The Influence of Residence Country on the Seaman’s Wage Level. Benchmarking Analysis From Drewry Shipping.
Date of posting: 04.12.2019
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One of the special aspects of seaman’s work is the significant difference in tariff rates and other conditions of employment depending on the seaman’s country of origin.
The independent maritime consulting centre Drewry Shipping determined a standard wage rate for each country that traditionally "supplies" the world’s merchant fleet market with the largest number of seamen. It used values of the subsistence level and GDP per capita (a feature that determines the level of economic development as well as the growth of the country's economy) for this. It turned out that the seamen with equal qualification holding the same position on the same type of vessels but living in different countries had different income.
One of the reasons for this is the stability or instability of the domestic currency in relation to the US dollar as the main payment unit of seamen’s wages. In the benchmarking analysis below the values for the period from 2008 to 2018 are taken as the basis and Master’s and Second Officer’s wage rates on seagoing oil tanker are used as an example.
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THE PHILIPPINES
The Philippines occupy the first place among the countries supplying the world’s merchant fleet with seaman. The Philippine seamen that work mainly as ratings and junior officers are highly rated with operators, managers and shipowners.
Comparison of income at sea vs. ashore per 1 working day
In the Philippines GDP per capita according to the purchasing power parity (PPP) is 55$ per day. The purchasing power parity is the amount of one currency expressed in the units of another currency required to purchase the same product or service in markets of both countries.
The income of the Master and 2nd officer on oil tanker is 450$ and168$ per day correspondingly. Thus the wage of even the second officer is three times higher than a daily "land" income.
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Influence of the Philippine peso/US dollar exchange rate on the seaman's income.
By reference to the seaman's wage of 30,000$ per year in 2009 the seaman's income in the national currency made about 1,400,000 pesos per year.
By 2012 the income of a Philippine seaman was 1,300,000 pesos/year.
By March 2018 the income grew again and amounted to 1,550,000 pesos per year.
Thus, from 2012 to 2018 the wage of a Philippine seaman increased by about 22% when converted to the national currency.
CHINA
In spite of the fact that China is the second largest supplier of seamen to the world’s merchant fleet after the Philippines, most of them work in inland water transport. Despite the impressive number of qualified senior officers, mostly junior officers are available at the world’s market.
Comparison of income at sea vs. ashore per 1 working day
In China GDP according to the purchasing power parity (PPP) is 100$ per working day per capita of work population aged from 15 to 64 years. The income of the Master and 2nd officer on oil tanker is 422$ and 165$ per day correspondingly, that approximately 320% and 65% higher than GDP per person per working day ashore. At the same time the rates of the ratings are so low that the Chinese seamen are more interested in work ashore.
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Influence of the Chinese yuan/US dollar exchange rate on the seaman's income.
The financial crisis of 2008 could not but influenced merchant shipping that acutely affected the income of Chinese seamen, who, in spite of gradual improvement of the situation, were forced to find job ashore, which also offers better conditions and higher wages. This trend is most noticeable among senior officers and rating specialties.
In 2008 the income of the Chinese seaman was nearly 210,000 yuans/year.
In 2013 it was even lower - 185,000 yuans/year.
By 2017 the situation improved to nearly 205,000 yuans/year.
At the beginning of 2018 the wage level fell again to 190,000 yuans/year.
INDIA
The Indian seamen have taken their position in the world’s shipping long and firmly. Many global ship operators and managers opened their offices in India thereby contributing to the improvement of training level and percentage of hired Indian seamen. In recent years there has been a trend to promote junior officers with unsufficient working experience, to higher positions. Among senior officers the cases of early retirement are frequent: the income received provides the opportunity for comfortable life in retirement at young age.
Comparison of income at sea vs. ashore per 1 working day
In India GDP per capita according to PPP is $ 51 per working day.
The income of the Master and 2nd officer on oil tanker is 510$ and 190$ per day correspondingly. That is, the seaman’s wage is significantly ahead in comparison to the wages available in the domestic labour market. And the Master’s income is 10 times higher than possible land income.
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Influence of Indian rupee/US dollar exchange rate on the seaman's income.
By reference to the wage of 30,000$ per year.
In 2008 the seaman's income was slightly less than 1,200,000 rupees per year.
By 2016 the wage of an Indian seaman reached the level of 2,100,000 rupees per year.
In March 2018 the income was about 1,900,000 rupees/ year.
In percentage terms the income of a seaman receiving payments in US dollars increased by about 20% when converted to the local currency from 2012 to 2018.
RUSSIA
Russia is the largest European supplier of workers for the world’s merchant fleet. Russian sailors are highly rated with shipowners and are considered to be workers with the best value for money.
Comparison of income at sea vs. ashore per 1 working day
GDP per capita according to PPP is 178$ per day. The income of the Master and 2nd officer on oil tanker is 473$ and 192$ per day correspondingly. Thus it can be seen the wage of even 2nd officer seems more attractive than the standard income sources ashore of working population in Russia.
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Influence of Russian ruble/US dollar exchange rate on the seaman's income.
Provided that the seaman's income had been equal to 30,000$ or 25,000€ per year for 8 years from 2008 to 2016, the amount received in dollars when converted to the national currency increased gradually shifting from 600,000 to 2 000 000 rubles per year. Then this value fell to 1,700,000 rubles a year. In March 2018 the scale remained at approximately the same value.
