Labor standards on Cypriot ships: myth and reality.

• Author: Christodoulou-Varotsi, Iliana

ABSTRACT

This Article offers a comprehensive comparative analysis of labor and social security standards on Cypriot and Greek ships. Potential cost savings for shipowners who register their ships in one country rather than the other may result from the absence of a given standard in the country of registration, or a lower or more flexible standard in that country than in the other. The authors conclude that the registration of ships in Cyprus does not provide overall advantages (in terms of "inferior" labor standards) over registration in Greece. Broadly speaking, shipowners may gain certain advantages by registering their ships in Cyprus with regard to working hours, manning, repatriation, and social security standards. However, the authors also show that shipowners registering their ships in Greece may gain advantages with respect to standards concerning repatriation of seamen, crew accommodation, and articles of agreement.

The Article also explores changes in the labor and social security legislation of Cyprus, applicable to merchant ships flying its flag, that may be expected as a result of its entry into the European Union, and whether these changes are likely to affect the attractiveness of Cyprus as a place of registration for foreign shipowners. The authors conclude that an open registry in Cyprus may not automatically be antithetical to adequate labor standards, nor contrary to the interests of responsible shipowners. They predict that the influence of international law, and EC law in particular, on maritime labor standards will result in the continued attractiveness of Cyprus as a place of registration.

1. INTRODUCTION II. THE MERCHANT SHIPPING (MINIMUM STANDARDS) CONVENTION OF 1976 (CONVENTION NO. 147): BENCHMARK FOR COMPARISON III. COMPARISON OF LABOR STANDARDS ON CYPRIOT AND GREEK SHIPS A. Scope of Convention No. 147 in Cyprus and in Greece B. Safety Standards (Article 2, Paragraph (a)(i)) 1. Qualifications 2. Standards for Hours of Work 3. Standards of Manning 4. Other Safety Standards (a) Prevention of Accidents (b) Minimum Age (c) Medical Examination (d) Food and Catering (e) Repatriation of Seamen C Social Security Standards: Sickness, Injury, and Medical Care D. Shipboard Conditions of Employment and Living Arrangements: Crew Accommodation E. Other Matters Appended to Convention No. 147 1. Articles of Agreement 2. Freedom of Association, Right to Organize, and Collective Bargaining IV. RECENT DEVELOPMENTS CONCERNING CYPRUS V. CONCLUSION I. INTRODUCTION

   The objective of reducing high labor costs associated with crews in traditional maritime countries under conditions of tough competition in the international shipping transportation market is traditionally considered one of the principal motives for registration of ships in "open registry" or "flag of convenience" countries. (1) Correspondingly, one of the stereotypes associated with ships flying the "flag of convenience" is the low level of seamen's wages as well as low labor and social security standards. (2) In light of the statistics of maritime casualties, in which ships registered in these countries traditionally occupy leading positions, (3) and the campaign against "flags of convenience" conducted by the International Transport Workers' Federation (ITF), (4) both these countries and the shipowners registering their ships in such countries have acquired a certain negative image in public opinion. (5)

   Would one be justified in applying this stereotype to shipowners registering their ships in Cyprus, one of the five major "open registries" countries? (6) Would one be justified in presuming that labor standards on ships flying the flag of Cyprus are "second-class" or "inferior" as compared to standards on ships flying the flags of countries not classified as "open registries," based exclusively on the fact that Cyprus is considered an "open registry" country?

   The answer to this question is not obvious. On one hand, Cyprus has ratified a number of conventions of the International Labour Organization (ILO), covering a broad spectrum of aspects of maritime employment, notably the Merchant Shipping (Minimum Standards) Convention of 1976 (Convention No. 147), a universal instrument establishing the minimum internationally acceptable labor and social standards for merchant vessels, regardless of their place of registration. (7) Furthermore, Cyprus is currently in the process of joining the European Union. As a consequence, its legislation is undergoing revision to bring it into conformity with a comprehensive set of European Union regulations dealing with labor standards on merchant ships flying the flags of its members. (8)

