Arguments for Maintaining Remuneration Differentials
Central to any argument over pay remuneration is the concept of justice. When conflicts arise in a society, principles of justice help determine what a society accepts as reasonable and fair. Campbell (1988) defines five criteria of justice that we can apply to the issue: moral desert; contractual entitlement (both referred to in the results section); equal shares; satisfaction of need/welfare; and maximising utility/efficiency. One of the most compelling and publicised criterion of justice for the payment for labour is an ‘equal share’. This entails that a worker ought to receive the same amount of pay as anyone else doing the same job. This criterion is founded on the intuitively appealing nostrums of equal pay for equal work and treating like cases alike (Campbell 1988). In the UK, the Equality Act (EA) 2010 enshrines the equality criterion: “… ‘equal work’, [meaning] work by one employee that is the same or broadly similar… it is the nature of the work that is important, rather than the job title or job description… [and] ‘work of equal value’ [meaning] the work one employee does… is assessed as of ‘equal value’ in terms of the demands placed on the two employees. … they can be regarded as of equal worth when looking at the training and skills necessary to do each job, the working conditions or the decision-making required” (ACAS 2015: p. 26).
However, the main difficulty with the principle of equal share is that no two cases are ever the same, and any criterion of justice which denies this fact of life is bound to be unconvincing (Campbell 1988). To overcome this difficulty, this criterion has often been modified to allow some flexibility. For example, there are “limited circumstances where an employer may act in a way which is discriminatory, but where it can objectively justify discrimination as ‘a proportionate means of achieving a legitimate aim’” (ACAS 2015: p. 20). In these cases, the onus is placed on the employer to defend any inequality of pay for workers performing the same job. If we apply this modification to the criterion of equal share—that there should be equal pay unless differentials can be objectively justified—there are four arguments that could be advanced for the remuneration differential observed in Scottish fishing vessels: relative differences in the cost of living; economic risk-sharing; labour abundance; and productivity. On the first argument, because of differences in countries’ cost of living, it is important to recognise that the purchasing power of a given amount of money differs when comparing the pay of workers who live in different countries. In other words, the same basket of goods and services costs different amounts in different countries even after adjusting for nominal exchange rates.Footnote 12 Based on the justice principle of ‘satisfaction of need or welfare’, this justice criterion entails that people be paid whatever they need to keep themselves and their families fed, clothed and housed. As Campbell (1988: pp. 85–86) points out, ‘Justice has inescapable and firm ties to the treatment accorded to those who fare worse in whatever social arrangements exist in a society… any theory of justice must, therefore, have regard to its implications for the most needy persons within a community’. In the case of international fishers on Scottish vessels, where their working status do not grant them permission to reside and spend in the UK, their financial needs would generally be lower than their counterparts residing in Scotland.
When the Scottish data on costs to vessels for hiring different migrant crews are adjusted to reflect purchasing power, statistical analysis found no significant differences in median pay between the crew under different contracts working in the same position (Table 3). The exception is for deckhands under crew share and those on agency contracts, where the welfare impact of vessels’ labour costs was significantly greater for agency contract crews (Md cost to vessels is £2316 for agency fishers compared to £1850 for crew share fishers). So, if it is assumed that international fishers spend their money in their country of origin, there is no difference in the welfare impacts of vessel costs: there is purchasing power parity between them and Scottish crew.
However, this analysis needs to adjust for the share of agency contract pay that would be taken up by agency fees, which in some instances could generate significant differences. Given a lack of reliable data on agency fees, we are unable to make these adjustments and identify this need as an area for further research. A further theoretical difficulty with this approach is that it pays people according to their needs rather than their contributions. On this basis, a person with many children could be paid more than a childless person, irrespective of his/her work output. Moreover, with this criterion of justice, how do we fairly measure what people need? As Campbell (1988: p. 195) points out, ‘the concept of need is… so open-ended that it admits of almost any practical deployment…’ and what can be considered a want in one place could be classified as a need in another. So whilst this principle is widely supported and applied when making pay comparisons (World Bank International Comparison Programme), it remains problematic especially in transnational/trans-boundary spaces such as the marine environment. For example, country of origin may not be a reliable comparator since international fishers may have different financial responsibilities in a range of locations. Currently, there is limited understanding about international fishers’ financial demands and living expenses, which are likely to be compounded by expenses associated with living away from home and additional burden to families because of the absent member and incidental expenses. Further research is required to understand such pressures on international fishers especially to increase transparency on costs to workers for accessing maritime employment.
