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Go to the main meeting page for the 29th Joint Maritime Commission

29th Session of the Joint Maritime Commission

Geneva, 22-26 January 2001

Seafarers' Wages, Hours of Work and the Manning of Ships Recommendation, 1996 (No. 187):
Updating of the minimum basic wage of able seamen

Contents

1. Introduction

2. Representative list of countries and areas

3. Updating the representative list of countries and areas

4. Changes in consumer prices

5. Changes in exchange rates

6. Purchasing power of the US dollar in January 2000 relative to January 1997

7. Average change in purchasing power of US$435 across selected countries and areas from 1 January 1997 to 1 January 2000

 Appendix I.     Relevant provisions of the Seafarers' Wages, Hours of Work and the Manning of Ships Recommendation, 1996 (No. 187)

Appendix II.     Resolution concerning the ILO minimum wage for able seamen

Appendix III.   Resolution concerning the ILO minimum wage for able seamen

Appendix IV.   Major maritime countries and areas, with more than 2 million gross tons, December 1999

Appendix V.    Major suppliers of seafarers, with more than 10,000 seafarers, 2000

1.      Introduction

At its 274th Session (March 1999), the Governing Body of the International Labour Office decided to convene the 29th Session of the Joint Maritime Commission during the 2000-01 biennium (GB.274/13, appendix). One of the agenda items of the session would be the updating of the ILO minimum basic wage of able seamen, set out in Paragraph 10 of the Seafarers' Wages, Hours of Work and the Manning of Ships Recommendation, 1996 (No. 187) (the relevant provisions are presented in Appendix I) (GB.274/STM/1 (March 1999), paragraph 51).

From 1972 to 1987, the ILO minimum basic wage contained in the then Wages, Hours of Work and Manning (Sea) Recommendation, 1958 (No. 109), was updated each session of the Joint Maritime Commission using an arithmetical formula which took into consideration the changes in consumer prices and exchange rates against the United States dollar in 44 maritime countries and areas. This allowed a calculation to be made of the number of United States dollars needed for the same purchasing power in each country equal to the dollar wage determined at the latest revision.

On the basis of a study of the feasibility of devising an alternative formula, the Joint Maritime Commission, at its 26th Session (1991), adopted a resolution modifying the mechanism and procedure for updating the minimum wage (Appendix II). It recommended: (i) a list of countries and areas that were more representative of maritime nations (those with at least 2 million gross tons of shipping) and of countries and areas which are major suppliers of seafarers; (ii) that the average of the three latest months of US dollar equivalent exchange rates be used so as to minimize the short-term effects of drastic fluctuations in exchange rates; (iii) that the period of measurement of the change in consumer prices should equal the full period of time between adjustments; and (iv) that, in calculating the median, countries and areas with fewer than 10,000 seafarers should be allocated a weight of one while those with 10,000 or more seafarers should be allocated a weight of two.

At its 28th Session (1996), the Joint Maritime Commission adopted a resolution which: (i) revised the list of countries and areas considered as currently representative of major maritime nations or major suppliers of seafarers; (ii) recommended that the formula used to revise the minimum wage should otherwise be maintained as it pertained to currency exchange rates, consumer prices and weighting; (iii) recommended that the amount of US$435 should be used as the base for recalculation purposes and that the period of adjustment time should start from 1 January 1997 up to the most current month for which data are available; (iv) recommended that when updated data covering the period 1 January 1997 through the next full period of adjustment are not available, the monthly average amount of change in the result should be extended to cover the period from the most current month of available data to the next full period of adjustment; and (v) declared that the revised amount recommended in future will be effective as of 1 January 2000 (Appendix III).

As at the time of writing this report, updated data for the suggested list of countries and areas are available for the period 1 January 1997 to 1 January 2000. Therefore in this report, for each of these countries or areas, the base figure of US$435 is recalculated for the full three-year period, 1 January 1997 to 1 January 2000, using the formula recommended in the resolution adopted at the 26th Session of the Joint Maritime Commission. At the time of its 29th Session in January 2001, if so required, the Office could provide the Joint Maritime Commission with details of the changes that have occurred during the period 1 January 2000 to 1 January 2001 (i.e. the next full 12-month period) using the “monthly average amount of change” estimation method recommended by the Joint Maritime Commission at its 28th Session, whenever necessary.

