The shipping minister has accused the European Union of unfairly penalising Britain after it started legal action over seafarers’ pay that the government warned could devastate the country’s shipping industry. The European Commission on Thursday gave the UK two months under legislation requiring the free movement of workers to ensure different countries’ nationals were paid the same rates on its ships.
The action comes after the Rail, Maritime and Transport Union complained to the Commission about the position after the coalition government refused to implement equal pay legislation passed under the previous government.
The British government has argued that no competitive maritime industry can afford to pay all seafarers at the high rate paid to sailors from the richest European countries. It said all countries’ ships offered different countries’ nationals different pay rates, and the UK had been singled out only because of the RMT’s complaint.
Mike Penning, the minister, said the rest of Europe was “getting off scot-free” while Britain was penalised.
“I am determined to do everything I can to stand up for British shipping and the red ensign. We will do the absolute bare minimum to comply with the EU’s ruling so as to cause as little disadvantage as possible to UK interests,” he said.
British-flagged ships not only employ large numbers of seafarers from developing countries such as the Philippines and Bangladesh, but also many citizens of poorer EU states such as Lithuania and Poland.
The Chamber of Shipping, the shipping lobby group, backed the minister’s attack on the Commission’s actions, saying they were “most regrettable”.
“[The chamber] has consistently drawn attention to the harm that will be caused to UK shipping by any measures that would require operators of ships registered in the UK to pay above market rates for their crew members,” it said.
There is a risk that, if costs rise for ships registered in the UK, owners will move their ships to other flags and stop paying the “tonnage tax” introduced under the previous government. The tax allows shipowners to pay a set tax per registered tonne for each vessel registered in the UK, rather than standard corporation tax. The tax regime – which many other countries have subsequently copied – has been widely credited with boosting the number of British-registered vessels in recent years.
The Chamber of Shipping last year warned that 40 per cent of UK-registered ships could move their registration elsewhere if full legislation barring pay discrimination on ships on grounds of nationality were implemented. The RMT complained to the Commission after the coalition government avoided implementing the Equality Act’s provisions extending equal pay legislation to British-flagged ships.
The Commission said existing UK rules broke the EU’s rules requiring free movement of workers between member states and the UK’s agreements with a number of non-EU member states. It remains unclear what the terms of any new UK legislation on seafarers’ pay might be.