The second modified equality argument for keeping pay differentials is economic risk-sharing. This takes into account that profit sharing or crew share workers are exposed to greater economic risks than contract workers. For example, if a fishing vessel lands no fish, workers on crew share get nothing, whilst their counterparts on contract would receive their full pay. The risk-sharing characteristic of these arrangements explains why they are predominantly used in natural resource-based sectors like fishing and farming where the value of production is vulnerable to a wide range of external shocks. An argument could therefore be made that workers on crew share arrangements should be rewarded more for the services of their labour as a premium to compensate them for sharing risks with the vessel owner (Weitzman and Kruse 1990). This is linked to the principle of ‘moral desert’ where if someone takes more risk they deserve more reward.
Whilst the risk argument appears convincing, a key question here is does the risk deserve the reward? As Sterba (1974: p. 1) suggests, ‘while everyone agrees that justice, almost by definition, is giving people what they deserve, there appears to be little agreement concerning what it is that people deserve’. In this case, all crews’ members are exposed to the same substantial risk of working at sea in dangerous conditions and those on deck often more so. In practice, the potential economic risks of low catches and therefore low wages are minimal compared to the actual daily risk of operations, especially given the fact that vessels are unlikely to operate for long if fish cannot be found.
The third modified equality argument for keeping pay differentials between crew share and contract crews is the abundance of labour in markets supplying the Scottish fishing industry. The price paid for labour tends to be low in countries where labour is more abundant and wages reflect rates of pay in the said country. For example, Freeman and Oostendorp (2000), using the Occupational Wages Around the World data, found that ‘[w]ages in the same occupation vary greatly across countries measured by common currency exchange and measured by purchasing power parity’. A good proxy for assessing the abundance of labour in a country is the national minimum wage, since it indicates the extent to which society is willing to ration employment relative to the size of its labour supply.Footnote 13 Data from the ILO (Table 4) show that the minimum wage set for the UK labour market is significantly higher than that set in all the countries supplying crew to the Scottish fishing industry. Filipino and Indonesian crews receive 11.5% and 7%, respectively, of the UK national minimum wage in their home country, whilst Ghanaians and Sri Lankans receive 3% of the UK national minimum wage in their home countries.
This argument is based on the principle of ‘contractual entitlement’, given that the majority of fishers appear willing to sign contracts for less remuneration than the UK minimum wage, but for significantly higher remuneration than their home country minimum wage. However, the difficulty with this argument is that individuals might be willing to sign contracts that pay them much less than others, due to desperation, misinformation or misunderstanding. Without oversight, contractual entitlement lacks transparency over what is being signed or consented to. As Campbell (1988: p. 121) notes, such contracts raise questions ‘about the involuntariness of the exchanges through duress, ignorance or mistake’ as well as concern that labour rights enshrined in different treaties may inadvertently be waived through contract. How non-coercive power plays into ‘contractual entitlement’ is an important explanatory variable. Further research is required to understand how relations of dependency and power influences justices claims and how current structures around accessing international labour impact on peoples ‘free’ choice.
