TABLE OF CONTENTS

1........... PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES....... 3

1.1........ Background.................................................................................................................... 3

1.2........ Policy context................................................................................................................. 5

1.3........ Consultation and expertise.............................................................................................. 6

1.4........ Impact Assessment Board............................................................................................ 10

2........... PROBLEM DEFINITION........................................................................................... 10

2.1........ Scope of exclusions and terminology............................................................................. 12

2.2........ Situation in Member States........................................................................................... 13

2.3........ Data on seafarers.......................................................................................................... 20

2.4........ A regulatory failure?...................................................................................................... 23

2.4.1..... Employer Insolvency Directive...................................................................................... 24

2.4.2..... European Works Council Directive............................................................................... 24

2.4.3..... Information and Consultation Directive.......................................................................... 25

2.4.4..... Collective Redundancies Directive................................................................................. 26

2.4.5..... Transfer of Undertakings Directive................................................................................ 26

2.4.6..... Posting of Workers....................................................................................................... 27

2.5........ The EU right to act and subsidiarity............................................................................... 28

2.6........ Baseline scenario.......................................................................................................... 28

3........... OBJECTIVES............................................................................................................. 29

3.1........ General objectives........................................................................................................ 29

3.2........ Specific objectives........................................................................................................ 29

3.3........ Consistency with other EU policies and horizontal objectives......................................... 30

4........... POLICY OPTIONS.................................................................................................... 30

4.1........ Policy option A: no EU action....................................................................................... 30

4.2........ Policy option B: no legally-binding measures.................................................................. 30

4.3........ Policy option C: a derogation subject to the guarantee of an equivalent level of protection 31

4.4........ Policy option D: suppress the exclusions in all Directives................................................ 31

4.5........ Policy option E: adapt the rules to the specificities of the sector...................................... 31

4.6........ Policy option F: suppression of the exclusions for the fisheries sector only....................... 31

4.7........ Preliminary screening of the options............................................................................... 32

4.8........ Options retained for the Impact Assessment.................................................................. 32

4.9........ SME Test..................................................................................................................... 33

4.9.1..... Preliminary assessment of businesses likely to be affected.............................................. 33

4.9.2..... Consultation with SMEs representatives........................................................................ 34

4.9.3..... Measurement of the impact on SMEs............................................................................ 34

4.9.4..... Alternative options and mitigating measures................................................................... 34

5........... ANALYSIS OF IMPACTS......................................................................................... 35

5.1........ The risk of flagging out and its link with competitiveness................................................. 35

5.2........ The experience in Member States................................................................................. 36

5.3........ Insolvency Directive...................................................................................................... 37

5.3.1..... Who is affected by the exclusion?.................................................................................. 37

5.3.2..... Economic and social impacts......................................................................................... 37

5.4........ European Works Council Directive............................................................................... 38

5.4.1..... Who is affected by the exclusion?.................................................................................. 38

5.4.2..... Economic and social impacts......................................................................................... 38

5.5........ Information and Consultation Directive.......................................................................... 41

5.5.1..... Who is affected by the exclusion?.................................................................................. 41

5.5.2..... Economic and social impacts......................................................................................... 41

5.6........ Collective Redundancies Directive................................................................................. 42

5.6.1..... Who is affected by the exclusion?.................................................................................. 42

5.6.2..... Economic and social impacts......................................................................................... 43

5.7........ Transfer of Undertakings Directive................................................................................ 44

5.7.1..... Who is affected by the exclusion?.................................................................................. 44

5.7.2..... Economic and social impacts......................................................................................... 44

5.8........ Posting of Workers Directive........................................................................................ 45

5.8.1..... Who is affected by the exclusion?.................................................................................. 45

5.8.2..... Economic and social impacts......................................................................................... 45

6........... COMPARING THE OPTIONS.................................................................................. 45

6.1........ Insolvency Directive...................................................................................................... 46

6.2........ European Works Council Directive............................................................................... 48

6.3........ Information and Consultation Directive.......................................................................... 50

6.4........ Collective Redundancies Directive................................................................................. 50

6.5........ Transfer of Undertakings Directive................................................................................ 51

6.6........ Posting of Workers Directive........................................................................................ 52

6.7........ Ranking of the options and their cost............................................................................. 53

7........... MONITORING AND EVALUATION....................................................................... 56

8........... Annexes....................................................................................................................... 58

COMMISSION STAFF WORKING DOCUMENT

IMPACT ASSESSMENT

Accompanying the document

Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

on seafarers amending Directives 2008/94/EC, 2009/38/EC, 2002/14/EC, 98/59/EC, 2001/23/EC

1. PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES

Lead DG: EMPL

Associated DG: MARE

1.1. Background

Over the years, the European Union has adopted a substantial number of directives in the field of labour law, essentially aiming at ensuring that the creation and the completion of the Single Market did not lead to a lowering of labour standards or distortions in competition and at improving the living and working conditions in Europe, in accordance with the objectives of the social policy as enshrined in Article 151 TFEU.

The EU labour law directives are generally applicable to all sectors of activity and all categories of workers. Nevertheless, seafarers[1] are excluded or can be excluded from the scope of six directives[2], without any express justification. The Directives concerned are the following:

· Directive 2008/94/EC[3] relating to the protection of employees in the event of the insolvency of their employer (hereafter referred to as "the Employer Insolvency Directive");

· Directive 2009/38/EC[4] on the establishment of European Works Council (hereafter referred to as the "European Works Council Directive");

· Directive 2002/14/EC[5] establishing a general framework for informing and consulting employees (hereafter referred to as the "Information and Consultation Directive");

· Directive 98/59/EC[6] on the approximation of the laws of the Member States relating to collective redundancies (hereafter referred to as the "Collective Redundancies Directive");

· Directive 2001/23/EC[7] relating to the safeguarding of employees' rights in the event of transfers of undertakings (hereafter referred to as the "Transfer of Undertakings Directive");

· Directive 96/71/EC[8] concerning the posting of workers in the framework of the provision of services (hereafter referred to as the "Posting of Workers Directive").

According to the Insolvency Directive, Member States need to establish guarantee institutions that guarantee payment of employee's outstanding claims resulting from contracts of employment or employment relationships.

The Directive provides that wherever such provision already exists in national legislation, Member States may continue to exclude from its scope share fishermen. Other categories of seafarers, notably within the merchant navy, are covered by the Directive.

The European Works Council Directive aims at improving the right to information and to consultation of employees in Community-scale undertakings. To that end, it provides for the setting up of a European Works Council in undertakings with at least 1000 employees within the Member States and at least 150 employees in each of at least two Member states.

Article 1(7) of the Directive reads as follows: "Member States may provide that this Directive shall not apply to merchant navy crews". The Directive therefore applies to fishing vessels, but not to the merchant navy.

The Information and Consultation Directive establishes a general framework for the right to information and consultation of employees in European companies. The Directive applies, depending on the choice of the Member State, to undertakings employing at least 50 or to establishments employing at least 20 employees in any one Member State.

In its Article 3(3), the Directive states that "Member States may derogate from this Directive through particular provisions applicable to the crews of vessels plying the high seas".

The Collective Redundancies Directive sets the procedures to be applied by any employer contemplating collective redundancies. The employer must start consultation with the workers' representatives in due time to reach an agreement. The Directive establishes the minimal information to be given to workers' representatives to enable them to make constructive proposals. It provides that projected collective redundancies cannot take effect earlier than 30 days after their notification to the competent authority.

In its Article 1(2)c), the Directive lays down that it does not apply to the crews of seagoing vessels.

The Transfer of Undertakings Directive aims at protecting employees in the event of a change of employer, in particular, to ensure that their rights are protected. It provides that the transferor's rights and obligations arising from the contract of employment are transferred to the transferee and that the transferee is bound by the terms and conditions agreed in any applicable collective agreement.

Article 1(3) of the Directive provides that it does not apply to "seagoing vessels".

Finally, the Posting of Workers Directive seeks to ensure adequate balance between the protection of workers' rights and the free provision of services. Posted workers, defined as workers who, for a limited period, carry out work in the territory of another member State, will benefit, at the very least, from the conditions of employment applicable in the host Member State, concerning minimum rate of pay, including overtime rates, maximum work periods and rest periods, minimum paid annual holidays, conditions of the supply of workers by temporary employment undertakings, rules on health and safety at work, working conditions of pregnant women and young people.

Article 1(2) of the Directive lays down that it does not apply to merchant navy undertakings as regards seagoing personnel.

1.2. Policy context

In 2006, the Commission has issued a Green Paper[9] entitled "Towards a Future Maritime Policy for the Union: A European vision for the oceans and seas", launching a comprehensive consultation and analysis of how Europe relates to the sea.

Building on this consultation, the Commission has adopted in October 2007 a Communication[10] on An Integrated Maritime Policy for the European Union. This Communication laid the foundation for the tools necessary for an Integrated Maritime Policy and set out the main actions the Commission would pursue during the current mandate.

One of the aims of the Integrated Maritime Policy is to increase the number and quality of maritime jobs for European citizens, taking into account that seafarers' experience is key also for shore-based jobs.

The European Parliament Resolution of 11 July 2007[11] requests that all workers have access to the same level of protection and that certain groups are not excluded by default from the broadest level of protection, such as is currently often the case for seafarers, workers on vessels and offshore workers.

