Global Collective Bargaining on Flag of Convenience Shipping

DOIhttp://doi.org/10.1111/j.1467-8543.2004.00304.x
AuthorNathan Lillie
Publication Date01 March 2004
Global Collective Bargaining on
Flag of Convenience Shipping
Nathan Lillie
Abstract
The most significant case of transnational union bargaining co-ordination in
existence is in the maritime shipping industry. A global union association, the
International Transport Workers’ Federation (ITF), and a global employers’
federation, the International Maritime Employers’ Committee (IMEC), now
negotiate over pay scales for seafarers on Flag of Convenience (FOC) ships.
These negotiations set the pattern for pay and working conditions for a signifi-
cant portion of the global seafaring work-force. The ITF brought about global
wage bargaining by building and enforcing a global inter-union consensus
between developed and developing countries around a uniform wage rate.
1. Introduction
Despite the often-observed phenomenon of the globalization of production
networks and product markets, organized labour’s bargaining strategies have
remained mostly national in scope. Although recent efforts at cross-border
union collaboration have attracted attention, particularly in the European
Union (EU) (Dølvik 1997; Gollbach and Schulten 2001; Ramsey 1997; Sisson
and Marginson 2002), the only well developed example of union-driven
transnational wage bargaining co-ordination covering large numbers of
workers is in the maritime shipping Flag of Convenience sector. Maritime
shipping is an interesting example because, unlike many other transnational
bargaining initiatives,1bargaining outcomes in maritime shipping have an
immediate,direct and significant real-world impact in terms of worker welfare
and labour costs. This sector affords the unique possibility to observe a func-
tioning industry-level bargaining system, with all the attendant employer–
union and inter-union conflicts played out in a transnational environment.
A global union association, the International Transport Workers’ Federa-
tion (ITF), and a global employers’ federation, the International Maritime
Employers’ Committee (IMEC), now negotiate over pay scales for seafarers
British Journal of Industrial Relations
42:1 March 2004 0007–1080 pp. 47–67
Nathan Lillie is in the School of Industrial and Labor Relations, Cornell University.
© Blackwell Publishing Ltd/London School of Economics 2004. Published by Blackwell Publishing Ltd,
9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.
on Flag of Convenience (FOC) ships. These negotiations set the pattern for
pay and working conditions for a significant portion of the global seafaring
work-force. Global bargaining developed out of the ITF’s Flag of Con-
venience campaign, a fifty-year-old effort to end the FOC system. The FOC
system is a global maritime regulatory regime, which allows ship owners to
avoid unions and regulation by flagging their vessels in countries with weak
regulatory systems. The process by which global wage bargaining has devel-
oped in the FOC sector sheds light on the mechanics by which transnational
bargaining co-ordination might develop in other contexts.
Global bargaining in maritime shipping is predicated on a bargaining
coalition between seafaring unions from high-wage capital–supplier coun-
tries2and seafaring unions from mid- to low-wage labour supplier countries.3
It developed in the face of resistance from maritime employers who sought
to undermine the union bargaining consensus by exploiting disagreements
between capital and labour supplier-country unions. The ITF balances the
strategic need for labour market influence with the politics of maintaining
inter-union consensus by dividing the labour market into three distinct seg-
ments. The FOC campaign system reduces competition between these three
segments, using targeted industrial action by port workers. The ITF has uni-
laterally imposed a uniform labour cost scale on ships in internationally com-
petitive market segments (namely, FOCs), prompting employers to organize
themselves for bargaining in an attempt to influence labour costs. This cen-
tralized wage bargaining system, in which ITF affiliates collectively partici-
pate in deciding the wage rate but are then obliged to maintain the agreed
rate, significantly undermines national union autonomy. Affiliates acquiesce
to the growth of ITF authority because they receive financial benefits and
power resources from the campaign.
This analysis is based primarily on interviews of national maritime union
officials, ITF staff and employers’ association staff. More than sixty inter-
views were conducted between 1998 and 2002 in Australia, Canada, Estonia,
Finland, Germany, Norway, Sweden, the United Kingdom and the United
States. All controversial facts were confirmed by consulting at least two
sources with opposing interests (e.g. an employer and a union official, or a
union official and an industry press source). Because some interviewees
requested anonymity, no interviews are cited, in order to prevent identifica-
tion by elimination. Information on current ITF structures, ITF bargaining
strategy and ITF politics was supplied by staff from the ITF and affiliates,
ITF official documentation, employer representatives and media sources such
as Lloyd’s List.Where possible, press sources related to particular incidents
and issues are cited for easy reference.
2. The importance of the ITF in maritime wage determination
The modern FOC system developed after the Second World War primarily as
an employer strategy to avoid unions and high wage costs,by ship owners first
48 British Journal of Industrial Relations
© Blackwell Publishing Ltd/London School of Economics 2004.

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