In accordance with the decision taken at the 26th Session of the Joint Maritime Commission, the figure for each country or area on the representative list is weighted appropriately to determine the median of the changes across countries and areas as the best way of summarizing these changes.

2.      Representative list of
         countries and areas

The list of countries and areas referred to in the 1996 resolution adopted at the 28th Session of the Joint Maritime Commission comprised 45 countries and areas, of which 38 had significant tonnage (over 2 million gross tons each) and seven had less than 2 million gross tons but supplied a significant number of seafarers (over 10,000 each) to the shipping industry.

Major maritime nations: Data on the gross tonnage of the world's merchant fleet in December 1999 are provided in table 1 of Lloyd's Register, World Fleet Statistics 1999. This shows that 35 major maritime countries and areas included in the list of 45 referred to in the 1996 resolution continued to have fleets of over 2 million tons in 1999 (see Appendix IV). Two other countries also had considerable tonnage: Belize with 2,368,152 tons (0.4 per cent of total world tonnage) and Antigua and Barbuda, with 3,621,890 tons (0.7 per cent of the world total). The Marshall Islands, which was not included in the list in 1996 because of the lack of information on consumer price indices, continued to have tonnage of over 2 million (6,761,811 tons, 1.2 per cent of total). These 38 countries and areas together accounted for nearly 92 per cent of the world's total tonnage in 1999.

Major suppliers of seafarers: Annex A of the BIMCO/ISF, 2000 Manpower update (technical annexes): World-wide demand for and supply of seafarers (Warwick, April 2000) ^[1] gives comprehensive data on the current supply of qualified seafarers from each country and area. It shows that 28 were major suppliers of seafarers in 1999, i.e. each supplied at least 10,000 seafarers (see Appendix V). Seventeen of these were also major maritime countries or areas and eight – Croatia, Honduras, Latvia, Myanmar, Poland, Romania, Spain and Ukraine – already appeared on the list of 45 countries and areas referred to in the 1996 resolution. Of the remaining three, Finland (10,000) newly emerged as a major supplier of seafarers in 1999 while Pakistan (12,168) and Sri Lanka (10,600) re-emerged as major suppliers of seafarers after being excluded from the 1996 list.

Three countries which had supplied significant numbers of seafarers in 1995 no longer appeared to do so in 1999: Denmark (9,875), Ghana (8,879) and Viet Nam (6,667). Unlike the other two, Denmark however remains on the list as a major maritime nation.

3.      Updating the representative list of
         countries and areas

The resolution adopted by the Joint Maritime Commission at its 26th Session did not state that the list should be revised whenever the international minimum wage of able seamen was to be updated. However, at its 28th Session, it decided to update the list of representative countries and areas, adding two which had more than 2 million tons and five with more than 10,000 seafarers. Consequently, the list incorporated the major maritime countries and areas and major suppliers of seafarers, identified from the information available in the ILO, at the time of the updating of the minimum wage.

If the list of countries and areas is to be considered as currently representative of major maritime nations or major suppliers of seafarers, as implied in paragraph 1 of the 1996 resolution, it should reflect the changes noted earlier. Consequently, two countries with more than 2 million gross tons have been added (Belize and Antigua and Barbuda). Also two countries which were no longer major suppliers of seafarers have been removed (Ghana and Viet Nam) while three other major suppliers of seafarers have been included (Finland, Pakistan and Sri Lanka). As a result, the revised list (see table 1) comprises 48 countries and areas. (This list does not include the Marshall Islands, for which data on consumer prices continue to be unavailable. Note also that three countries are no longer major maritime nations but continue to be major suppliers of seafarers (Poland, Romania and Ukraine) while Denmark, though no longer a major supplier of seafarers, continues to be a major maritime nation. These four countries therefore continue to be on the list.)

4.      Changes in consumer prices

Table 1, column 1, shows the changes that took place in consumer prices between 1 January 1997 and 1 January 2000, the period of three full years to be used for adjustment according to the 1996 resolution. The data on consumer prices in this table are based mainly on figures published in the Bulletin of Labour Statistics (ILO) and available in the ILO database, LABORSTA. For Taiwan, China, the figures used have been drawn from their Monthly Bulletin of Statistics. As CPI figures for Liberia were not available, they were estimated on the basis of the price movements in countries in the region.