The European Economic and Social Committee[12] noted the exclusion of fishermen and seafarers from European social legislation on a number of areas and it underlined that, irrespective of the reasons behind these exclusions, it was important to put an end to that discrimination where appropriate. It therefore invited the Commission to reassess these exclusions in close cooperation with social partners.

The General Affairs and External Relations Council meeting of 16 November 2009[13] acknowledged the progress achieved in the field of the integrated maritime policy and called on the Commission to maintain the momentum behind it. It pointed to the need to enhance a solid social dimension for maritime activities.

1.3. Consultation and expertise

A broad consultation and evidence gathering process carried out within the scope of the present impact assessment allowed all interested parties (the social partners at EU level and the Member States) to express their views concerning the analysed options and measures to be proposed.

Green Paper

Chapter 2.5 of the 2006 Green Paper deals with the issue of the declining number of European seafarers, mostly merchant marine officers, which affects all Member States. It notably states that the objective for Europe should be to have quality ships, manned by highly skilled employees, working under the best conditions.

The Green Paper therefore asks: "how can the decline in the number of Europeans entering certain maritime professions be reversed and the safety and attractiveness of jobs ensured?" and "how can better working conditions, wages and safety be combined with sectoral competitiveness?"

In its 2007 Communication[14], the Commission draws some conclusions from the consultation launched with the Green Paper. On the issue of jobs in the maritime sector, it states that "there are divergences on whether, and which, exclusions concerning maritime sectors in EU social legislation are justified, but there is agreement on the need to contribute to a global level playing field for the sector and the role that EU legislation can play in this context".

Communication on an Integrated Maritime Policy

Following this consultation, in its 2007 Communication[15] on an Integrated Maritime Policy for the European Union, the Commission has announced that it would reassess, in close cooperation with social partners, the exclusion affecting maritime sectors in EU labour legislation.

First-stage consultation of European social partners

The detailed outcome of the consultation can be found in Annex 3.

In October 2007, the Commission adopted a Communication[16] launching the first stage consultation of European social partners as provided for in Article 154 TFEU. The Commission asked the European social partners for their views on how to proceed on this issue.

The first consultation showed that the social partners in the maritime transport sector had differing views on the need to do away with the existing exclusions. While the employees (ETF) were in favour of suppressing all exclusions, the employers (ECSA) considered that the reasons for introducing them, which were linked to the specificities of the maritime transport sector, remained valid and that the exclusions should therefore be maintained.

For their part, concerning the fishery sector, both sides of the industry were in favour of doing away with some of the existing exclusions.

Second-stage consultation of European social partners

In April 2009, the Commission launched the second-stage consultation of the European social partners. ECSA underlines that the maritime sector is already well regulated and recalled the adoption of the Directive implementing the social partners' agreement on the maritime labour convention. ECSA did not believe that a straight removal of any of the existing exclusions or derogations was justified, but would be prepared to discuss other possible ways ahead.

On the other hand, ETF reiterated its views that the current exclusions or derogations were unjustified and that there was no compelling reason to exclude seafarers from the provisions of the Directives. ETF considered that the exclusions and derogations should be suppressed, but with certain nuances for the Directive on Posting of Workers.

Contrary to the maritime sector, the social partners of the fishing sector sent to the Commission a joint reply, agreed within the Sectoral Social Dialogue Committee (SSDC). The SSDC did not take position regarding European Works Councils and Posting of Workers, but it supported the elimination of all the other exclusions in force or the establishment of equivalent specific provisions.

Responses by the Member States

A detailed questionnaire was sent to all Member States. Replies were received from 20 Member States[17]. A detailed overview of the responses can be found in Annex 3 of the report. detailed in the Annex dealing with the consultations of stakeholders (see Annex 3).

The replies can be summarized by underlying that Member States having made the option to apply the provisions of the Directives to seafarers are unanimous concerning the estimation that this does not appear to represent significant additional costs compared to on-shore companies. None of these Member States is aware of any negative impact, notably in case of the sale of a vessel.

On the contrary, Member States having made use of the exclusions and derogations unanimously argue that they should be maintained and that the application of the Directives to the maritime sector would have important additional costs. The Member States at stake do not give any indication as for the quantification of the additional costs.

Inter-service group meeting on the Integrated Maritime Policy

The Group was set up in April 2005 by DG MARE to contribute to the production of the report on the consultation period on the Green Paper on Maritime Policy and the related action plan, subsequently adopted in October 2007.

In July 2010, the Inter-service group discussed the draft final report of the external consultant[18] (the MRAG study) in view of the preparation of the Impact Assessment.

An early draft of the present Impact Assessment Report has been discussed with the Inter-service Group on 19 April 2012. A meeting was also organised on 22 March 2012 with DGs and Services more closely concerned by the initiative (invited: MARE, MOVE, ENTR, JUST, EUROSTAT, SG, LS). A draft Impact Assessment Report was discussed, as well as the areas for more detailed contribution from each service.

Task Force on maritime employment and competitiveness

In its Communication on the Strategic goals and recommendations for the EU's maritime transport policy until 2018[19], the Commission established a Task Force on maritime employment and competitiveness entrusted to contribute with valuable input and recommendations on how to combine the competitiveness of European fleets with a strengthened seafaring profession in Europe. The Task Force is chaired by Sir Robert Coleman, former Director General of Transport at the European Commission and is composed by 12 additional members drawn from three groups: a group familiar with seafarers' concerns, a group familiar with shipowners' concerns and a group familiar with the concerns of the broader maritime cluster.

The Task Force delivered its report in July 2011[20]. On the issue of exclusion of seafarers from certain labour law Directives, the Task Force underlines that "in some cases Member States had not taken advantage of the provisions, casting doubt on their necessity". It also notes that "important evolutions have occurred since the provisions were adopted, notably as regards communications technology, which might now make information and consultation requirements more practical. Elimination of the exclusions or the application of requirements adapted to the special circumstances of employment at sea would help to eliminate the impression that seafarers are less well protected by European Union labour law than other employees which may contribute to a lack of interest in maritime careers".

The Task Force therefore concludes that "the elimination or adaption of the existing exclusions should be considered" for four of the six Directives concerned: the Insolvency Directive, the Works Council Directive, the Information and Consultation Directive and the Transfer of Undertakings Directive.

External expertise

The Commission has launched a call for tenders for a study aimed at supporting the preparation of an impact assessment concerning the possible review of the current exclusions of seafaring workers from the scope of EU labour law.

The Study has been carried out by a consortium led by MRAG Limited. The final report[21] was delivered in December 2010. It will be mentioned hereafter as "the MRAG Study".

1.4. Impact Assessment Board

The Impact Assessment Board (IAB) examined this Impact Assessment and issued an opinion on 22 June 2012. The recommendations for improvement have been taken into consideration.

The problem definition has been refocused and better explained, as well as supported with further anecdotal evidence (sections 2 and 5). Additional stakeholder's views have also been included.

The intervention logic has been strengthened by designing sub-options which address the full set of problem drivers and correspond to the improved policy objectives (section 5.6.2; 5.7.2, 6.4 and 6.5).Option F has been further explained.

The presentation of options has been improved by further explaining the applicability of the proposed policy options to both merchant navy and fisheries (on the grounds of fundamental rights). The analysis of costs resulting from the policy options has been improved and its accuracy improved. Overall comparative cost of the proposed policy mix has been estimated by comparison with other options possible (Section 6.7). The impact on competitiveness has been assessed using the risk of flagging-out as indicator (see 5.1).

The section concerning future monitoring and evaluation has been improved providing for more operational and time specific arrangements (section 6).Statistical information concerning maritime employment is incomplete and usually incomparable throughout the Member States. This is reflected in this document. However, the best efforts have been made to further consolidate the statistical instruments used.

2. PROBLEM DEFINITION

The EU labour law directives are generally applicable to all sectors of activity and all categories of workers, although some adaptations have been introduced to address specific situations[22].

Nevertheless, the maritime sector or a part of it is excluded or can be excluded from the scope of six directives.

The existence and/or possibility of introducing exclusions may prevent or limit the possibility for seafarers to fully enjoy their right to information and consultation, and the right to working conditions which respect workers' health, safety and dignity, both of which are enshrined in the Charter of Fundamental Rights of the European Union in Article 27 and Article 31.

Table 0: Fundamental rights concerned and their relevance per directive

Directive || Article 27 || Article 31

Employer Insolvency || NO || YES

European Works Council || YES || YES

Information & Consultation || YES || YES

Collective Redundancies || YES || YES

Transfer of Undertakings || YES || YES

Posting of Workers || NO || YES

The Directives at stake do not provide an express justification for the exclusions, which were not proposed by the Commission or justified explicitly either during the preparatory works or in the text of the directives.. Nevertheless, it can be assumed that the itinerant nature of vessels was seen as an obstacle to the application of the rules on information and consultation of workers, which are part of all the directives concerned, with the exception of the Insolvency Directive and the Posting of Workers Directive. It can be assumed that some Member States in the Council may have invoked the difficulty to communicate with vessels plying the high seas as a reason for the possibility to derogate from general rules, particularly on information and consultation. Currently, with the evolutions in terms of communications technology, this cannot be seen as a reason for the exclusion[23].

A different treatment of workers from a given sector, if not justified by objective reasons, may prevent these workers to enjoy their rights which are enshrined in the Charter of Fundamental rights of the European Union. It is therefore necessary to assess whether objective reasons can justify the different treatment of seafarers and, if not, to propose measures that would apply the same or equivalent rights to those enjoyed by on-shore workers.

