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 United States dollar in various countries and areas from January 1995 to January 1996
7. Proposed revised minimum wage


Annex I - Relevant provisions of the Wages, Hours of Work and Manning (Sea) Recommendation, 1958 (No. 109)
Annex II - Resolution concerning the ILO minimum wage for able seamen
Annex III - Resolution concerning the ILO minimum wage for able seamen
Annex IV - Major maritime countries and areas, with more than 2 million gross tons, December 1995
Annex V - Major suppliers of seafarers, with more than 10,000 seafarers, 1995

1. Introduction

From 1972 to 1987, the ILO minimum basic wage contained in Paragraph 2 of Recommendation No. 109 was updated at 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), considered a study which analysed the inadequacies of the formula, and made proposals for dealing with them. These proposals were discussed by the Commission, which adopted a resolution modifying the mechanism and procedure for updating the minimum wage (Annex 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 27th Session (1994), 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; and (iii) recommended that the amount of US$385 per month as of 1 January 1995 should be used as the base for recalculation purposes at the 28th Session of the Joint Maritime Conference.

The formula used to calculate the minimum wage is as follows:

Minimum wage in US dollars during base period	x	Foreign exchange rate during base period	x	Current consumer price index
				_____________________ 100
Number of US dollars currently needed	=	_______________________ Current foreign exchange rate

The figure for each country or area on the representative list is then weighted appropriately, and the median is determined and taken as the best indication of the figure summarizing the changes there, since the base period.

On each occasion, the Shipowner and Seafarer members of the Commission have, after discussion, agreed on a different figure from the calculated median (see table 1).

The results of the revisions between 1972 and 1994 are given in table 1:

Table 1. Revisions of the minimum wage from 1972 to 1995

	Median derived from the formula (US$)	Minimum wage set by JMC (US$)	Addition by JMC as percentage of median
1970	84.91	100
1972	109.20	115	5.3
1976	178.82	187	4.6
1980	259.24	276	6.5
1984	232.75	276	18.6
1987	280.88	286	1.8
1991	352.00	356	1.1
1995	366.68	385	5.0

2. Representative list of countries and areas

Major maritime nations: Data on the gross tonnage of the world's merchant fleet in December 1995 are provided in table 1 of Lloyd's Register World Fleet Statistics, December 1995. This shows that all 36 major maritime countries and areas included in the list of 41 referred to in the resolution continue to have fleets of over 2 million tons (see Annex IV). Two other areas also have considerable tonnage: Taiwan (China), with 6,104,294 tons (1.24 per cent of total world tonnage) and the Isle of Man (United Kingdom), with 2,300,402 (0.47 per cent of the world total). The Marshall Islands, which was not included in the list in 1994 because of the lack of information on consumer price indices, continues to have tonnage of over 2 million (3,098,574 tons, 0.63 per cent of the total). These 39 countries and areas together account for nearly 92 per cent of the world's total tonnage.

Major suppliers of seafarers: Annex A of the BIMCO/ISF 1995 Manpower update -- The world-wide demand for and supply of seafarers (December 1995)¹ gives comprehensive data on the current supply of qualified seafarers from each country and area. It shows that 27 were major suppliers of seafarers in 1995, i.e. each supplied at least 10,000 seafarers (see Annex V). Twenty of these were also major maritime countries or areas. Of the other seven, Myanmar and Spain already appeared on the list of 41 countries and areas referred to in the resolution. Newly emerging major suppliers of seafarers were Croatia (with 20,800 seafarers), Ghana (10,138), Honduras (19,756), Latvia (14,305) and Viet Nam (12,500).

Three countries which had been included in the 1994 list because in the past they had supplied significant numbers of seafarers now no longer appear to do so: Bangladesh (7,809), Pakistan (7,400) and Sri Lanka (8,000).

3. Updating the representative list of countries and areas

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 1994 resolution, it should reflect the changes noted earlier. Consequently, two areas with more than 2 million gross tons have been added (the Isle of Man (United Kingdom) and Taiwan (China)). Three countries which are no longer major suppliers of seafarers have been removed (Bangladesh, Pakistan and Sri Lanka), while five other major suppliers of seafarers have been included (Croatia, Ghana, Honduras, Latvia and Viet Nam). As a result, the revised list (see table 2) comprises 45 countries and areas. (This list does not include the Marshall Islands, for which data on consumer prices continue to be unavailable.)

