Selective replacement of national by non-national seafarers in OECD countries and the employment function in the maritime sector

Abstract

Commonly, in the shipping industry of the developed Organisation for Economic Cooperation and Development (OECD) countries, national seafarers are progressively being replaced by non-national ones. The present paper aims to provide a model for this tendency. Our analysis is based on the assumption that when shipowners are called to make decisions concerning crew characteristics (such as crew composition and employment levels), they address themselves to two distinct seafarer markets: the domestic (seafarers from OECD countries, henceforth to be referred to as ‘national’) and the non-national (seafarers from other countries). Whilst workers of the first market are better examples in the field of ‘on-the-job-performance’ (in terms of efficiency and loyalty) than workers of the second, shipowners set their domestic employment rule with the view to maximize their profits facing wages and ‘on-the-job-performance’ from national and non-national seafarers alike. Thus, national seafarers are chiefly recruited as officers and the employment level of non-national seafarers are residual, formed thereafter. Our findings point out that the employment rule concerning nationals is negatively affected by the former's wages, and positively by the wage increases of non-national seafarers and by eventual increases of the differential between the ‘on the job performance’ of nationals and that of non-national seafarers of corresponding specialisation.

Acknowledgments

Elements of the present paper were presented in the 2007 IAME conference held in Athens. The author wishes to express his gratitude to the organizers and the participants for their valuable comments and suggestions. Also, the author would like to thank Prof. Helen Thanopoulou for her comments and suggestions on some earlier drafts, and Dr. Eleni Iakovaki for her valuable help proofreading the text.