The fourth modified equality argument for keeping pay differentials is linked to the distributive justice claim of ‘utility-maximisation and efficiency’. This entails that people be paid according to their economic value to their employer. The rationale behind this criterion is that if differential pay is necessary in order to maximise total utility, then people who are valued as contributing more to that utility should be paid more (Campbell 1988). The standard economic argument here is that workers receiving a fixed wage have less incentive to work hard than workers in profit-share employment, because for the latter, the less they work the less they earn (Kruse 1992). This argument concludes that in the case of the fishing industry, workers on crew share are perceived to be more productive and efficient than their counterparts on wage or fixed pay arrangements (Weitzman and Kruse 1990) and should be paid more as a result.
However, the difficultly with this approach is that it awards pay to people on the basis of a criterion (productivity) that may have little to do with them (and their performance) and all to do with external circumstances beyond their control. More widely, utility-maximisation seems to justify injustice, since it is ‘compatible with the many gross inequalities which are routinely denounced as unjust’ (Campbell 1988: p. 129). It turns workers into commodities, ignoring the fact that people have different motivations to work hard beyond money, and “permits the ‘victimisation’ of minorities whose sufferings can be outweighed by the increased pleasures [or benefits] these sufferings bring to others” (Campbell 1988: pp. 129, 141). In addition, qualitative data from the 2013 Scottish Sea Fisheries Employment report (Marine Scotland Science 2014) contradict the argument. Interviews with skippers reported international fishers as reliable and hard-working, expressing that ‘local crews are not reliable, foreign crews are’, ‘foreigners work all day’; ‘Filipinos are amazing workers’ and ‘All foreign crew. Very reliable – sober, drug free and willing to do whatever is asked’ (2014, pp. 33–42).
Arguments for Removing Remuneration Differentials
There are five arguments for removing remuneration differentials. These are (1) international fishers’ dissatisfaction at wage differentials; (2) the role and practices of international employment agencies; (3) public pressure to reduce differentials; (4) advocacy of living wage policies; and (5) national versus global justice. The first argument for reducing wage differentials is that differentials can cause considerable dissatisfaction and unhappiness to international fishers. As Couper et al. (1999: p. 47) argues in relation to the internationals shipping and fishing industry ‘complaints are received regularly from seafarers who are receiving less pay than others on board their ship by virtue of their race’. This argument rests on the premise that ships and vessels are social spaces within which social and cultural orderings of class, race and gender operate (see Pearson 2009; Peters 2010; Steinberg 1999; Worden 2009). Differential pay within a work place affects the material and psychological well-being of crews and may heighten the risks of further exploitation, discrimination and marginalisation due to uneven relationships of power on board (Sampson 2003; Sampson and Zhao 2003; Sampson and Schroeder 2006; and Alderton and Winchester 2002). The negative impact of differential pay on levels of worker satisfaction and happiness is a strong justification for removing wage differentials and imposing the principle of equal shares.
The second argument for reducing remuneration differentials relates to the role of international labour recruitment agencies. Agencies appear to base seafarers’ market value on what they are willing to work for, reflecting the supply country’s unemployment rate, rather than what businesses are willing to pay, reflecting the demand country’s unemployment rate. This situation, which is known as monopsony power, does not allow for an accurate reading of the true value of labour in the global market because workers from countries with higher levels of unemployment generally lack the power to bargain for higher pay. Unions have been credited with negotiating higher rates of remuneration for seafarers from some countries. For example, Ruggunan (2011: p. 78) argues that unionisation has led to pay and conditions for Filipino seafarers on merchant vessels remaining fairly high, yet Filipinos are paid less than the ITF rate and South Africans are paid the ITF rate because ‘national unions… are able to negotiate their wage rates to make their members more attractive to prospective employers’ (Ruggunan 2011: p. 93). So whilst unionisation might reduce the pay differential for some nationals working in the fishing industry, it may not do so for others, whose unions are not as effective in lobbying their cause. In some cases, there are also examples where international fishers have taken financial risks and become indebted to recruitment agents, known as debt bondage, where they have had to raise capital to access overseas work in the first place (Couper et al. 2015). This is classed as an abuse of human rights and a form of modern slavery (United Nations Human Rights Commission 2016).