Furthermore, as underlined by the Commission previously, the number of EU national seafarers is steadily decreasing and this could be problematic for the future, notably because experience off-shore is essential for certain shore-based jobs. Although this could be the consequence of different factors such as isolation from friends and family, workload including short turn-around times, and the social environment on board (cultural and language difficulties), the perception that seafarers do not benefit of the same level of protection as other employees in the EU may reduce the attractiveness of maritime careers for EU citizens and especially young students[24]. This contributes to the perception of seagoing work as an "excluded sector" subject to its own rules or no rules at all Doing off with those exclusions would also improve the overall perception of working conditions in the maritime sector throughout the EU. This has been confirmed by stakeholders including the Task Force on Maritime employment and competitiveness.

A recent study[25] carried out in the context of the preparation of the Task Force on Maritime Employment and Competitiveness (see point 1.2) looked at the balance between supply and demand of seafarers in Europe. The situation in OECD countries is serious, with a gap of 45,000 officers and of 145,000 ratings between supply and demand. It estimates that the gap will grow for OECD countries in the next ten years up to 70,000 officers and 221,000 ratings.

2.1. Scope of exclusions and terminology

The universe of workers excluded from the six directives is different from one directive to another. The different scope of the exclusions makes it difficult to quantify the number of persons affected, since in some cases all seafarers will be concerned (merchant navy and fishermen), in others only the merchant navy, and in one case only share fishermen.

Furthermore, not all the terms used are defined in the relevant directives, their interpretation being left to the national authorities. In order to take these national interpretations into account as much as possible the Commission requested the Member States, by means of a questionnaire, to provide it with information which it used in the elaboration of this document.

The terms used in the present document should be interpreted as defined in the directives, even though, in some cases, additional definitions deriving from international law and/or practice are provided in footnotes.

The table below gives an overview of the sectors of activity covered by the exclusions.

Table 1: Overview of the scope of exclusions and derogations

Directive || Fishermen excluded? || Merchant navy excluded?

Employer Insolvency || Yes, share fishermen || No

European Works Council || No || Yes,

Information & Consultation || Yes, fishermen plying the high seas || Yes, crews plying the high seas

Collective Redundancies || Yes, seagoing vessels || Yes, seagoing vessels

Transfer of Undertakings || Yes, seagoing vessels || Yes, seagoing vessels

Posting of Workers || No || Yes, seagoing personnel

2.2. Situation in Member States

The directives at stake allow Member States to exclude seafarers, but do not impose that Member States do so. It is therefore important to assess how Member States have used this faculty. Although almost all member States excluded seafarers from the scope of the Posting of Workers Directive, the situation is different from a Member State to another as far as the other Directives are concerned.

Table 2: Implementation at national level

MS || Exclusion from Directives on

Insolvency || EWC || Information & consultation || Collective redundancies || Transfer of undertakings || Posting of workers

AT || || || || || ||

BE || || || || X || || X

BU || || || || || || X3

CY || X || X || X || X || X || X

CZ || || || || || ||

DE || || || X1 || X || || X3

DK || || X1 || || X || X || X

EE || || X || || || || X3

EL || X || X3 || X1 || X || X || X

ES || || || || || || X3

FI || || || || || X1 || X3

FR || || || || || || X

HU || || X || || || X || X

IE || X2 || || || X || X || X3/ X2

IT || || X3 || || || || X3

LT || || X3 || || || || X3 / X2

LU || || || X || X || X || X3

LV || || XX || || X || X || X3

MT || X || X || X || X || X || X1

NL || || || || || X ||

PL || || || || || || X3

PT || || || || || X1 ||

RO || || X3 || X || || X || X

SE || || || || || || X

SI || || || || || ||

SK || || || || X || ||

UK || X2 || X1 || X1 || X2 || || X

X excluded

X1 MS has provided for an equivalent level of protection in national law

X2 share-fishermen are excluded because qualified as self-employed workers

X3 excluded are merchant navy crews

Source: European Labour Law Network (ELLN).

The table shows in green Member States who have not made use of the derogations or exclusions (and therefore apply national law to the categories of workers excluded from the Directives), in yellow Member States who do not apply entirely the provisions of the Directive but grant an equivalent protection and in red Member States having used the faculty to exclude seafarers from national law transposing the Directives.

The current situation does not ensure a level playing field in the European market, since certain companies are exempted from certain obligations, notably in terms of information and consultation, which are mandatory for competing companies based in other Member States.

It is worth noting that some of the big shipping nations do not exclude seafarers from the national provisions implementing the Directives, without any measurable negative impact (see point 6.2 for more details).

The merchant navy

Around 90% of world trade is carried by the international shipping industry. Without shipping the import and export of goods on the scale necessary for the modern world would not be possible. There are over 50,000 merchant ships trading internationally, transporting every kind of cargo. The world fleet is registered in over 150 nations, and manned by over a million seafarers of virtually every nationality. About 30% of the merchant ships are registered in an EU Member State (see Annex 2). In terms of gross tonnage (GT)[26], the EU represents 19,2% of the world fleet. The EEA represents 40% of the world fleet[27].

Table 3: Top 30 Commercial Fleet Registration (GT Basis)

Flag country || vessels || GT Total

Panama || 8637 || 223958099

Liberia || 3122 || 125407801

Marshall Is. || 2002 || 79555852

Hong Kong || 2097 || 73233264

Singapore || 3319 || 54940849

Bahamas || 1463 || 53780248

Malta || 1853 || 44941400

Greece || 1582 || 43,063,752

China P.R || 4135 || 42247731

Cyprus || 1045 || 21676443

United Kingdom || 1362 || 18817025

Italy || 1526 || 18423793

Norway || 1591 || 16,975461

Germany || 820 || 15,505,688

Japan || 5423 || 15227950

Isle of Man || 425 || 13562439

United States || 3631 || 11833928

Denmark || 665 || 11612293

South Korea || 1909 || 11400181

Antigua & B || 1340 || 11331852

Bermuda || 166 || 11270168

India || 1330 || 9665778

Indonesia || 5,921 || 9,505,776

Malaysia || 1,503 || 8,056,477

Netherlands || 1,264 7 || 836,717

France || 554 || 6,961,264

Turkey || 1358 || 6571223

Russia || 2,319 || 6,036,884

Philippines || 1388 || 5214668

Belgium || 203 || 4528275

Total || 63953 || 983143279

Total World || 87347 || 1582839745

Source: ECAS, Annual report 2011-2012

It is difficult to quantify the value of volume of world seaborne trade in monetary terms, as figures for trade estimates are traditionally in terms of tonnes or tonne-miles, and are therefore not comparable with monetary-based statistics for the value of the world economy.

However, the United Nations Conference on Trade and Development (UNCTAD) estimates that the operation of merchant ships contributes about US$380 billion in freight rates within the global economy, equivalent to about 5% of total world trade[28].

Throughout the last century the shipping industry has seen an increasing trend in total trade volume. Increasing industrialisation and the liberalisation of national economies have fuelled free trade and a growing demand for consumer products. Advances in technology have also made shipping an increasingly efficient and swift method of transportation. Over the last four decades total seaborne trade estimates have quadrupled, from just over 8 thousand billion tonne-miles in 1968 to over 32 thousand billion tonne-miles in 2008.

As with all industrial sectors, however, shipping can be susceptible to economic downturns. The contraction in trade, following the economic downturn in 2008, has translated into a dramatic and abrupt reduction in demand for shipping in 2009. The market recovered in 2010, but slowed down in 2011. The global shipping market faces several challenges: a general over capacity, the global economic outlook and trade growth, high operational costs (e.g. fuel), and piracy, as about half of EU shipping activity takes place in so-called cross-trades[29].

Table 4: International Seaborne Trade selected years (millions of tons loaded

|| 2000 || 2005 || 2006 || 2007 || 2008 || 2009 || 2010 || 2011

Container || 628 || 1020 || 1134 || 1264 || 1319 || 1201 || 1347 || 1477

Other dry || 1905 || 1 852 || 2 032 || 2066 || 2109 || 1 921 || 1 976 || 2 105

Five major bulks || 1288 || 1701 || 1836 || 1957 || 2059 || 2 094 || 2 333 || 2 477

Crude oil and products || 2163 || 2 422 || 2698 || 2747 || 2 742 || 2 642 || 2 752 || 2 820

Source: UNCTAD, Martime Transport Review,2011

This had also consequences for seafarers. The economic downturn is raising real fears that crews could be left high, dry and unpaid if shipping companies become bankrupt while they are in transit[30]. Services are being rescheduled and unprofitable routes are cut. Reportedly, crews are repatriated without knowing when they will be paid. Some shipping companies are in financial difficulties or file for bankruptcy[31].

The fishing industry

The world fishing fleet consisted of about 4.4 million vessels in 2010, relatively stable since 1998, with 73 percent in Asia, followed by Africa, Latin America and the Caribbean, North America and Europe. In total, 3.2 million vessels were considered to operate in marine waters and 1.1 million vessels in inland waters. Globally, 60 percent of the fishing vessels were with engines in 2010 and over 85 percent of the motorized fishing vessels were less than 12 m in length overall (LOA).