Table 1. Changes in the purchasing power of the United States dollar
                in selected countries and areas, 1 January 1997-1 January 2000
 

Prices in three out of the 48 countries and areas fell slightly over the three-year period of adjustment (Belize, China and Hong Kong (China)), 27 per cent of the countries and areas had price increases of less than 5 per cent while 42 per cent experienced inflation of over 10 per cent over this period. Turkey and Romania had substantial inflation with prices increasing by more than five times while in the Russian Federation and Myanmar prices more than doubled. In Indonesia, the Islamic Republic of Iran, Ukraine and Honduras prices rose 98 per cent, 69 per cent, 58 per cent and 45 per cent, respectively.

5.      Changes in exchange rates

Columns 2 and 3 of table 1 present the average exchange rates as at 1 January 1997 and 1 January 2000. The exchange rate figures are, in most cases, the average of the exchange rates for the three months ending at 1 January 1997 and at 1 January 2000, as reported in International Financial Statistics (International Monetary Fund). For a few countries and areas, the rates were drawn from the Monthly Bulletin of Statistics (United Nations). Due to the absence of exchange rates for Taiwan, China, in these publications, the rates were drawn from the CNN's currency converter website. The data used are generally the end-of-month market exchange rates or official exchange rates.

Only in China, Japan and Taiwan (China), did the local currency strengthen against the US dollar over the three-year period with improvements of 0.3 per cent, 10 per cent and 13 per cent respectively. In eight countries and areas there was no change as either the currency was the US dollar or it had a fixed exchange rate relative to the US dollar. Thus in over 75 per cent of the countries and areas, exchange rates deteriorated against the US dollar between January 1997 and January 2000 with the deterioration exceeding 15 per cent in over half of the countries and areas. This is very likely a reflection of the strength of the US dollar against most currencies in January 2000, a trend which is still continuing at the time of writing of this report.

6.      Purchasing power of the US dollar in
        January 2000 relative to January 1997

The last column (column 4) of table 1 shows the number of January 2000 US dollars with the same purchasing power as US$435 in January 1997 in the 48 proposed countries and areas. They have been calculated based on the decisions given in the 1991 and 1996 resolutions. The procedure applied is as follows:

Number of 1 January 2000 US dollars with the same purchasing power as US$435 as at 1 January 1997 is obtained as:

• US$435 (approved minimum wage in US dollars at 1 January 1997):

  –      converted to local currency as at 1 January 1997 (using average exchange rate for October-December 1996)

then

–      adjusted for inflation between 1 January 1997 and 1 January 2000 (using change in CPI between December 1996 and December 1999)

then

–      reconverted to 1 January 2000 US dollars (using average exchange rate for October-December 1999).

An example of this computation is set out below using data for the United Kingdom.

Number of January 2000 US dollars with same purchasing power as January 1997 US$435 is computed as follows:

• January 1997 sterling pound equivalent of January 1997 US$435 = US$435 x 0.599 (three-month average January 1997 sterling/US$ exchange rate) = sterling £260.565:

  –      adjusted for inflation from January 1997 to January 2000 = £260.565 x 108.35 / 100 = £282.322

  –      and then reconverted to January 2000 US dollars =  £282.322 / 0.619 (three-month average January 2000 Sterling/US$ exchange rate) = US$456.09

        (The slight difference between this figure and the one shown in table 1 is due to rounding.)

The combined effect of changing exchange rates and prices on the January 2000 purchasing power of the January 1997 US$435 in each country or area depends on the relative size of these factors. Where the deterioration in the exchange rate exceeds inflation, fewer January 2000 US dollars are needed to maintain the 1997 level of purchasing power. This is the case for 28 out of the 48 countries and areas with the Russian Federation, Ukraine and Indonesia requiring only 58 per cent, 61 per cent and 66 per cent, respectively, of January 2000 US dollars. In 17 countries and areas, inflation exceeded the deterioration in exchange rates, so that a larger number of January 2000 US dollars are required to reach the same 1997 purchasing power level. This is particularly evident for the Isle of Man (UK) and Myanmar which require respectively 168 per cent and 202 per cent of January 2000 US dollars. For the two countries and areas where improvements in the exchange rate against the January US dollar were experienced (Japan and Taiwan, China), the effect of their price increases was accentuated while China, with moderate deflation and little change in exchange rates, had a small decrease in the January 2000 US dollars required.