Thus, the variable ruble/US dollar exchange rate in recent years and ruble devaluation over the past 10 years (till 2018) led to increasing in seamen’s wages paid in US dollars by almost 130% in the domestic currency. The situation is similar for payments in euros. The move of the euro/ruble exchange rate from 2012 to 2016 (the lowest and highest values) is more than 86%. The situation stays the same in respect to the US dollar, the fluctuations in the ruble/euro exchange rate became more moderate in 2017 and early 2018.
UKRAINE
Ukraine is the second largest European supplier of seamen. A number of Ukrainian crewing agencies are greatly regarded in the world and Ukrainian officers remain popular choice among ship operators and managers who consider Ukrainian seamen to be fairly good investment.
Comparison of income at sea vs. ashore per 1 working day
GDP per capita of working population according to PPP is 57$ per working day. The average income of the Master and 2nd officer on oil tanker is 477$ and 193$ per day correspondingly. It can be seen the wage of even the second officer seems to be much more attractive than the standard income source ashore of working population in Ukraine.
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Influence of Russian ruble/US dollar exchange rate on the seaman's income.
By reference to the amount of annual income of 30,000$ or 25,000 € the income of a seaman amounted to about 200,000 hryvnia per year with slight annual changes when converted from dollar to hryvnia from 2008 to 2013. It has been steadily growing since 2013 to reach the value of 800,000 hryvnias per year by March 2018. Thus, the amount of payment received by a Ukrainian seaman in US dollars converted into the national currency has grown substantially more than 4 times since 2008. The situation is similar for payments in euros. Since 2008 the amount has grown 3.5 times.
CONCLUSION
These statistical data prove that the income received from work at sea prevails if compared to opportunities ashore, although it should be noted that in some countries the gap between the income of ratings and domestic economy offer is gradually declining.
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BULGARIA
Bulgarian seamen remain popular choice of shipowners rating the candidates from the Eastern Europe due for their affordability.
Income of a seaman vs. a person employed ashore per working day
GDP according to PPP calculated per capita of working population aged from 15 to 64 is 32,658$ or 143$ per working day in Bulgaria.
The average income of the Master and 2nd officer on oil tanker is 493$ and 203$ per day correspondingly, that is approximately 245% and 42% higher than GDP per capita per working day.
Exchange rate of Bulgarian lev/US dollar (euro)
By reference to the amount of annual income of 30,000$ or 25,000€ (2008 - 2018), in 2014 the seaman's income in Bulgarian lev was 43,000 leva/year, then there was a significant increase to 53,000 leva in 2015 followed by 11% decrease (to 47,000 leva/year) from 2016 to March 2018. At the same time the seamen receiving payment in euros did not feel any significant changes when converted to the national currency, since 2002 the lev exchange rate has been pegged to the euro at the fixed rate.
CROATIA
The wage of Croatian seamen remains among one the highest wages for Europeans. There are many intermediary crewing agencies in the country as well as some large shipowners and operators which have their representative offices here. A lot of seamen with real experience and good skills often end their marine careers before reaching retirement age (60-65 years) preferring to work as shore personnel.
Income of a seaman vs. a person employed ashore per working day
In Croatia GDP per capita according to PPP is 36,089 $ or 159$ per working day.
The income of the Master and 2nd officer on oil tanker is 563$ and 243$ per day correspondingly, i.e. the seaman’s wage prevails when compared to the wage available in the labour market in Croatia.
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Croatian kuna/dollar (euro) exchange rate
By reference to the income of 30,000$ or 25,000€ per year in 2008 a seaman's income was about 120,000 kunas, then there was a gradual increase that reached its peak value in 2015 (205,000 kunas) and dropped to 180,000 kunas in March 2018.Thus, due to the strong instability of Croatian kuna to US dollar the difference between the upper value recorded in 2015 and the values of 2018 was 40%. The seamen receiving payments in euros did not feel such sudden fluctuation: when converted to the local currency the income for 2018 is higher than the figures of 2008 by about 23%.
LATVIA
For more than one generation Latvian seamen have been building their careers at sea and still do. In spite of the significant increase in wages over the past few years shipowners and operators believe that a Latvian seaman is worth the money spent.
Income of a seaman vs. a person employed ashore per working day
In Latvia GDP per capita according to PPP is 41,807$ or 183$ per working day.
The income of the Master and 2nd officer on oil tanker is 500$ and 198$ per day correspondingly, i.e. the wage of even the second officer is more attractive than the standard income of working population in Latvia, although in recent years the gap began to decline.
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The exchange rate of Latvian lat/dollar (euro)
By reference to the wage of 30,000$ or 25,000€ per year from 2008 to 2013, the seaman's income was about 15,000 lats per year without any significant fluctuations, which is explained by the stable lat /dollar exchange rate . In 2014 euro was adopted in Latvia as the main currency. In 2014 the income in euros was about 20,000 per year; the income received in dollars when converted to the new national currency was about 23,000 euros per year. In 2015 there was an increase to 25,000 euros and 27,000 euros (when converted from dollars to euros). From 2015 to 2017 the income was stable and the values remained at the level of 2015, then the values fell and in March 2018 the income amounted to about 25,000 euros per year. Thus, at the beginning of 2018 the income fell by almost 9% when converted to the local currency if compared to the average value in 2017. However, this is almost 30% higher than figures recorded in 2014 after the euro adoption.
CONCLUSION
These statistical data prove that income from work at sea prevails if compared to shore opportunities, although it should be noted that in some countries the gap between the income of ratings and domestic economy offer is gradually declining.