Total global capture production decreased by about 1.1 percent in 2010, due to a drop in anchoveta catches of 2.7 million tonnes. On the other hand, catches of all other marine species excluding anchoveta grew by 0.9 million tonnes, and the reported inland waters catch continued its increasing trend with world production reaching 11.2 million tonnes in 2010, although the statistics for this sector remain highly approximate for many countries.[32]

The EU fishing industry provides some 6.4 million tonnes of fish each year. Fishing and fish processing provide jobs for more than 350,000 people.

In 2006 five Member States (Denmark, Spain, France, the Netherlands and the United Kingdom) accounted for 60 % of Community production. There are structural differences between these five countries. In Denmark, 69 % of production is for industrial use, mainly the production of fishmeal, whereas the corresponding figure in the United Kingdom is only 6 %. In Spain, France and the Netherlands, all production is intended for human consumption. Catch values and employment in the fisheries sector are an accurate reflection of this situation. For example, the unit value of landings in Spain is seven times higher than that of Danish landings.

In the period 2005 to 2008 the EU fleet continued the decline seen in the period 2000 to 2005. This was in spite of the inclusion of the fleets of new Member States in 2004 and 2007.

The decrease in vessel numbers was 12.4% from 2000 to 2005 compared with a fall of 5.8% from2005 to 2008. In 2008 the EU-27 fishing fleet consisted of under 87 thousand vessels with a total tonnage of nearly 1.9 million tonnes and a total engine power of 6.9 million KW

By far the largest fishing fleets among the EU Member States, in terms of power, were those from Italy, France, Spain and the United Kingdom; in 2010, the fishing fleets of each of these countries had a collective power of between 0.8 million kW and 1.1 million kW. In terms of tonnage, however, the Spanish fishing fleet was by far the largest (415 000 gross tonnes), which was at least twice the size of the fleets in the United Kingdom, Italy or France. The fishing fleets of Norway and Iceland were also relatively large. Indeed, the fleet in Norway had more power (1.2 million kW) than any of the fleets from the EU Member States, while in tonnage terms the Norwegian fleet (366 000) was smaller only than the Spanish one.[33]

Table 5: Fishing fleet EEA countries

With the exception of Belgium and the Netherlands, where large vessels predominate, all Member States’ fleets have relatively similar structures. In Greece, Ireland, France, Poland and the United Kingdom more than 50 % of vessels are less than 12 metres in length, reflecting the importance of coastal fishing in those countries.

Table 6: Total catches in all fishing regions, 2000-2010 (1 000 tonnes live weight)

2.3. Data on seafarers

First of all, it should be noted that, in order to give a working estimate of affected seafarer numbers, the applicable law to contracts of employment in the shipping industry has been taken to be the law of the flag since this is the commonest practice[34].

Data on seafarers is not systematically gathered at national level. Over recent years a number of international surveys have been undertaken to measure the number of European seafarers[35]. However, there are still many loopholes and no uniform methodology to calculate the number of seafarers in employment. As a result of using different sources and methodologies, such surveys arrive at different conclusions (see Annex 1).

The Commission has asked Member States to provide figures on the number of seafarers active at national level. When available, the present report uses the data received from national authorities. When not available, taken into account the disparities in the different studies, it is more appropriate to use an average of all the identified sources, instead of using a single source.

The present report is therefore based on the information from national authorities or a calculation of the average numbers of seafarers based on the studies listed in Annex 1.

Table 7: employment in the merchant navy

Member State || Estimated employment in merchant navy

AT** || 537

BE* || 879

BU** || 16,579

CY* || 21,000

CZ** || 967

DE* || 15,179

DK* || 9,200

EE* || 6,250

EL* || 44,800

ES* || 12,138

FI* || 9,175

FR* || 23,060

HU** || 250

IE** || 1,320

IT** || 21,955

LT* || 1,204

LU** || 2,306

LV* || 500

MT* || 43,000

NL** || 13,358

PL* || 25,000

PT* || 14,853

RO** || 20,191

SE* || 13,997

SI* || 300

SK** || 457

UK* || 27,000

Total EU 27 || 345,455

*: Source: national authorities

**: Source: average calculated from studies listed in Annex 1

How many fishermen in Europe?

The number of seagoing fishermen in Europe is very much concentrated in a handful of countries: Spain, Greece, Italy and France account for a high proportion of total employment in the fisheries sector in the EU.

Table 8: Employment in the fisheries sector

Member State || Estimated employment in fisheries

Austria*** || 0

Belgium** || 239

Bulgaria* || 1507

Czech Republic*** || 0

Cyprus*** || 747

Denmark** || 3635

Estonia*** || 247

Finland** || 2195

France** || 23000

Germany** || 739

Greece*** || 24745

Hungary*** || 0

Ireland*** || 3838

Italy*** || 25426

Latvia** || 865

Lithuania*** || 744

Luxembourg*** || 0

Malta** || 894

Netherlands || 1966

Poland** || 3071

Portugal** || 13731

Romania* || 6811

Slovenia** || 117

Slovakia*** || 0

Spain** || 28462

Sweden*** || 1879

UK** || 12703

Total || 157561

* Source: ECOTEC, An exhaustive analysis of employment trends in all sectors related to sea or using sea resources. Data for 2006.

** Source: national authorities

*** Source: The 2009 Annual Economic Report on the European Fishing Fleet.

The universe of excluded workers is different from a Directive to another and across Member States due to their different choices in terms of use of the exclusions and derogations.

In order to give a general idea of the dimension of the problem, the table below gives an overview of the number and proportion of workers concerned for the whole EU.

Table 9: Workers affected by the exclusions

|| Insolvency || EWC || Consultation and Information || Collective Redundancies || Transfer of Undertakings || Posting of Workers

Total || Merchant navy || Not excluded || 159150 || 86497 || 138141 || 155925 || 272520

Fisheries || 26386 || Not excluded || 8452 || 35702 || 43501 || Not excluded

% in category || Merchant navy || Not excluded || 46.1% || 25.0% || 40% || 45.1% || 78.9%

Fisheries || 16.7% || Not excluded || 5.4% || 22.7% || 27.6% || Not excluded

% of EU workforce[36] || Merchant navy || Not excluded || 0.07% || 0.04% || 0.06% || 0.07% || 0.11%

Fisheries || 0.01% || Not excluded || 0.004% || 0.015% || 0.018% || Not excluded

The percentage of workers affected by this initiative in relation to the number of workers in the same category varies from 5.4%% to 78.9%. In any case, compared with the EU active population, this situation concerns a marginal proportion of workers (from 0.004% to 0.11%).

2.4. A regulatory failure?

A different treatment of a certain category of workers without any objective justification could be problematic in terms of equal treatment between categories of workers. Due to the different scope of the exclusions and the diversity of the legal texts concerned, it is necessary to determine whether it can be inferred from the context any objective justification of the exclusions. It is also necessary to determine whether the directive could be applied as such to seafarers or whether such an exclusion results in a way or another from the specificities of the sector.

The directives contain no reasoning on the reasons and aims of the exclusions. It should be recalled that these exclusions were not part of the Commission's proposal, but were inserted at a later stage during the inter-institutional negotiations.

The absence of express reference in the preparatory works or recitals of the directives does not per se mean that the exclusion is not justified. It has to be assessed whether other elements gleaned from the general context can allow the identification of the objective underlying the exclusion. This will be done below for each directive.

2.4.1. Employer Insolvency Directive

The Directive provides that wherever such provision already exists in national legislation, Member States may continue to exclude from its scope share fishermen. Other categories of seafarers, notably within the merchant navy, are covered by the Directive.

Is there an objective justification for the derogation?

As mentioned above, the possibility that Member States exclude share fishermen was not in the original proposal from the Commission. It was inserted during the inter-institutional negotiations, without any attempt to justify it in the preamble of the Directive.

It should nevertheless be assessed whether an objective justification can be inferred from the general context.

There is an important difference between share fishermen and other categories of workers: share fishermen are usually paid at the end of the trips, which for most of them do not last for more than one to three days. Share fishermen are paid once the catch is sold, i.e. they are paid before the following trip. Therefore, as underlined by the MRAG study, "the accrual of unpaid wages is relatively less likely to take place than in circumstances where a worker is paid a weekly or monthly wage".

Nevertheless, as the social partners have underlined in their joint contribution to the second-stage consultation, "often a guarantee wage is fixed to secure a minimum pay to fishermen". This guarantee wage is not different from the wage received by any other worker and could be left unpaid in case of insolvency.

Furthermore, it should be mentioned that the Directive also deals with the potential impact of the non-payment of compulsory contributions due by the employer to social security. On this aspect, there does not seem to be any difference between share fishermen and any other category of employees.

According to a settled case-law[37], the principle of equal treatment or non-discrimination requires that comparable situations must not be treated differently and that different situations must not be treated in the same way, unless such treatment is objectively justified.

In the case at stake, although the system of remuneration is partially specific, it does not appear that share fishermen and other workers are in a substantially different situation concerning the exposure to the risk of non-payment in case of insolvency as to justify this faculty to exclude them from the scope of the Directive.

Would the Directive apply if no express exclusion/derogation?

Without express provision, the Directive would entirely apply to share fishermen.

2.4.2. European Works Council Directive

Article 1(7) of the Directive reads as follows: "Member States may provide that this Directive shall not apply to merchant navy crews". The Directive therefore applies to fishing vessels, but not to the merchant navy.

Is there an objective justification for the exclusion?