7.      Average change in purchasing power of
         US$435 across selected countries and
         areas from 1 January 1997 to 1 January 2000

Table 2 contains the resulting data from column 4 of table 1 arranged in ascending order of magnitude. The median is then calculated using weights equal to one for countries and areas with less than 10,000 seafarers, and two for countries and areas with 10,000 or more seafarers, as required by the 1991 resolution. The median value obtained is the figure for Pakistan, US$399.29. This result represents a decrease of 2.2 per cent compared to the median of US$408.23 reported in 1996 and a decrease of 8.2 per cent compared to the recommended minimum of US$435 in the 1996 resolution. The lower January 2000 median is largely attributable to the current strength of the US dollar.

On each occasion, the Shipowner and Seafarer members of the Joint Maritime Commission have, after deliberations, agreed on a different figure from the calculated median. Table 3 gives the details of these differences since 1970. It is worth noting that on the only previous occasion when the computed median also decreased the recommended minimum wage remained unaltered (in 1984).

Table 2. Countries and areas arranged in ascending order of purchasing power, with                          corresponding weights
 

Table 3.          Revisions of the minimum wage from 1970 to 1996
 

Appendix I

Relevant provisions of the Seafarers'
Wages, Hours of Work and the Manning of
Ships Recommendation, 1996 (No. 187)

IV. Minimum monthly basic pay or
wage figure for able seamen

10.    The basic pay or wages for a calendar month of service for an able seaman should be no less than the amount periodically set by the Joint Maritime Commission or another body authorized by the Governing Body of the International Labour Office. Upon a decision of the Governing Body, the Director-General of the ILO shall notify any revised amount to the Members of the International Labour Organization. As of 1 January 1995, the amount set by the Joint Maritime Commission was 385 United States dollars.

11.    Nothing in this Part should be deemed to prejudice arrangements agreed between shipowners or their organizations and seafarers' organizations with regard to the regulation of standard minimum terms and conditions of employment, provided such terms and conditions are recognized by the competent authority.

Appendix II

Resolution concerning the ILO
minimum wage for able seamen

The Joint Maritime Commission of the International Labour Organization,

Having met in Geneva, in its Twenty-Sixth Session, from 17 to 25 October 1991,

Considering the report prepared by the International Labour Office on Wages, Hours of Work and Manning (Sea) Recommendation, 1958 (No. 109),

Considering also that criticism has been expressed, on several previous occasions by the seafarers and by the shipowners as to the formula which has been used to revise the minimum wage figure contained in Recommendation No. 109,

Noting also that currency fluctuations have again rendered use of the current formula an even more unreliable exercise,

Considers that the formula used to revise the minimum wage should be amended,

Requests therefore the Governing Body of the International Labour Office to take action on the following proposals agreed by the Shipowner and Seafarer members of the Joint Maritime Commission, with regard to a revised formula for dealing with the updating of the minimum wage for able seamen:

Revised formula

The mechanism and procedure for the periodic revision of the minimum basic wage for able seamen shall be revised:

(a)   to provide a more representative list of 44 countries and areas including nations which have at least 2 million gross tons of shipping or countries and areas which are major suppliers of seafarers. The new list of countries and areas is:
 

(b)   to minimize the short-term effect of drastic fluctuations in currency exchange rates. The formula is to utilize an averaging of the three latest months of US dollar equivalent exchange rates (e.g. for the 26th Session, March-May 1991 averaging);

(c)   the formula is to measure the changes in consumer prices for a four-year period up to the month of the most current data (e.g. for the 26th Session, where available, May 1987 shall be the base month and May 1991 shall be the period of measurement). In the future, the period of measurement shall equal the full period of time between adjustments;

(d)   the formula is to include a weighting on the basis of the total number of seafarers in different countries, on a scale equal to one for countries with less than 10,000 seafarers, and two for countries with 10,000 or more seafarers, the numbers to be determined by an ILO survey;

(e)   the issue of productivity should be addressed when the Joint Maritime Commission or the bipartite wage committee meets and, if by common reasoning the two parties have found productivity increases have taken place since the last adjustment was made, a relevant percentage should be agreed upon and added to the new wage figure calculated according to the formula.