4. Changes in consumer prices

The 1994 resolution states that the formula used to revise the minimum wage should be maintained as it pertains to currency exchange rates, consumer prices and weighting. In this connection, the 1991 resolution recommended that the period of measurement should equal the full period of time between adjustments. When the Joint Maritime Commission revised the minimum wage in 1994, the Office interpretation of "full" period was that it referred to full 12-month periods, rather than parts of years. As a result, the period for measuring changes in the consumer prices covered three full years, from March 1991 to March 1994. The 1994 resolution states that 1 January 1995 should be used as the base for recalculation purposes, and that any revised minimum wage recommended by the Commission should be effective from 1 January 1997. Thus, the full period between adjustments would be two full years. However, at the time of writing this report, the most current data available on consumer prices refer to January 1996, so that changes over only one year can be measured. To measure the changes over two full years would mean taking January 1994 as the base, which in turn would mean measuring changes that were already taken into account in the adjustment of the minimum wage by the Commission in 1994. Therefore, the period for measuring changes in consumer prices has been taken as January 1995 to January 1996. The Office will make available to the Commission, if it so wishes, figures updated to a period as close as possible to the time at which the JMC meets, covering two full years.

Table 2. Changes in the purchasing power of the United States dollar in selected countries and areas, 1995-96

Country or area	Consumer price index, January 1996 (January 1995 = 100) 1	Exchange rate: 2 Number of local currency units for US$1		Number of January 1996 US$ with same purchasing power as US$385 in January 1995
		January 1995 (3 month average)	January 1996 (3 month average)
	[1]	[2]	[3]	[4]
Australia	103.73	1.32	1.33	395.78
Bahamas	102.5	1.00	1.00	394.63
Bermuda (UK)	102.5	1.00	1.00	394.63
Brazil	122.0	0.85	0.98	406.26
Canada	101.6	1.40	1.37	399.99
China	109.0	8.44	8.32	425.76
Croatia	104.8	5.47	5.416	408.15
Cyprus	102.5	0.47	0.476	396.60
Denmark	101.7	5.95	5.66	411.28
France	102.0	5.25	5.02	410.10
Germany	101.5	1.51	1.46	402.02
Ghana	155.0	1 060.10	1 388.897	455.48
Greece	108.4	236.10	241.37	408.23
Honduras	126.84	9.19	10.456	429.53
Hong Kong (UK)	105.9	7.74	7.738	407.89
India	109.0	31.39	35.57	370.40
Indonesia	110.1	2 206.33	2 313.67	404.05
Iran, Islamic Rep. of	150.0	1 744.56	1 750.38	575.44
Isle of Man (UK)	103.1	0.63	0.65	386.48
Italy	105.64	1 632.93	1 578.90	420.42
Japan	99.6	98.45	104.93	359.88
Korea, Rep. of	105.1	787.13	779.90	408.34
Kuwait	103.5	0.30	0.30	397.96
Latvia	130.1	0.523	0.54	477.29
Liberia	108.0	1.00	1.00	415.80
Malaysia	103.4	2.56	2.55	399.30
Malta	104.7	0.36	0.36	409.11
Myanmar	114.84	5.83	5.84	440.41
Netherlands	101.9	1.69	1.64	404.22
Norway	101.2	6.62	6.41	401.92
Panama	101.3	1.00	1.00	390.05
Philippines	112.3	24.91	26.19	411.19
Poland	121.1	2.43	2.478	459.08
Romania	126.7	1 785.67	2 693.67	323.49
Russian Federation	204.5	4 023.67	4 730.67	669.59
Singapore	100.9	1.45	1.42	398.96
Spain	104.0	130.56	123.72	422.48
St. Vincent and the Grenadines	105.3	2.70	2.70	405.48
Sweden	101.7	7.42	6.78	428.56
Turkey	180.5	40 177.67	62 753.83	445.01
Ukraine	254.2	135 666.67	173 000.008	767.56
United Kingdom	102.9	0.63	0.65	385.63
United States	102.7	1.00	1.00	395.50
Viet Nam	112.7	11 073.005	11 011.005	436.34
Taiwan, China	104.64	26.29	27.278	388.50
1 Prepared by the ILO from official statistics. 2 Rounded to two decimal places. 3 First quarter. 4 December 1995 on base December 1994 = 100. 5 Average for fourth quarter of previous year. 6 Average of December 1995 and January 1996. 7 Third quarter of 1995. 8 December 1995.

The only country among those shown in table 2 not to experience inflation during January 1995-January 1996 was Japan, where consumer prices fell by 0.37 per cent. In the majority of countries and areas, however, the increases were moderate: 30 of the 45 countries and areas in table 2 recorded inflation of below 10 per cent. Notable exceptions were the Russian Federation and Ukraine, where prices more than doubled, and Ghana, the Islamic Republic of Iran and Turkey where they rose by between 50 and 80 per cent.

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