The Directive has a horizontal nature and was intended to apply to all sectors of activity. As the Commission notes in its 2007 Communication[38], "the provisions of the Directive are flexible (the information and consultation mechanisms are negotiated in order to adapt them to company characteristics)". There does not appear to be an objective justification for the exclusion although "the specific working patterns of seafarers will always need to be taken into account".

Would the Directive apply if no express exclusion?

There are no provisions in the Directive which could be inapplicable to the excluded sector. The fact that seafarers spend periods of time off-shore is in itself not an obstacle to the application of the provisions of the Directive.

2.4.3. Information and Consultation Directive

Directive 2002/14/EC establishes a general framework for the right to information and consultation of employees in European companies. The Directive applies, depending on the choice of the Member State, to undertakings employing at least 50 or to establishments employing at least 20 employees in any one Member State.

In its Article 3(3), the Directive states that "Member States may derogate from this Directive through particular provisions applicable to the crews of vessels plying the high seas".

Is there an objective justification for the derogation?

It is worth underlying that there is no exclusion, since the Directive imposes that Member States who derogate from the provisions of the Directive do it through "particular provisions". Member States can therefore derogate from the rules of the Directive but provided they adopt specific provisions on information and consultation applicable to the crews of vessels.

According to the Commission document launching the second-stage consultation of European social partners, the reasons raised by the Member States to justify the use of the derogation were as follows: the difficulty in applying information and consultation procedures on board ships operating far away from the undertaking's seat and the fact that seafarers' contracts are frequently short-term.

In view of the relevance of the rights at stake, it can be made clearer in the text that Member States can only derogate from the provisions of the Directive if they adopt alternative provisions ensuring equivalent level of rights on information and consultation.

Would the Directive apply if no express derogation?

The definitions of "undertaking" and "establishment", which refer to the location "within the territory of the Member State" could be problematic. As the Commission wrote in the document launching the first-stage consultation of European social partners, "the application of the law of the flag is generally based on the notion of nationality of a vessel rather than assimilation to the territory".

The fact that seafarers spend periods of time off-shore is in itself not an obstacle to the application of the provisions of the Directive since the obligations in term of information and consultation could be fulfilled using available IT technologies.

2.4.4. Collective Redundancies Directive

In its Article 1(2)c), the Directive lays down that it does not apply to the crews of seagoing vessels.

Is there an objective justification for the exclusion?

In 1991, in the explanatory memorandum[39] attached to its proposal for the review of Directive 75/129/EEC[40], the Commission considered that "the information, consultation and notification requirements laid down in this Directive are in no way incompatible with the special nature of the contract of employment or employment relationships of the crews of sea-going vessels. Their exclusion from the protection provided by the Directive is not justifiable, unless they are covered by other forms of guarantee offering them protection equivalent to that resulting from the Directive".

This remains valid, even more so now that the right to information and consultation became a fundamental right enshrined in the EU Charter of Fundamental Rights.

Would the Directive apply if no express exclusion?

There are no provisions on the Directive which could be inapplicable to the excluded sector. The fact that seafarers spend periods of time off-shore is in itself not an obstacle to the application of the provisions of the Directive since the obligations in term of information and consultation could be fulfilled using available IT technologies.

2.4.5. Transfer of Undertakings Directive

Article 1(3) of the Directive provides that it does not apply to "seagoing vessels".

Is there an objective justification for the exclusion?

As underlined by the Commission in its Communication launching the second-stage consultation of European social partners, neither the original Commission proposal[41] nor the amended proposal[42] contained any specific reference to seagoing vessels. In 1994, in its proposal for the revision of the Directive[43], the Commission considered that seagoing vessels could be excluded from the information and consultation rights granted by the Directive but not from its fundamental provisions, i.e., the maintaining of the employees' rights existing at the moment of the transfer.

As mentioned above, the merchant navy sector is characterised by a high proportion of employees being on fixed term employment contracts. This could make a difference in terms of accrued rights, but it does not seem to be relevant when the Directive aims at protecting the maintenance of the existing rights at the moment of the transfer.

As for information and consultation rights, the absolute exclusion does not appear to be justified by the specificities of the sector, although they could justify some differentiation from the general rules to take into account the itinerant nature of vessels.

Would the Directive apply if no express exclusion?

The Directive applies "where and in so far as the undertaking, business or part of the undertaking or business to be transferred is situated within the territorial scope of the Treaty". The reference to the "territorial scope of the Treaty" could cast doubts as far as certain vessels plying the high seas are concerned.

2.4.6. Posting of Workers

Article 1(2) of the Directive lays down that it does not apply to merchant navy undertakings as regards seagoing personnel.

The Commission adopted on 21 March 2012 a legislative package including a proposal for a Directive[44] on the enforcement of Directive 96/71/EC concerning the posting of workers in the framework of the provision of services and a proposal for a Council Regulation[45] on the exercise of the right to take collective action within the context of the freedom of establishment and the freedom to provide services.

The proposal for a Directive does not intend to amend Directive 96/71/EC. It aims to improve, enhance and reinforce the way in which this Directive is implemented, applied and enforced in practice across the European Union by establishing a general common framework of appropriate provisions and measures for better and more uniform implementation, application and enforcement of the Directive, including measures to prevent any circumvention or abuse of the rules.

On the other hand, the proposal for a Council Regulation aims to clarify the general principles and EU rules applicable to the exercise of the fundamental right to take industrial action within the context of the freedom to provide services and the freedom of establishment, including the need to reconcile them in practice in cross-border situations.

Therefore, this legislative package did leave unchanged the scope of the Posting of Workers Directive and did not deal with the exclusion of merchant navy undertakings as regards seagoing personnel.

Is there an objective justification for the exclusion?

The exclusion could be justified by the specific nature of the itinerant work done by this group of workers and the practical difficulties associated with monitoring them. This was the view taken by representatives of Member states meeting in the context of the Working Party on the transposition of the Directive.

Would the Directive apply if no express exclusion?

There is a doubt on whether the provisions of the Directive could apply to seagoing personnel at all, even in the absence of the express exclusion. Indeed, posted workers are defined in the Directive as workers who, for a limited period, carry out their activities in the territory of a Member State other than the State in which they normally work. In practice, situations equivalent to posting seem to be rare in the maritime sector. According to the MRAG Study, "the temporary posting of workers from a vessel flying one flag to a vessel flying another flag may happen occasionally but essentially seems to be a rather rare kind of situation".

Even if the situation exists, as mentioned by the Commission in the Communication[46] launching the first-stage consultation of European social partners, "seagoing personnel on a vessel plying the high seas are not to be considered as being posted to the territory of another Member State", since "the application of the law of the flag is generally based on the notion of nationality of a vessel rather than assimilation to the territory".

This why in the previously mentioned Communication the Commission considered that "the definition of posting contained in Directive 96/71/EC does not seem to be applicable to seagoing personnel. The existing exclusion appears to reflect this reality and therefore to be justified". This remains valid.

2.5. The EU right to act and subsidiarity

This exercise concerns the possible review of six Directives. As such, this can only be done at the level of the EU, by a Directive or a series of Directives amending the existing acts.

The Directives at stake have been adopted at different moments with mainly three legal bases: Article 100 EC (Maastricht consolidated version of the Treaties), Article 94 EC (Nice consolidated version) and Article 137 EC (Nice consolidated version), corresponding to current Article 115 TFEU and Article 153 TFEU.

Depending on the Directives to be amended, this could be done by a single proposal for a Directive based on Article 153 TFEU or on separate proposals based on Article 153 TFEU, on Article 115 TFEU and on Articles 53(1) and 62 TFEU.

This initiative covers a sector subject to a strong international competition and with a large part of the workforce employed in the vessels of Member States coming from other Member States or third countries. An EU initiative would ensure a level playing field, at least at the level of vessels carrying the flag of a Member State.

2.6. Baseline scenario

In the EU, the legal situation is characterised by its diversity in practical and legal terms. The importance of the maritime sector as a whole is very different from a landlocked country to a country with a large maritime coast and tradition. The legal situation, as far as the Directives at stake are concerned, is also very different, Member States having made different choices when implementing the exclusions and derogations of the EU Directives. Table 2 in chapter 2 gives an overview on whether Member states have made use of the exclusions or derogations.

In the absence of new EU action, the current situation would remain unchanged as far as the labour law Directives are concerned.This would mean that, at EU level, the protection of labour rights protected under the EU Charter of Fundamental Rights would be kept at a problematic low level.

The gradual decrease of the number of EU seafarers will continue and this is problematic for the whole maritime cluster, since experience off-shore is essential for certain shore-based jobs.

The maritime sector has a clear international dimension. In this context, it should be underlined that the Maritime Labour Convention, 2006[47], enters into force on 20 August 2013. The Convention will harmonize the working conditions of seafarers throughout the world and therefore contribute to fill the gap between vessels holding an EU flag and vessels holding third countries flags.

At EU level, the adaption of the EU legal acquis to the standards of the Convention is done by Directive 2009/13/EC implementing the European social partners' agreement[48].

On the other hand Directive 2009/16/EC[49] on port State control will contribute to reduce substandard shipping in the waters under the jurisdiction of Member States and therefore ensure a level playing field at international level.

Nevertheless, it is important to note that neither the Convention nor the Directive deal with the issues that are the subject of the present report and would therefore not change the current situation on these matters.

