources to check pay scales at ferry operators, and the Maritime and Coastguard Agency has agreed to review its enforcement policies.

Employers who engage in so-called ‘fire and rehire’ tactics will be liable to a 25% increase in compensation payments where they fail to consult with trade unions.

The UK’s existing maritime strategy will be revised to increase the focus on training and welfare, and there will be changes to the tonnage tax system to provide new incentives for shipping companies to operate from the UK and register their vessels with the UK Ship Register.

Details are so far limited to Mr Shapps’ announcement in parliament and there are obvious questions on some of the finer points.

The ILO already specifies a non-binding benchmark for ratings of $648 a month. Getting an effective minimum wage through the United Nations agency will be the work of years.

Any attempt to do so may meet resistance from labour supply countries, for whom remittances from seafarers are an important source of foreign exchange revenue.

As the level the UK will seek has not been stated, it is not clear how far it would diverge from the current benchmarks voluntarily agreed between shipping employers and seafarer unions through the International Bargaining Forum mechanism, or indeed simple market forces.

Moreover, a rate that would be meaningful in advanced economies would have to be far above the norms in much of the rest of the world. Third-world governments may object to being dragged into what they see as a British domestic problem.

The idea of minimum wage corridors seems more feasible in a shorter time frame, although even that much will require a substantial effort of negotiation.

But the post-Brexit dispute with the European Union over trade between mainland Britain and Northern Ireland is likely to complicate matters.

P&O Ferries effectively owns two of the ports out of which it operates — Cairnryan, in Scotland, and Larne, in Northern Ireland. Asking the company voluntarily to ban its own ships may be met with a negative response.

Ports themselves are unlikely to be happy with the policing function they are being asked to adopt.

“We do not feel that using ports as the vehicle to enforce rules on behalf of the government is suitable,” said Richard Ballantyne, chief executive of the British Ports Association. “Ports exist to facilitate ships in and out of the UK safely. They are not well placed to monitor or question ships about specific issues around their crew. At the moment we are not sure how workable or sustainable this measure will be.”

The issue of pay scales for non-UK ratings working in UK waters has been subject to debate ever since the national minimum wage was introduced by a Labour government in 1998, with a specific exemption for shipowners.

The RMT transport union has long campaigned on the question, accusing some operators of paying less than £2 an hour.

The UK’s last Labour government commissioned — but did not enact — the Carter Review in 2010, which saw academic Susan Carter recommend that UK-flagged vessels pay the same rates to all seafarers, regardless of nationality.

In October 2020, the law was changed so that the minimum wage covered seafarers working between UK ports and in the offshore energy supply chain on the UK Continental Shelf, regardless of residency, flag or legal domicile of the employer.

But crucially, there was continued exemption for international seagoing ships coming into or out of UK ports, including ferries linking Britain to other countries.

There will also plans for a new statutory code to ban so-called ‘fire and rehire’ practices, again largely down to the political pressure that has arisen thanks to the widespread outcry over the P&O Ferries dismissals.

Strictly speaking, P&O Ferries fired but did not rehire. But other major companies have sacked large numbers of workers and offered them re-employment on inferior salary and conditions, and the company’s action has reignited the matter politically.

Business minister Paul Scully this week announced measures to act on the issue, and said that courts would be able to take lack of consultation into account in unfair dismissal cases.

The Chamber of Shipping said it did not condone the sackings at P&O Ferries.

“We are working closely with the Department for Transport, our members and other stakeholders to create a commercially viable UK model for our international ferry services,” it said in a statement. “We must establish and agree with all stakeholders a construct which ensures a level playing field, to allow fair competition between UK ferry operators. On this foundation they will be able to deliver quality training jobs for seafarers and quality services for their passengers and freight customers.”

The RMT union said the package announced by Mr Shapps was insufficient.

“This continued lack of action and courage has meant a ferry company owned by the Dubai royal family has been able to break our laws and disrupt our ports and ruin people’s lives with impunity, and we will keep pressing the government to ensure justice for our members,” said general secretary Mick Lynch. “What has been announced today is far too little, far too late and we are calling for urgent action for speedier, more radical reforms to save the UK seafarer from oblivion.”

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