“Gentleman’s Agreement” and how they affect professional Canadian seafarers

handshakeOntario – “Yours to discover”

We were in port unloading, nearby, a well-known ship was in the dry-dock, getting repairs done. I thought to myself, what a great opportunity to dispel some myths, and have a look at this vessel, and perhaps “drop my name in”, as I had heard of the wages and conditions being “decent”. Once on board, I found the ship was not what I had imagined it to be. Regardless, it was a nice to see what’s going on elsewhere in the industry with my peers, and their working conditions.

Some of the engineers knew of me, and wanted to introduce me to the superintendent, who was on board, overseeing some of the technical work. In a world of “Human Resource” people being pretty much clueless as to what Marine Engineers do, and the value they bring to a ship, it’s always good to get a hold of the people who actually make hiring decisions, and have to live with them. This superintendent already knew of me and was happy to show me around.

When the conversation turned to work opportunities with “his” company, he asked me where I worked. I replied I worked at “X” company, then he dropped a bit of a bomb, “ahhhh, we have an agreement with your company to not poach engineers from them”. He said I would have to quit first, then maybe we could revisit he idea of hiring me, after some time had pass.

fat_catRight away, this raised some serious alarm bells in my mind, explaining allot about the “shortage” of Marine Engineers and the depressed wages and conditions that exist in Canada. How could two well-known Ontario based companies agree to not hire me? If one company has better wages and conditions, it is my individual right to go there, and seek better conditions for our family, isn’t that the cornerstone of the “free market” – capitalism, “supply and demand”.

I had heard of these subtle agreements in the past, on the west coast, conjectures, I had thought; but here I was, just being confirmed that by a senior manager.

 

Quebec – “Je me souvien”

More recently, an officer I know was getting a bit nervous about how he was going to satisfy his commitments to another company; I inquired, what do you mean? He tells me that he is only temporarily on board “Y” company’s ship, as company “Z”, where he worked for “before”, have “an agreement” with each other, to not poach each others officers.

I gathered from our discussions that there was considerable work done ashore in reaching an agreement for him to work on “Y” ship, but that he needed to go back to the “Z” ship when the arctic season re-opened. Again, this agreement was plainly restricting the officers’ ability to seek out preferable working conditions of his choosing, this time, between two Quebec companies.

Further east in Canada’s marine industry, companies probably do not require these agreements, principally due to the lack of competition, but is still ripe territory for companies to control wages, contrary to market availability. Newfoundland in particular, with its well-known policy to only hire local people, and rife with nepotism, is undoubtedly a highly suspect market in terms of competitive remuneration.

 

Big problem, as it turns out

“Anti-poaching” agreements are probably framed in a way that business is intuitively protecting its ability to function in times of limited supply of qualified seafarers. The reality is that they are limiting wages and conditions, plain and simple. If they are not force to compete for the short supply of workers, why would they improve?

Aren’t these agreements illegal? Commodities brokers and shippers are pretty quick to demands government action when shipping lines work together to fix rates,  restricting competition, increasing their cost. Major league baseball seems to have a long history of these practices, with the sole focus of limiting or even depressing player’s salaries.

Mr. Jobs and Mr. Schmidt - AFP Photo by Tony Avelar
Mr. Jobs and Mr. Schmidt – AFP Photo by Tony Avelar

A quick search reveals that that several large and mega profitable “tech companies” (Google, Apple, Intel, Adobe, Disney, Intuit, etc) have recently been challenged by the US government on these policies, of not “poaching” each other’s engineers, and other staff. In 2010, the US Justice department found evidence that the companies had agreed with each other to use hiring practices that restrict workers’ ability to find work elsewhere and better their conditions.

In Sept 2015, Google and Apple settled a class action lawsuit on the practice, brought about on behalf of 64,000 workers at a cost of $415 million US, other tech companies also settled. Meanwhile, just last month, Korean heavyweights, Samsung and LG, have been accused of a “no poaching employee” pact between themselves. In 2001, oil drilling firms settled a lawsuit for $75 million US, stating that they had fixed wages affecting 60,000 workers, over several decades. Even Nurses, who are highly trained and specialized workers, like Marine Engineer, and are in short supply, have fallen victim to these practices

 

Call a spade a spade

These “gentleman’s agreement” are known as colluding, or the act of collusion. In most jurisdictions it is a crime, albeit a challenging one to prove, but a crime nonetheless, against a group of people for the benefit of another.

Collusion is defined by Wikipedia as :

“ Collusion is an agreement between two or more parties, sometimes illegal and therefore secretive, to limit open competition by deceiving, misleading, or defrauding others of their legal rights, or to obtain an objective forbidden by law typically by defrauding or gaining an unfair market advantage. It is an agreement among firms or individuals to divide a market, set prices, limit production or limit opportunities. It can involve “wage fixing, kickbacks, or misrepresenting the independence of the relationship between the colluding parties”. In legal terms, all acts effected by collusion are considered void. ”

The Competition Bureau of Canada administers the the Competition Act and its enforcement. Although I could not determine any previous Canadian cases where collusion in hiring was challenged, the law could be applied both in criminal and civil action against employers found to be colluding in hiring policies.