Despite the entry into force of the Maritime Labour Convention, perception of a lower level of protection of off-shore jobs would continue. For a young European envisaging to engage into a maritime job, the perceived difference of protection by European and national law of off-shore jobs (compared to on-shore jobs) is a factor of dissuasion. This would continue to exert a downward pressure upon the willingness of young students to envisage a career in the merchant navy or the fishing sector. Therefore, the number of EU workers citizens wishing to engage into merchant navy or fishing jobs would continue its downward trend, thus aggravating the already serious shortage of skills and manpower in this sector.

3. OBJECTIVES

3.1. General objectives

This initiative aims to improve the level of protection of the rights protected under the EU Charter of Fundamental Rights in labour law. It contributes to general policy objectives which are enshrined in Article 151 TFEU, namely the promotion of employment, improved living and working conditions, proper social protection and dialogue between management and labour.

3.2. Specific objectives

In order to reach the general objectives set above, the present initiative has the following specific objectives:

(a) Improve the level of protection of the rights protected under the EU Charter of Fundamental Rights, in particular by assessing whether a different treatment is objectively justified by the characteristics of the sector and, if not by enhancing the rights of workers in the seafaring professions in order to bring them up to the standard enjoyed by workers on shore;

(b) Contribute to bring more young EU citizens into jobs in the merchant navy and fisheries sectors, by making them more attractive compared with on shore jobs and improve the retention of seafarers in the profession.

3.3. Consistency with other EU policies and horizontal objectives

This initiative aims at assessing the scope and reasons for the exclusion or faculty to exclude of seafarers from labour law Directives. The Commission is committed to ensure the compatibility of any new legislative proposal with the EU Charter of Fundamental Rights. In the case at stake, suppressing the exclusions would have a positive impact on the rights protected under Articles 27 and 31 of the Charter.

On the other hand, this initiative is also fully in line with the Integrated Maritime Policy for the European Union, established in 2007 through the so-called "Blue Book"[50]. The Blue Book stressed the need for an increase of the number and quality of maritime jobs for European citizens. It considered that "improved staffing policies and working conditions (including health and safety), supported by a concerted effort by all maritime stakeholders and an efficient regulatory framework taking into account it global context, are necessary if Europeans are to be attracted to the sector". It therefore announced Commission's intention to "reassess, in close cooperation with social partners, the exclusion affecting maritime sectors in EU labour legislation".

This initiative is also in line with the EU 2020 Strategy and its goals, notably in terms of employment.

4. POLICY OPTIONS

It should be noted that the policy options below will be assessed separately for each Directive. The preferred option for the initiative as a whole could therefore be a combination of the different policy options.

4.1. Policy option A: no EU action

Under this policy option, the EU would take no new initiative, legislative or non-legislative. The current Directives would remain in place as they stand and Member States would remain free to use or not use the derogations and exclusions. Trends show that the decline in the number of European seafarers is likely to continue, with more and more jobs aboard European vessels taken up by personnel from non-EU countries. As the Green Paper "Towards a future Maritime Policy for the Union" notes, "evidence suggests that the causes of this decline are to be found on both the demand and supply sides. In shipping, competitive pressures reduce the willingness of employers to offer openings at wage levels that are attractive to Europeans. Coupled with the impression that jobs are not secure and to a much lesser extent working conditions are poor, this has led to a reduction in the number of candidates applying for positions within the maritime profession".

4.2. Policy option B: no legally-binding measures

This option would consist of non-legally binding measures aimed at reaching the objectives set for the initiative without any further legal measure.

The Commission could issue a Recommendation providing that Member States consider whether the use of the exclusions at national level is still necessary and, if not, take the initiative to suppress it from national law. Such a recommendation could also encourage employers' and employees' organisations to discuss at the appropriate level the adoption of rules in the areas excluded by national measures transposing the Directives.

4.3. Policy option C: a derogation subject to the guarantee of an equivalent level of protection

This option entails replacing the blank exclusions by a provision allowing Member States to deviate from the provisions of the Directive for seafarers provided that a degree of protection equivalent to that of the Directives is ensured.

This option would allow the adaptation of the legal framework to the specificities of the maritime sector, notably the remoteness of workers from the headquarters of the company for very long periods, but would still require Member States to ensure the substance of the protection, if not the practical modalities.

This option would require the adoption of a proposal for a Directive amending the existing texts, based on Article 153 of the TFEU.

4.4. Policy option D: suppress the exclusions in all Directives

This option would be based on the assumption that, all of the proposals were originally intended to include all sectors of activity and that the exclusions of seafarers are unjustified and in breach of the fundamental rights to information and consultation and/or fair and just working conditions.

This option would require the adoption of a proposal for a Directive amending the existing texts, based on Article 153 of the TFEU.

4.5. Policy option E: adapt the rules to the specificities of the sector

This option would entail the adoption of substantive norms aimed at adapting the legal texts to the characteristics of the maritime sector. This option would address the concerns expressed by some stakeholders concerning the specificities of the sector and the additional costs.

Depending on each particular Directive, this could mean that it could be neccesary to put in place special arrangements concerning the application of information and consultation obligations (Option a) or the eligibility as worker representative or the application of general rules to the sale of a vessel. (option b) .

This option would require the adoption of a proposal for a single Directive amending all the concerned Directives based on Article 153 of the TFEU. Contrary to options C and D, it would not aim at simply suppressing the exclusions or provide for an equivalent level of protection, but rather at determining the substantive rules which would apply to the sector taking into account its specificities. Taking into account the financial impacts of the options which is a concern expressed by the Member States (see annex 3), this could mean, for instance, providing for a specific rule to apply in situations which are specific to the sector such as, for instance, the frequent sale of a vessel or collective redundancies. This would not exclude the information and consultation rights of seafarers as underlined by other stakeholders.

4.6. Policy option F: suppression of the exclusions for the fisheries sector only

This option would be based on the outcome of the consultations of European social partners. Since there is an agreement between both sides of industry for the fisheries sector and disagreement between employees' and employers' organisations for the merchant navy, this option would draw an immediate consequence from this situation.

4.7. Preliminary screening of the options

Two of the six options identified above seem hardly compatible with the objectives and nature of the initiative.

Option B above (no legally-binding measures) could encourage Member States to apply the provisions of the Directives to seafarers but it is hardly imaginable that all Member States would do so. Even if this was the case, depending on national law, level of protection of rights enshrined by the EU Charter of Fundamental Rights could be low in certain cases.

On the other hand, option B would not contribute to change the perception that seafarers' jobs are less protected and valued than on-shore jobs. It would therefore not encourage more young Europeans to engage into maritime professions.

Option B is therefore not a viable option and should be discarded without in-depth analysis of its economic and social impacts.

Option F consists in suppressing the exclusions for the fisheries sector only It concerns a more limited personal scope than option D. When option D is used Option F is implied. The use of Option F can have

(a) no effect when fishermen are not excluded (EWC, Posting of Workers),

(b) more limited effect than Option D when both seafarers and fishermen are currently excluded (Information and consultation, Collective redundancies, Transfer of undertakings) or

(c) the same effect as Option D when only fishermen are currently excluded (Employer insolvency regarding Article 1(3))

As such, this option could be realistic since there is an agreement between the two sides of industry in the fisheries sector on this issue, contrary to what happens in the merchant navy.

Nevertheless, the inclusion of fishermen only within the scope of the Directives would reach the objectives set for the initiative for a small part only of all employees concerned by the exclusions. It would leave unchanged, reduce the level of protection of the rights enshrined by the Charter.

Therefore, it seems that concerning the situations where Option F has more limited affect than D, the latter should be considered instead of the former (situation b). Situation (a) can be disregarded. As regards situation (c) the effect of F is equivalent to D and therefore the latter can be used instead of the former for the sake of clarity of analysis.

The agreement of social partners from the fisheries sector is an important element to take into consideration when deciding on the way forward, but it cannot be the only element to take into account. Option F alone is therefore not a viable option and should be discarded without in-depth analysis of its economic and social impacts.

4.8. Options retained for the Impact Assessment

In consequence, the following options will be subject to a detailed impact assessment and comparison of costs and benefits:

· Option 1: no EU action

· Option 2: a derogation subject to the guarantee of an equivalent level of protection

· Option 3: suppress the exclusions in all Directives

· Option 4: adapt the rules to the specificities of the sector.

4.9. SME Test

4.9.1. Preliminary assessment of businesses likely to be affected

In its Report entitled "Minimizing regulatory burden for SMEs – Adapting EU regulation to the needs of micro-enterprises"[51], the Commission announces that "from January 2012 the Commission's preparation of all future legislative proposals will be based on the premise that in particular micro-entities should be excluded from the scope of the proposed legislation unless the proportionality of their being covered can be demonstrated".

It is therefore necessary to assess the impact of this initiative on SMEs and specifically consider whether micro-enterprises should be covered.

As a preliminary, it should be underlined that some of the Directives at stake do not apply to micro-enterprises and some of them do not even apply to small or medium-sized enterprises. Indeed, most of the Directives include a threshold in terms of number of employees which excludes enterprises with a small number of staff. The table below summarizes the situation for the six Directives at stake.

Table 10: Applicability of the Directives according to the number of employees

Directive || Threshold

Insolvency Directive || No threshold, applies to all types of undertakings.

European Works Council Directive || Undertakings and groups with at least 1000 employees within the MS and at least 150 employees in each of at least two MS.

