Some of the most important instruments for promoting the employment of highly qualified on-board personnel and for safeguarding Germany’s competitiveness as a shipping hub were to expire in 2021. First, this relates to the 100% wage tax deduction and the subsidies to reduce non-wage labour costs (reimbursement of employer social security contributions for seafarers). And, second, it also applies to the adaptation of Germany’s Safe Manning Ordinance to the EU standard. Given these circumstances, Germany’s Federal Ministry of Transport and Digital Infrastructure and VDR each commissioned its own study to independently analyse to what extant these measures are impacting Germany as a shipping hub. The consensus finding of both studies is that these measures are indeed useful – and should by all means be continued.
The package of measures aims to enable German shipping companies to employ highly qualified on-board personnel and to sail under the German and other EU flags under conditions similar to those in other EU shipping locations. Both studies examined in detail whether the measures have helped to reduce the “competitive disadvantage of the German flag”, as the the German Ministry of Transport put it, compared to other European flags in terms of personnel costs. The studies also aimed to ascertain whether the measures are helping to safeguard and promote the employment of German and European seafarers in the maritime transport sector in a way that lowers the risk of seeing Germany lose maritime expertise.
VDR commissioned the consulting firm PwC Germany to take a close look at the package of measures. Even before the outbreak of the coronavirus pandemic, PwC conducted its examination using relevant figures as well as in-depth interviews, including with multiple stakeholders from the maritime economy. Sixty-six German shipping companies also filled out a detailed questionnaire in full.
The key findings of the investigation were:
- The number of ships in the German merchant fleet has continued to significantly decline in recent years – as part of a lasting repercussion of the global economic crisis triggered by the bankruptcy of Lehman Brothers. The number of ships sailing under German flag has also decreased. However, the study also found that “the existing package of measures has succeeded in significantly stabilising the share of tonnage under German flag”. One can clearly see a slowdown in this negative trend, and there have actually been some positive developments, as well. For example, between 2016 and 2019, the proportion of ships registered in German shipping registers that also operate under German flag rose by three percentage points.
- It has also been possible to keep more or less stable the share of German seafarers or seafarers legally resident in Germany, and the number of vocational training places per vessel has even gone up. This shows that, despite the difficult situation, the efforts to safeguard the ship-operating expertise in Germany have succeeded. And this can be expected to continue thanks to the subsidies. For example, 78 percent of the surveyed shipping companies said that they would not have offered these training positions had it not been for the measures.