Annex E: De Minimis Assessment (DMA) implementation of the MLC 2006, amendments 2022
Published 10 December 2024
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| Department: | Maritime and Coastguard Agency |
|---|---|
| Name of measure: | Maritime Labour Convention 2022 Amendments |
1. Please provide evidence supporting the consideration and discounting alternatives for regulation
This policy option of implementing the amendments to the Maritime Labour Convention (MLC) 2022 through regulation is the preferred option. A non-regulatory option has been considered, providing guidance instead of implementing the amendments. However, this would not be the best outcome, as there could be reputational damage to the UK, whilst policy aims would not be achieved.
The regulations are expected to be a cost to business with an equivalent annual net direct cost to business (EANDCB) of £2.8m (2019 prices, 2020 present value). However, there will also be reputational and welfare benefits which have not been non-monetarised.
2. Please provide consideration of any relevant past evaluation (including PIRs)
There are no previous evaluations or post implementation reviews available.
3. Please provide an assessment (or estimate) of direct business impacts (EANDCB) justifying the application of de minimis
The equivalent annual net direct cost to business (EANDCB) is anticipated to be £2.8m in the central scenario (2019 prices, 2020 present value), which is within the EANDCB threshold for a de minimis assessment (DMA) of +/-£10m. The estimate for the high scenario is £4.4m, which shows that the policy is unlikely to exceed the de minimis threshold.
The policy is not controversial and is not likely to have disproportionate impacts on specific groups, including small or micro businesses. This regulation therefore meets the criteria for a DMA.
4. Please provide a short qualitative summary of the wider impacts on the new regulatory scorecard
Though there will be no costs anticipated to the Maritime and Coastguard Agency (MCA), as the compliance checks will be absorbed into existing inspections, there will be a positive impact to the public sector as there may be a non-monetised benefit of protection of the reputation of the UK flag and improvement to working conditions for seafarers on UK flagged vessels.
All other marginal impacts will be direct and indirect costs and benefits to business and non-monetised benefits to firms and seafarers. Where proportionate, these costs have been monetised, otherwise they have been assessed qualitatively. No impact on the environment or the safety of personnel or vessels are anticipated as a result of this policy.
Evidence base
Problem under consideration, with business as usual, and rationale for intervention
Problem under consideration
The International Labour Organization’s (ILO) Maritime Labour Convention, 2006 (MLC) sets out minimum requirements for living and working conditions for seafarers. It was adopted in 2006 and came into force internationally in August 2013. The MLC was designed to be regularly reviewed to ensure that it is updated to remain relevant and effective. If the UK does not implement the four 2022 amendments which have been noted as requiring UK legislative change, shipping companies would potentially face misalignment of standards when operating internationally when assessed through Port State Control inspections, with increases in foreign port costs.
Rationale for intervention
Given the international nature of the shipping industry, it is considered that effective international standards are needed to address the varying employment conditions across the industry, and to provide decent working conditions and a level playing field for ships of different flags. MLC aims to provide minimum rights for all seafarers that are globally applicable and uniformly enforced.
Without international minimum standards, there is an information asymmetry, where seafarers and governments are not aware of the standards across the different ships operating. There is also a market failure on the basis of welfare, where seafarers may face poor working conditions without intervention through regulation.
There are also potential market failures through negative externalities due to poor working conditions having an implication on safety. If seafarers cannot conduct their jobs to their best ability, due to poor health, fatigue, or other issues, there is an increased risk of injury, accidents or incidents which could, for example, result in marine pollution.
Failure to implement the MLC amendments would mean that the government would fail to meet its international obligations. This could also have implications for ships who could be detained at international ports, incurring additional costs. This would therefore be an example of government failure.
Policy objective
The purpose of the MLC 2006, amendments 2022 is to promote decent living and working conditions for seafarers globally and an international level playing field for shipping as part of the UK’s implementation of the MLC by:
(a) bringing UK legislation into line with the minimum global standards for recruitment and placement services, social connectivity and balanced food, and
- this will be measured by monitoring how the UK brings legislation into line with its international obligations under the MLC and the associated standards for recruitment and placement services, social connectivity and balanced food requirements. Evaluation will also take place through the internal Post-Implementation Review process. Consideration will also be given to whether the UK and other member states have implemented amendments in a similar manner and within comparable timescales.
(b) fully complying with MLC standards under UK international obligations as a ratifying country, and
(c) under Article 22 of the ILO Constitution reports are periodically requested from States which have ratified ILO Conventions. The UK will continue to evaluate progress at regular intervals in order to complete these returns as requested by the ILO. enforcing these global minimum standards on non-UK registered ships that call at UK ports.
- the UK will incorporate these amendments into its Port State Control inspection work and compliance of non-UK registered ships that call at UK ports will be assessed.