Information and Consultation Directive || Undertakings employing at least 50 employees in any one MS or establishments employing at least 20 employees in any one Member State.

Collective Redundancies Directive || Applies to collective redundancies of: (i) either, over a period of 30 days: - at least 10 in establishments normally employing more than 20 and less than 100 workers, - at least 10 % of the number of workers in establishments normally employing at least 100 but less than 300 workers, - at least 30 in establishments normally employing 300 workers or more, (ii) or, over a period of 90 days, at least 20, whatever the number of workers normally employed in the establishments in question.

Transfer of Undertakings Directive || The provisions on information and consultation can be limited by MS to "undertakings or businesses which, in terms of the number of employees, meet the condition for the election or nomination of a collegiate body representing the employees".

Posting of Workers Directive || No threshold, applies to all types of undertakings.

As it appears from the tables above, there are only two Directives which apply irrespective of the size of the company – Insolvency and Posting of Workers. For the rest, one of them (European Works Council Directive) does not apply at all to SME's, another one applies in principle to medium-sized companies or small companies, although is more likely to apply to bigger enterprises (Collective Redundancies), the Directive on Information and Consultation only applies to large and medium-sized companies and another one (Transfer of Undertakings) has introduced mitigating measures for small and micro-enterprises, allowing them not to apply some of its provisions.

4.9.2. Consultation with SMEs representatives

As mentioned previously, the Commission consulted twice the European social partners from both sectors concerned, merchant navy and fisheries.

The position of the European social partners is explained in point 1.2 of the present report.

4.9.3. Measurement of the impact on SMEs

The impact of this initiative on SMEs, essentially on small and micro-enterprises is reduced. On one hand, most of the Directives already exclude small and micro-enterprises, on the other hand, when this is not the case (the Insolvency Directive, for example), the employers' organisation for fisheries at European level is in favour of the suppression of the derogation for their sector.

4.9.4. Alternative options and mitigating measures

Mitigating measures are already in place for most of the Directives concerned. In any case, two of the envisaged policy options (policy options 2 and 4) would require amendments to the Directives to adapt their provisions to the reality of the maritime sector.

Since micro-enterprises will not be affected (and small enterprises only marginally), it is not necessary to reverse the burden of proof and assess the proportionality of their being covered.

5. ANALYSIS OF IMPACTS

5.1. The risk of flagging out and its link with competitiveness

Shipping has historically been a globalised industry. With a few exceptions, such as ferries and cabotage, world shipping operates with few barriers to entry. As both supply and demand for shipping is global, shipping companies compete directly with each other all around the world.

The globalised nature of the shipping industry manifests itself in a number of different ways but a key element is the legal regime for the flagging (and re-flagging) of ships, a process that has no direct equivalent in land-based industries. Shipowners have strategically chosen to fly another state’s flag for almost as long as there have been shipping records. Widespread use of such flags, however, came only with the decision by certain States beginning around the 1920s to create ‘open registries’, where ships were not required to have onerous ties to a state to register.

From the outset, the phenomenon of flagging out has been largely driven by the desire of shipowners to avoid the costs and restrictions associated with having their ships registered in the traditional maritime States. One of the main costs of operating a ship is the cost of paying crew salaries and other related costs. It is estimated that crew cost differences between selected EU flags and lower-cost open registry vessels range from +22% to +333%[52].

The risk of flagging out is thus directly proportional to the difference in the manning costs between the lower-costs countries and higher-costs countries. Therefore, it constitutes a good indicator of the impact which the policy options taken into consideration in the present document might have on the competitiveness of EU vessels.

It should be noted that the entry into force in August 2013 of the Maritime Labour Convention 2006 will approximate the working conditions on board ships throughout the world. The Convention establishes comprehensive minimum requirements for almost all aspects of working conditions for seafarers including, inter alia, conditions of employment, hours of work and rest, accommodation, recreational facilities, food and catering, health protection, medical care, welfare and social security protection. A detailed description of the provisions of the Convention can be found in Annex 4.

Directive 2009/16/EC[53] on port State control will also contribute to reduce substandard shipping in the waters under the jurisdiction of Member States. It is expected that it will ensure a level playing field at international level and reduce the encouragement to flagging-out.

European shipowners have made considerable use of non-EU registries: some 46% of the total EEA-controlled fleet is currently registered under third country flags[54].

The MRAG study calculates that the simple change of the county of registration has an annual cost around $14,000, i.e. around 10,000 euros per year. This concerns only the direct administrative costs (initial registration fee, and yearly fees paid to the new country of registration).

Nevertheless, the real costs of flagging-out, although difficult to monetise, include more elements than just the registration costs. It should be noted, for instance, that holding a flag of a Member State brings benefits, which are difficult to monetise but are important for shipowners. According to the MRAG study, the benefits are mainly the following: increased protection from EU naval forces, lower costs for insurance, market premium due to assurances of reliability and quality, better access and lower prices for loans and mortgages and higher prestige in the market attached to an EU flag.

In the present context, the benefits of any policy option have to be measured against this risk of flagging-out, which should be minimised. It must be avoided that an initiative aiming at improving the working conditions of European seafarers ends up as reducing not only their working conditions but also their safety. A high risk of flagging out associated with a policy option would mean that the perception of the negative competitive impact of that policy option outweighs the perceived benefits of flying the flag of a Member State. An actual flagging out would also trigger a further reduction in the number of EU seafarers. As a consequence, one of the objectives of the proposed EU action would be jeopardised.

5.2. The experience in Member States

As table 2 clearly shows, many Member States have chosen not to use the possibility to exclude or derogate seafarers from the scope of the Directives. This means that options 2, 3 and 4 are, to a certain extent, already applied in some Member States, notably some Member States with important maritime sectors.

In order to determine whether the application of the Directives had any measurable impact, notably on the flagging-out of vessels, the table in Annex 2 presents the evolution on the number of vessels and gross tonnage per Member States during a period of 10 years.

It should be emphasised that this evolution has probably been determined by factors other than the exclusions from labour law Directives. Those factors include trends and vicissitudes of national/global economies and the adoption of national measures aimed to boost the maritime industry (such as tonnage taxes and tax exemptions for seafarers). In consequence, for the purposes of the present exercise, it should be checked whether the exclusions from labour law Directives has prevented this kind of measures from producing their positive effects.

In Spain (where pro-shipping measures were introduced during this time-spam), the gross tonnage of the national fleet increased by 40.4% between 2001 and 2011. In France (where the same occurred), for the same period, the increase was 40.2%. Both France and Spain apply all the Directives (except the Posting of Workers Directive) to the maritime sector. On the other hand, in Greece, between 2001 and 2011, the gross tonnage of national fleet increased by by 34%. In Cyprus, between 2003 and 2011, the gross tonnage increased by 0.5%. Both Greece and Cyprus exclude the maritime sector from the scope of national law transposing the Directives.

In conclusion, the experience in the last decade does not corroborate the argument that the application of the Directives could lead to a flagging-out of vessels under third countries flags.

For the preparation of the present report, the Commission has requested Member States and social partners to help in identifying the impacts of their national law. A detailed questionnaire was sent to all Member states and to sectoral employers' and employees' organisations. The Commission services received replies from both sides of the industry and from 20 Member States (AT, BG, CY, CZ, DE, DK, EE, EL, ES, FI, FR, LT, LV, MT, PL, PT, RO, SE, SI and UK). The information received is detailed in the Annex dealing with the consultations of stakeholders (see Annex 3).

The replies can be summarized by underlying that Member States having made the option to apply the provisions of the Directives to seafarers are unanimous concerning the estimation that this does not appear to represent significant additional costs compared to on-shore companies. None of these Member States is aware of any negative impact, notably in case of the sale of a vessel.

On the contrary, Member States having made use of the exclusions and derogations unanimously argue that they should be maintained and that the application of the Directives to the maritime sector would have important additional costs. The Member States at stake do not give any indication as for the quantification of the additional costs.

This allows concluding that since the implementation of the Directives, the position of the Member States regarding the appropriateness of the exclusions has not evolved significantly.

5.3. Insolvency Directive

5.3.1. Who is affected by the exclusion?

Three Member States have excluded share fishermen from the scope of national law transposing the Directive: Cyprus, Greece and Malta. It should be noted that in Ireland and in the United Kingdom, the provisions on the protection against employers' insolvency are not applicable to share fishermen because they are considered by law and/or by an established case law as self-employed workers. Therefore, the suppression of the exclusion would have no impact on Ireland and the United Kingdom.

There are 26,386 workers excluded from the scope of the Directive, assuming that all fishermen in those Member States are share fishermen (it is therefore an overestimation).

The proportion of fishermen excluded from the protection granted by the Directive amounts to 16.7% of the total number of fishermen in Europe.

5.3.2. Economic and social impacts

In Cyprus, a special Fund has been created, which is managed by a Council consisting of members of the Social Insurance Department. When it was set up, the Fund received a payment of CYP 1,000,000 (approx. EUR 1,724,137) from the Redundancy Fund of the Republic of Cyprys and has since then been receiving monthly contributions from the employers at the rate of 0.2% of gross salaries paid to employees. According to the information received by Cyprus as response to the questionnaire there are currently 500 self-employed fishermen in Cyprus, which would be excluded from the scope of the Directive. Around 248 employees work in on fishing vessels from which 200 belong to the small scale fisheries and the rest of them to the sector of multipurpose fisheries

In Greece, Law 1836/1989 specifies that the Guarantee Fund is financed in part by employers’ contributions and in part by State subsidy from the Labour Ministry budget. Employers contribute with 0.15% of any remuneration paid. Based on the MRAG study, there are 30,196 share fishermen in Greece, which is overestimated as mentioned in paragraph 5.3.1.

