Crew Pay Increases In 2018 After Years of Stagnation
The latest Manning Annual Review and Forecast report by shipping consultancy Drewry states that cost growth has returned to seafaring in 2018 and will continue to accelerate at a moderate pace on recovering vessel earnings and continued shortfall officer numbers. This is following years of stagnation due to the depressed state of most cargo markets rendering wage increases almost unaffordable.
Manning costs have risen moderately as a result of the recovery in most cargo shipping markets. This recovery has taken pressure off vessel operators and has allowed employers to increase wages particularly across market-related officer ranks.
Martin Dixon, director of research products of Drewry, said that back then, owners had to make up for the financial losses by not increasing wage.
According to the report by Drewry, the estimated aggregate manning costs increased by around 1% this year compared to the 0.2% rise last year. In the increase this year, ratings and officer pay rose by the same margin. This is in contrast to last year that was bogged down by a 0.75% decline in overall officer wage rates.
This wage growth has happened in spite of the shortfall in officer numbers decreasing to a more manageable level, but the shortage is expected to continue in the future. This is because though there is a projected stagnation in the vessel fleet, the longer leaves and shorter tours of duty have increased man-berth ratio requirements. Officer supply growth has also been inferred as slowing further. In contrast, ratings supply is expected to maintain the fact that it has always been in surplus.
Regarding this, Dixon commented, “The growth in supply of seafarers has been slowing and is projected to slacken further over the next five years. This slowdown in the available maritime workforce has important implications for shipowners, particularly in terms of recruitment, retention and wage costs.”
The Drewry report further elucidates that that the pressure on vessel operators’ costs will continue and dampen wage inflation. The International Transport Workers’ Federation (ITF) has yet to arrive to an agreement on new wage scales with employer organizations that will take effect starting January of next year. Still, Drewry does not expect that this will lead to a significant rise in average salaries as lots of seafarers already earn higher than the minimum wage.
In conclusion, the Drewry report projects that the average manning costs will increase over the next five years at a moderate pace. This will have little acceleration expected nearing the end of the forecast period as backup ratios increase to cope with longer leave periods. Higher vessel earnings and competition for scarce officers certified to crew specialist ships will also affect moderately higher wage growth during this timeframe.
Despite the wage growth only slightly higher, this is good news for aspiring seafarers undergoing maritime training in the Philippines as their wages will be slightly higher should they be hired within the projected time frame of wage rise.