Typically, a report or an allegation of collusion comes into a center where it is divided into classes of relevance to the Competition Act.

  • The first step may be a contractual dispute or the likes.
  • Second, collaborative agreements between employers could fall under Section 90.1, and be investigated and prosecuted by the “Monopoly Directorate”.
  • More important offenses, such a collusion, are investigated by the “Cartel Directorate” under Section 45.

The Competition Bureau has the same resources and investigative powers as the RCMP (national police). Under Section 29 of the Competition Act, terms of confidentiality by the government to whistle blowers reporting collusion are laid out.

Be that as it may, collusion is not right and has no moral merit, and is probably illegal under Canadian law; I encourage Canadian seafarers to shed light on the practice, and call it out, as it really is the only recourse we have. Unfortunately, this type of behavior by ship operators is not surprising, and has direct and negative impacts on our ability as seafaring professionals to seek out better terms and conditions of employment.

 

Supply and demand

Svitzer billboard near its competitor in Quebec City and Montreal - Healthy competition
Svitzer billboard near its competitor in Quebec City and Montreal – Healthy competition

Becoming a certified Marine Engineer in Canada is a long, expensive, complicated journey, full of individual sacrifices, which partly explains the shipping sector’s lament, that they are having a tough time finding “qualified individuals”. Companies say they are short of seafarers, most of my peers balk at this nonsense, one of the main reasons the industry is short of people, is because the “return on investment” is not worth the effort of the arduous certification process.

These collusionary practices would certainly explain, that, despite an industry lamented shortage, pay and conditions for certified Marine Engineers in Canada have remain largely stagnant for the last 20 years.

These “gentleman’s agreement” create an unhealthy work environment that is damaging to Canada’s shipping sector well-being, perpetuating low standards of remuneration and poor working conditions. These policies are certainly contributory to the low overall availability of Canadian seafarer, as cited by the very same companies engaged in these collusionary practices. Being able to switch employers is really the only option left to professional seafarers to seek better terms.

Canadian seafaring professionals, especially recent graduates, need to be aware of these policies, recognize it, and fight this collusion. Evidence suggests a current problem, with wide implications across Canadian shipping sector, and highly damaging to your future. Pass the word around, let your peers know, if you run across specific example, let me know, in confidence, or on The Common Rail, the forum area of www.dieselduck.net or submit a complaint to the Competition Bureau.

This article has 4 Comments

  1. Nice job Martin, this is an issue many of us have faced, and fighting stagnant wages and minimal raises (0.5% is not a “raise” we are loosing money with inflation). competition is important to be able to properly market ourselves. Thanks for putting it out in the open.

  2. Martin,
    Any substantial increase in pay I ever got was by changing company or industry segment. You are 100% correct in what you are writing here!

    Also, working in an office for awhile I can see the discussions among the HR people. – Disgusting..
    All the HR people I have spoken to are completely baffled by the much higher salaries the seafarers (senior officers, all crew is already foreign) have compared to the shore side employees, trying to explain to them the struggle and efforts involved with getting a high paying job on board a ship as a senior officer is something they never will understand. Instead they are working within their networks to actively prevent our jobs from being higher valued and often put someone down as not hireable because he have been unloyal and moved companies too many times in quest for better conditions…

    /Per

  3. An impressive share! I’ve just forwarded this onto a co-worker who
    had been conducting a little research on this. And he in fact bought me lunch because I stumbled upon it for him…
    lol. So let me reword this…. Thanks for the meal!! But yeah,
    thanks for spending the time to discuss this issue here
    on your site.

  4. What a great article Martin. You are absolutely correct when it comes to the various HR departments, some of the bs I’ve seen is to offer someone like myself that has a 2nd class a job as an oiler or be put through 3 major security clearances for 3 years have my files and certificates “lost” 3 times and then hear that they are desperate for engineers. Or and this was my favorite in last couple years, verbally agree to hire you for a 6 week contract and get to the ship and find out that I was scheduled for 16 weeks not 6 and when I tried to call the person in HR to complain they refused to even take my calls. Can you imagine these HR idiots ever working 12hrs/day 7d/wk for 16 weeks, not a chance!! While I understand the companies difficulties in getting engineers outright lying is to you in order to hire you is a great way to destroy all trust in these people. IMHO these HR people have no right to be hiring professional ships officers when they know absolutely nothing about the trade positions they are filling, In the past there was usually a Port Captain or Engineering Superintendent that made the final call on new hires so as to weed out the bad apples but the HR people took that away for themselves to control as they see fit.

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