Periodic review

It is agreed that a small bipartite wage committee composed of six Shipowner representatives and six Seafarer representatives will be convened every alternate year between sessions of the Joint Maritime Commission for the purpose of updating the ILO minimum wage for able seamen in accordance with the prescribed formula, it being understood that such a committee should not be convened in the year before a Joint Maritime Commission session.

Updating of minimum wage figures

The current figures of US$286 and £176 sterling as of October 1987 shall be updated to amounts equal to US$335 and £196 sterling as of October 1991 and US$356 and £208 sterling as of 25 October 1992. The base figure for recalculation purposes should be US$356 as of 25 October 1991, using the formula prescribed above.

Appendix III

Resolution concerning the ILO
minimum wage for able seamen

Having met in Geneva in its 28th Session on 22 October 1996,

Having considered the report prepared by the International Labour Office on the Wages, Hours of Work and Manning (Sea) Recommendation, 1958 (No. 109): Updating of the minimum basic wage of able seamen,

Having noted that the Joint Maritime Commission, at its 27th Session in 1994, considered the wage figure of US$385 as of January 1995,

Having noted the changes since the 27th Session as to which countries and areas are now either major maritime nations or major suppliers of seafarers, as described in the Office report, and also noted the desire to clarify the method of calculating the minimum wage,

Having noted the adoption, at the 84th (Maritime) Session of the International Labour Conference, of the Recommendation concerning Seafarers' Wages and Hours of Work and the Manning of Ships (No. 187), referred to below as “the Recommendation”, which revised Recommendation No. 109,

The Joint Maritime Commission of the International Labour Organization:

1.     Considers the list of 45 countries and areas contained in the Office report as currently representative of major maritime nations or major suppliers of seafarers.

2.     Considers also that the formula used to revise the amount of the basic pay or wages for a calendar month of service for an able seaman should otherwise be maintained as it pertains to currency exchange rates, consumer prices and weighting, and that productivity should also be addressed when the Joint Maritime Commission finds this fact relevant.

3.     Considers furthermore that in view of the above factors, the figure of US$435 should be regarded as the equivalent, as of 1 January 1998, of the amount referred to in Paragraph 10 of the Recommendation.

4.     Urges that, in giving effect to the Recommendation, Members should apply the amount of US$435, with effect from 1 January 1998.

5.     Agrees that the amount of US$435 should be used as the base for recalculation purposes and that the formula should measure changes in consumer prices, currency exchange rates and weighting to cover the period of adjustment time which will start from 1 January 1997 up to the most current month for which data are available, when the amount of the basic pay or wages for able seamen is considered for revision by Joint Maritime Commission sessions in future.

6.     Agrees that when updated data covering the period from 1 January 1997 through the next full period of adjustment are not available from the Office, a preliminary adjustment of the amount set by this resolution should initially be performed using the most current data available, and then the monthly average amount of change in the result should be extended to cover the full period of adjustment.

7.     Suggests that the next Office report continues to provide preliminary data on all factors measured in the calculation, but the Office should not propose a revised amount until all updated data are made available to the Joint Maritime Commission.

8.     Agrees that any revised amount recommended in future will be effective as of 1 January 2000.

9.     Reminds the Governing Body of the earlier proposal of the Joint Maritime Commission that a small bipartite wage committee composed of six Shipowner representatives and six Seafarer representatives be convened every alternate year between sessions of the Joint Maritime Commission for the purpose of updating the amount of the basic pay or wages for able seamen in accordance with the prescribed formula, it being understood that such a committee should not be convened in the year before a Joint Maritime Commission session.

Appendix IV

Major maritime countries and areas, with more than
2 million gross tons, December 1999
 

Appendix V

Major suppliers of seafarers, with
more than 10,000 seafarers, 2000
 

[1] This study, carried out for the Baltic and International Maritime Council and the International Shipping Federation by the Institute for Employment Research (University of Warwick, United Kingdom), contained the best information on the worldwide supply of seafarers available to the Office during the period when the report was prepared.

Photo credits: ILO