In Malta, the Guarantee Fund is financed by the national budget (Consolidated Fund). It was initially endowed with the sum of MTL 250,000i, (EUR 579,722) to be paid out of the Consolidated Fund over a maximum period of five years, at a minimum rate of MTL 50,000 (115,944 euro). There is therefore no specific contribution from employers or employees.

None of these funds presently cover share-fishermen.

In conclusion, in view of the low number of workers concerned (and it is overestimated), the economic impact of the coverage of share fishermen is marginal. In Cyprus and in Greece, employers would need to contribute to the Guarantee Fund, but the contribution is low and the number of workers reduced. In Malta, in view of the reduced number of workers (1,303) concerned, the Guarantee Fund would probably need no reinforcement to cover these workers.

The exclusion of share-fishermen from the national provisions transposing the Insolvency Directive means that share-fishermen do not benefit from the guarantee of payment of any outstanding claims in case of employer's insolvency. There are no statistics on the number of insolvencies in the fishing sector or on the number of fishermen having benefited from the guarantee. There are no elements to suggest that this sector is different from other sectors on that matter.

European social partners, including the employers' organisation, of the fisheries sector are in favour of the suppression of the exclusion.

5.4. European Works Council Directive

5.4.1. Who is affected by the exclusion?

Nine Member states have made full use of this derogation, i.e., they do not apply any rule on information and consultation of employees to the merchant navy (see table 2).

The number of workers potentially excluded from the scope of national laws is 159,150, i.e., 48.3% of the total number of seafarers.

Taking into account that the Directive only applies to undertakings and groups with at least 1,000 employees within the Member States and at least 150 employees in each of at least two Member States, Member States having made use of the exclusion do not seem to host, at present, any company qualifying for the application of the Directive.

5.4.2. Economic and social impacts

In order to assess the possible additional costs of applying the EWC Directive to seagoing workers, the MRAG study has chosen two scenarios for illustrative purposes. The scenarios depend on the choice of the company and the availability, or not, if IT technologies, they are not an alternative left to Member States.

The first scenario assumes that one of the large European shipping companies based in Denmark (having more than 1000 workers and 150 in each of at least two Member States) has set up a EWC and is obliged to allow representatives of merchant navy crews to attend.

It is assumed that the EWC member is at sea when a meeting has to be held and is, for example, an officer (as more likely to be European) aboard a vessel about to land in Hong Kong then go to Shanghai.

- Flying back to Copenhagen for the duration of the meeting and then returning (EUR 2000 flight costs although the time during the meeting is not an additional cost since the individual would be spending this time at sea.);

- Flying a replacement to Hong Kong then returning from Shanghai (7 working days at EUR 3,500pm for an officer = EUR 816 and EUR 2000 flight costs)

- Management and administration of the swap-over at the company offices (2 working days at EUR 106 per day)

According to the MRAG study, the total of these costs would be around EUR 5028 per meeting per participant. Since the average number of annual plenary meetings (including both ordinary and extraordinary meetings) is 2, and that one of the two representatives would be probably on-shore, the annual costs would amount to EUR 5,028 X 2 = EUR 10056 per year.

The second scenario is based on the availability of communication by satellite phone. For a remote meeting by means of satellite phone the Euro 1.50 per minute rate would mean about EUR 500 for dialling into a EWC meeting that took most of the day. Since the participant would be attending in their own time owing to the responsibilities of seagoing duties they would need compensating by up to a day’s salary (the week's salary being EUR 816 a day's salary can be estimated at EUR 163), the total cost of remote participation would be EUR 663 per meeting per participant. As for scenario 1, this calculation of the costs needs to be adapted to the reality: average of 2 meetings and great probability that some of the participants are on-shore. The annual cost would then amount to EUR 663 X 2 = EUR 1326.

It is important to note that these costs spread over the company and not specific vessels. The companies to which these directives apply are by definition large companies. Thus, for example, Maersk Line of Denmark has more than 500 vessels but only needs to host one EWC. The costs estimated above can therefore be deferred over, say 500 vessels.

Taking into account that the Directive applies to companies having more than 1000 employees, that the number of personnel serving on a vessel is between 20 and 27[55] and the working time arrangements for seafarers, we can estimate that a maritime company qualifying for the application of the Directive has at least 25 vessels. Therefore, the costs amount to EUR 603 per vessel per year for Scenario 1 and EUR 79.5 per vessel under Scenario 2. In relation to the benchmarks for the risk of flagging out or increasing social costs within cost of operation, these are not significant.

In any case, it is important to underline that these are the costs for companies qualifying for the application of the Directive (+ 1000 employees) and not for all the companies.

Furthermore, it should also be underlined that not all companies that qualify effectively have EWC in place. According to ETUI database[56], there are 2424 companies that fit the criteria in terms of number of employees but only 931 (38.4%) currently operate an EWC. This is so because the introduction of EWC is not automatic but requires either central management initiative or a request from a certain number of employees.

It has proved to be more difficult to quantify benefits for shipping companies.

In the context of the review of the EWC Directive, some elements have been presented. For instance, where active, EWCs contribute to improving corporate governance in large transnational undertakings, a key factor for their competitiveness, and to reducing the negative consequences of unprepared restructuring for both the workers and the territories affected.

All employee representatives consider EWCs to be beneficial (EPEC 2008 survey[57]). Despite the financial and the other non-quantifiable costs of operating a EWC, 57% of the companies with a EWC accept that the benefits of having a EWC outweigh its costs (while 35% consider that costs outweigh benefits and 8% give no clear answer). The reason for this is largely the ability of companies to communicate information regarding company strategy and the rationale for certain decisions to employees, particularly in times of change.

Table 11: Views of involved parties on the benefits associated with the operation of EWCs (EPEC 2008)

|| Companies || Employees

Agree || Neutral || Disagree || Agree || Neutral || Disagree

Better ability to talk to employee reps from other countries || 88% || 4% || 8% || 96% || 0% || 4%

Better ability to talk directly to group management || 79% || 10% || 10% || 91% || 4% || 4%

Improved understanding of management decisions || 82% || 10% || 8% || 76% || 15% || 10%

Better exchange of information || 80% || 12% || 10% || 98% || 2% || 0%

Improved relations between management and employees || 76% || 22% || 2% || 63% || 17% || 20%

Increased trust || 63% || 29% || 8% || 61% || 20% || 20%

Better corporate culture at European level || 62% || 28% || 11% || 73% || 22% || 5%

More effective decision-making || 23% || 33% || 44% || 37% || 22% || 41%

Enhanced productivity || 0% || 38% || 62% || 19% || 46% || 35%

These benefits, although non–quantifiable, have very concrete impacts upon both workers and companies. For companies, they minimise the risks associated with social unrest in terms of the company’s public image as well as costs and delays, which far more than outweighs the operational costs of running a EWC. They reduce resistance to change, support adaptation on the part of workers, contribute to the building of an integrated corporate culture following mergers, convey qualitative root-level information about the company’s life to top management, and help in attracting and retaining qualified employees.

The employees’ representatives (ETF) are in favour of the suppression of the exclusion. On the other hand, the employer organisation (ECSA) is against the mere suppression of the exclusion and argues that a distinction could be made between seafarers away from home for long periods and seafarers away no longer than 48 hours.

5.5. Information and Consultation Directive

5.5.1. Who is affected by the exclusion?

The Directive does not allow Member States to exclude seafarers from the scope of their national law on information and consultation of employees, but only to deviate from the provisions of the Directive through specific provisions on the matter.

Four Member States (Cyprus, Luxembourg, Malta and Romania) have totally excluded seafarers from the scope of their national law, without providing for "particular provisions" on information and consultation. All the other Member States apply the general rules to them or have introduced particular provisions applying to crews of vessels plying the high seas, as allowed by the Directive (Germany, Greece, and the UK) (see Annex 6).

The total exclusion of seafarers is in contradiction with the text of the Directive and this should be dealt with by the infringement procedures, rather than by an amendment of the EU law. For the purpose of the present report, it will be assumed that Member States having excluded seafarers from the Directive will adopt particular provisions applicable to them.

The exact number of workers to whom the provisions of the Directive do not fully apply is impossible to identify since there is no statistical data on how many seafarers from the merchant navy and fishermen "ply the high seas". Furthermore, the directive applies only to undertakings with at least 50 employees or with establishments with at least 20 employees. Taking into account all seafarers and fishermen from the four Member States concerned, independently of the fact that they ply the high seas and irrespective of the size of the company, the universe of workers excluded would amount to a maximum of 94,649 seafarers, i.e., 19.5% of the total of EU27.

5.5.2. Economic and social impacts

Merchant Crews

Since this Directive does not allow Member States to exclude seafarers from the scope of national law transposing it, but only to lay down specific provisions on information and consultation, only option 3 could have an economic impact. In any case, this would be more a clarification of the substantive law already in place, rather than a modification of the law.

It can be considered that the scenarios available to enable the rights currently subject to derogation are the same as for those under the EWC Directive, namely the repatriation scenario with a replacement being fielded or the participation by sattelite with the workers private time compensated for. The