The third argument for reducing wage differentials is that public pressure is increasing to do so. In addition to industrial influence, the ‘public’ can and are increasingly exerting their influence in matters of employment and human rights and what is viewed as reasonable and fair. Increasingly, it is stated that consumers expect seafood to be sustainably sourced (MSC 2016), and more recently, this expectation has begun to include what society perceives as morally acceptable labour practices. Social and ethical issues on the sustainability agenda have lagged behind environmental issues (Kittinger et al. 2017), but during the past few years, there has been a flurry of supply chain activities launched, some of which focus on preventing cases of worker abuse (Plant 2015). For example, seafood suppliers and major retailers in the USA and UK have begun to take action to reduce the risk of forced labour in their supply chains, following several high-profile cases on board fishing vessels in Thailand (Hodal and Kelly 2014). This has intensified public scrutiny on many fishing nations (Couper et al. 2015). Negative media exposure has raised consumer consciousness, putting pressure on the supply chain to share intelligence and coordinate communications to ensure a collective voice is heard by countries where labour abuses and exploitative pay are found (Plant 2015). In the UK, under the Modern-day Slavery Act (2015) and in Scotland under the Trafficking and Exploitation Act (2015), businesses with a net turnover over £36 million are mandated to ensure their supply chains are free from labour abuse. This is a reason for arguing that it is in the economic self-interest of fishing companies to reduce wage differentials in order to ensure they comply with exploitation legislation and thereby avoid losing the respect and trust of their customers. However, it is also worth noting that some commentators argue that price is still the over-riding factor determining consumers’ buying decisions (Seafish 2015), and there is a discrepancy between what consumers say and what they will do, to put pressure on suppliers. So how influential this movement will be in reducing inequality in the fishing industry is far from clear.
The fourth argument for reducing wage differentials in this case study relates to the shift from the minimum wage to the living wage, which is central to the Scottish Government’s employment policy. This argument, which invokes the contractual entitlement criterion of justice to counteract a modification of the equality criterion, points out that the Scottish Government advocates not only the national minimum wage, but also the national living wage to tackle issues of low pay and inequality (Living Wage Accreditations 2016). The living wage is justified because low pay is one of the three main drivers of in-work poverty, and there is evidence to suggest that the benefits of the living wage are not only to employees but also to employers through increased productivity, reduced absenteeism and improved staff morale (Scottish Government 2016). Although legally, international fishers live and work outside UK territorial waters, it is difficult to argue that non-EEA crews on contracts to Scottish vessels do not contribute significantly to Scottish businesses and the Scottish economy (Curtis 2016), which is a key criterion used by Her Majesty Revenues and Custom (HMRC) for imposing taxation regulations. If international fishers can be classified in this way for taxation, they should equally qualify for the range of contractual arrangements offered to UK and EEA fishers which would be governed by minimal wage standards and potentially the living wage.
The fifth argument for reducing wage differentials follows on from the fourth, asserting that whilst national justice often trumps global justice in its application, domestic principles of fairness and equality should be promoted and supported not just nationally but across transnational boundaries to promote more universal standards. Attempting to influence universal justice claims is not without its difficulties given justice claims vary so much across the world, but in cases where workers are living and working across national borders, domestic expectations of fairness should invoke international or transnational protections. Forced labour is a comparatively well-defined issue that countries and the international community may be able to deal with through international law. However, fair labour is much less well defined and globally more challenging to audit (Aldana 2011). This variation of national norms on migrant labour conditions complicates but should not deter attempts to evaluate the fairness of any particular case, such as the case in Scotland. The argument here is that Scotland should not adopt the standards of Asia or Europe, but should try to influence international frameworks for fair labour with the labour standards that it affords to Scottish citizens. Given the challenges in monitoring, reviewing and resolving international variations in remuneration, Scotland’s national policies on pay and working conditions should be given priority in the first instance, and steps should be taken to work with other governments to bring about an integrated framework for equal payment for international seafarers.