   On the other hand, despite recent ratification of Convention No. 147 and expected changes in its legislation, Cyprus remains one of the most popular places for registration of ships by foreign shipowners. According to data of the U.N. Conference on Trade and Development (UNCTAD), as of January 1, 2002, based on the tonnage of registered ships of 1,000 or more Gross Registered Tonnage (GRT), Cyprus was ranked fifth (32,941,000 deadweight tonnage) among the countries of "Open Registry," behind Panama (171,874,000 dwt), Liberia (73,179,000 dwt), Bahamas (45,327,000 dwt), and Malta (42129000 dwt), and fourth (1,191 ships) based on the number of such ships, only behind Panama (4,419 ships), Liberia (1,436 ships), and Malta (1,287 ships). (9) At the same time, the Cypriot national shipowners accounted for only 756 dwt or 2.3 percent of the total tonnage of ships registered in Cyprus. The remaining tonnage belonged to foreign shipowners. (10) While Cyprus was ranked thirty-fourth among the thirty-five most important maritime countries and territories based on tonnage of ships of 1,000 or more GRT owned by its nationals, it would rank sixth in the world based solely on the tonnage of ships under the national flag (regardless of their true ownership), after the states above and also Greece (45,707,599 dwt); and sixth as well based on the number of such ships after the states above, the Russian Federation (2,156 ships), and China (1,584 ships). (11) Furthermore, taking into account that as of December 31, 1996, 1,348 vessels with the combined deadweight tonnage of 33,050 were registered under its flag, (12) it appears that the entry of this convention into force for Cyprus later that year did not cause any significant decrease in the number of ships registered there. Either the ratification of Convention No. 147 by Cyprus did not require any subsequent changes in its legislation; or these changes have been made but the legislation itself is not efficiently enforced; or, contrary to traditional belief, savings on labor costs as a result of lower labor standards is not the main reason shipowners choose to register their ships in Cyprus.

   Since several alternative explanations are possible as to why the ratification of Convention No. 147 by Cyprus has not resulted in a diminution of its attractiveness as a place to register ships from the point of view of labor costs, the labor and social security standards on ships flying its flag cannot be presumed to be "lower" in comparison with those on ships registered in "non-flag of convenience" countries. In order to establish the true level of labor standards on Cypriot ships, it is necessary to compare them with standards on ships of such a country. Taking into account that seventy percent of the tonnage of ships currently registered in Cyprus is owned by Greek nationals, (13) labor and social security standards on ships registered in Greece seems to be a logical point of comparison.

   This Article offers a comparative analysis of labor and social security standards on Cypriot and Greek ships. The comparison is carried out from the point of view of potential cost savings for shipowners, resulting either from an absence of a respective standard, (14) a "lower" standard, (15) or a "more flexible" standard. (16) The Article also discusses what changes in the labor and social security legislation of Cyprus, applicable to merchant ships flying its flag, could be expected as a result of its entry into the European Union, and whether these changes could affect the attractiveness of Cyprus as a place of registration for foreign shipowners. Since Convention No. 147, prescribing a comprehensive set of labor standards on merchant ships, has been ratified by both Cyprus and Greece, (17) it may be used as a benchmark for comparison of labor standards on Cypriot and Greek ships. Before such comparison is made, it is desirable briefly to discuss the content of its main provisions.

2. THE MERCHANT SHIPPING (MINIMUM STANDARDS) CONVENTION OF 1976 (CONVENTION NO. 147): BENCHMARK FOR COMPARISON

   The Merchant Shipping (Minimum Standards) Convention (Convention No. 147) was adopted at the sixty-second session of the International Labour Conference in 1976 and entered into force on November 28, 1981. (18) As of January 31, 2004, it had been ratified by forty-five countries. (19) This Convention constitutes what is probably the most important international instrument on maritime labor standards, notably aiming at the problem of substandard ships. (20) It is supplemented by the Merchant Shipping (Improvement of Standards) Recommendation of 1976 (Convention No. 155). (21) Furthermore, the Protocol to Convention No. 147 was adopted at the eighty-fourth session of the International Labour Conference in 1996. (22) The latter attaches significance to port state control over labor and social conditions. (23)

   Furthermore, it is worth noting the following main characteristics of Convention No. 147. First, within the framework of port state control established by Article 4 of Convention No. 147, the Convention is also applicable to vessels flying the flag of a member state which has not ratified it. (24) Second, member states which have not ratified the Conventions listed in the Appendix to Convention No. 147 must...