Workers’ rights and a level playing field at the OECD

The OECD Shipbuilding Committee held a workshop on 30 October on a global level playing field for the shipbuilding sector to ensure that global shipbuilding remains “balanced and competitive” and is not distorted through unfair state support or other factors.

The International Maritime Organization has set a target for shipping to be at net zero by 2050, and the organization will have to agree to midterm measures – a pathway to achieve this goal – at its meeting of the Marine Environment Protection Committee (MEPC 83) in April 2025.

This poses a challenge for shipbuilders, as there is no consensus on alternate fuels, and the trajectory is influenced by the decisions of major shipping companies to invest in a particular fuel. Many shipowners use LNG as a transition fuel, but this is not a green solution due to the high amounts of methane released.

Green fuels are expected to raise freight rates – the cost of shipping cargo from one place to another – by 80 per cent.

The biggest concern for OECD members was the rise of China as a shipbuilding superpower. Measured in gross tonnage, more than half the world’s ships are made in China. Chinese ships are produced with state support, distorting competition.

IndustriALL presented the workers’ perspective. For unions, the biggest factor that undermines a level playing field is workers’ rights and conditions. Unions agree that good practice includes:

• High safety standards
• Competitive wages and good working conditions
• Investing in a core workforce
• Providing training and entry routes into the industry
• Treating migrant workers and contractors equally

However, best practice is expensive. Companies and countries gain short term cost advantage by undercutting standards. Countries with strong unions are more likely to adhere to best practice, which puts them at a cost disadvantage. There is divergence within OECD countries, but greater divergence between OECD and non-OECD countries – particularly China.

China has the lowest labour costs for shipbuilding in the world – 7.4 times lower than in German. China has not ratified core ILO Conventions on freedom of association and collective bargaining, and the country has no free unions. It undercuts competitors because workers have no rights.

Addressing the meeting, Roy Houseman of the USW and Peter Greenberg of the IAMAW explained their unions’ decision to file a 301 trade petition with US government, arguing that state support, intellectual property theft and a lack of workers’ rights has allowed China to dominate. One of the relief measures proposed by the unions is a port fee on Chinese-made ships.

IndustriALL industry director Walton Pantland said:

“There is good will in the shipbuilding committee to uphold high labour standards. However, this is undermined by China’s failure to respect workers’ rights. The US unions have an interesting solution to this, but the labour movement needs to develop a global response.”

IndustriALL proposed convening an ILO sectoral technical meeting to reach agreement on best practice.