First Port of Call: Payments, Benefits, and Employee Retention in the Maritime Industry
Tightness in the seafarer labor market has made retention particularly challenging. Eliminating late and inaccurate payments and providing benefit packages would go a long way toward fixing that.
Shachar Ben David| Feb 06, 2024
- According to a recent survey, 55% of seafarers changed employers at least once in the last three years.
- The maritime industry is lagging when it comes to workforce payments: 36% of seafarers claimed their salaries were not paid on time in 2023.
- Benefit packages are also rare: less than 20% of seafarers were offered medical insurance in 2023
- A unified workforce and payments platform with flexible payments options, global benefit packages, and guaranteed payments might be the answer.
Here’s an esoteric yet meaningful stat: between 2018 and 2022, the likelihood that the words “supply chains” will be mentioned during firms’ earnings calls more than doubled, rising from 30% to 61%. The main reason, of course, was the COVID-19 pandemic, which disrupted deliveries of consumer goods and international trade more broadly.
As the pandemic faded, trade volumes have bounced back. However, issues with global supply chains remain, leading to backlogs of cargo ships at ports across the globe. Most of these issues are caused by labor shortages in the maritime industry. And while crewing was an area of concern even before the outbreak of COVID-19, the pandemic has exacerbated the problem.
It starts at the top. According to the latest Manning Annual Review and Forecast report by global shipping consultancy Drewry, the industry’s shortage of ship officers has reached a record high. In 2023, the officer availability gap had widened to a deficit of approximately 9% of the international pool – a significant increase from the previous year’s 5% shortfall – and Drewry forecasts similar deficit levels until 2028.
The seafarer labor market’s tightness has made recruitment and retention particularly challenging. “There are not too many candidates out of work,” said Martin Bennell, managing director at Faststream, a shipping, maritime, and energy recruitment specialist. “Most people are moving around, so they’re probably gainfully employed, and their employer probably doesn’t want them to leave. We’ve never known a market like it.”
Lagging in employee welfare
The numbers confirm that the crew employment market has tipped in the seafarers’ favor. A recent survey by Danica Crewing Specialists, an international maritime recruitment and manning services provider, revealed that 55% of seafarers changed employers at least once in the last three years.
In the face of fierce competition for workers, employers must ensure their seafarers are treated well. Unfortunately, notes Danica’s report, the industry is still lagging in employee welfare. And that’s especially true when it comes to workforce payments:
- 36% of respondents, drawn from the worldwide crewing marketplace, claimed their salaries were not paid on time – a rise of 7% since 2021.
- 8% said they did not receive their salary in full.
- 5% of seafarers who changed companies in the past 12 months did it because they weren’t paid on time.
Late and inaccurate salaries indicate using an inadequate payment solution. Cross-border workforce payments require a specialized solution, like Papaya Global, that shifts the focus from “send date” (the date the money enters the payment rails) to “land date” (the date the salary must arrive in the worker’s bank account). This way, you can account for possible delays en route and avoid late payments.
Inaccurate payments are typically caused by relying on banks or payment service providers (PSPs) to pay global workforces. PSPs and banks deliver workforce payments via traditional rails, which are littered with hidden fees nibbling away at salary sums. That’s why Papaya Global established the world’s first workforce-dedicated rails, where all fees are known in advance, guaranteeing that workers receive every cent they are entitled to.
Benefits work wonders
Another thing maritime workers are entitled to – but don’t always get – is a benefits package. Less than 20% of workers were offered medical insurance in 2023, per Danica, who surveyed 6,228 seafarers. A company-supported pension plan is even rarer: less than 10% of seafarers were offered one last year. It is no wonder that a pension plan and health insurance were among the top five reasons for changing employers in the Danica survey.
Providing benefit packages for a global workforce is easier said than done. Going it alone means forming relationships with benefits vendors in different countries. Not surprisingly, most companies choose to avoid this complex process. Instead, they invest in a total workforce solution, like Papaya Global, whose core offering includes benefits administration for an international workforce.
Papaya’s in-house benefits experts can guide you through the maze of benefits regulations, help you figure out what is possible, and connect you with first-rate benefits providers across the globe. In addition, Papaya clients can offer their workers an employer-sponsored, customized health insurance plan, giving them access to medical, dental, and vision care in more than 160 countries – and, most importantly, fewer reasons to change employers.