Indicators of success would include reporting of improved social connectivity, improved diets of seafarers, improved retention and recruitment of seafarers, as well as compliance of MLC standards on UK ships as well as on non-UK registered ships that call at UK ports.
Description of options considered
Three options have been considered.
Three options are considered in the impact assessment:
Option 0: do nothing
In this option, the MLC amendments would not be implemented by the UK. Under this option, the objectives of ensuring that seafarers working on UK flagged vessels and non-UK flagged vessels in UK waters are afforded the full protection of the MLC would not be met. Furthermore, the objective of the UK meeting its international obligations would also not be met.
Option 1: address the MLC amendments through regulation
This would amend the existing regulation of the MLC 2022, and this is the preferred option. The objectives are specific (as explained in section 3) measurable (via a post implementation review), achievable (via an amendment to MLC), relevant to the industry, and timely. The objectives of improving seafarer conditions and maintaining the UK’s reputation as a strong maritime state, would be achieved under this option. This will be measured via outcomes from MCA inspections on compliance and stakeholder engagement.
Option 2: user guidance
This option would address the MLC amendments without the use of regulation through guidance. However, this is not the preferred option as guidance alone would not place a requirement on companies to comply with the MLC. The objectives of improving seafarer conditions and maintaining the UK’s reputation as a strong maritime state, would not be fully achieved under this option.
Therefore, Option 1 is the preferred option, which is taken ahead, as it is the most effective way of meeting the objectives.
Summary and preferred option with description of implementation plan
Option 1, address the MLC amendments through regulation was identified as the preferred option as it is most likely to mee the policy objectives.
This is the only option costed in the analysis below, as the costs would be the same in Option 2, but with lower benefits overall due to lower levels of take up.
Option 1 is the lowest risk option, with minimal risk of uncertainty or misinterpretation compared to the less formal guidance option in Option 2.
NPSV: monetised and non-monetised costs and benefits of each shortlist option (including administrative burden)
The following costs and benefits have been identified.
Monetised costs and benefits
Implementation costs.
Transition costs:
- familiarisation costs to businesses (direct cost to business)
- familiarisation costs to seafarers (direct cost to households)
Ongoing costs:
- cost of providing internet access on vessels (direct cost to business and indirect cost to households)
Non-monetised costs and benefits
Benefits:
- reduced time to clarify and find the relevant compensation information, for both firms and seafarers.
- increased certainty for seafarers and firms.
- increased seafarer welfare.
- reduced risk of detention in a Port State Control inspection.
- social connectivity for seafarers as a result of internet access.
- improved seafarer recruitment and retention.
- increased access to training as a result of internet access on board.
- improved retention and improved productivity as a result of improved seafarer wellbeing.
Analysis is Green Book compliant, using a 3.5% discount rate where present value years are required. A 2023 price year is used unless otherwise specified, and prices are adjusted using Transport Analysis Guide (TAG) GDP deflators, v1.22, November 2023. The implementation year is 2024, and a standard ten-year appraisal period is used.
Note that the numbers in the tables are rounded to the nearest 1p, and therefore the totals may appear inconsistent with the table inputs. This is due to rounding.
Vessels in scope
The scope of these amendments is UK-flagged seagoing vessels other than pleasure vessels, fishing vessels, warships and naval auxiliaries, or vessels which do not ordinarily engage in commercial activity. Data has been provided by the Maritime and Coastguard Agency on coded vessels (5,415) and yachts (30), IHS World Fleet data for UK flagged vessels (390) resulting in a total UK merchant fleet estimate in 2022 of 5,835. A +/- 20% assumption has been used to account for some uncertainty in vessel numbers.
The annual growth in the UK merchant fleet and the number of new vessels joining the UK flag each year are in the table below. The growth estimate and rate of new vessels joining estimate is provided by the Department for Transport, using IHS World Fleet data for UK flagged vessels.
Table 1: Fleet growth assumptions
| Low | Central | High | |
|---|---|---|---|
| % growth of UK merchant fleet per year | -3.28% | -2% | 0% |
| Average number of new vessels joining the UK flag per year | 280 | 350 | 420 |
Estimated using flag data 2018 to 2022.
Costs and benefits
Each amendment will be considered and costed separately, and then combined for a final total cost estimate.
- Standard A1.4 - recruitment and placement
In the preferred option, employment agencies must ensure that seafarers are informed of their rights under the established system of protection. Several costs have been identified with this policy change, including familiarisation costs and implementation costs.
Direct costs
Familiarisation costs for firms
For each firm, it is assumed that each firm has one manager in logistics, warehousing and transport review the regulations. A low, central, and high scenario has been used to account for uncertainty. Due to the minor nature of the change, the familiarisation time is expected to be low.
All wage costs are uplifted by 26.5%, in line with TAG guidance (Unit A4.1 Social Impact Appraisal) to produce a labour cost.
Table 2: Familiarisation assumptions for firms for recruitment and replacement (rounded)
| Low | Central | High | |
|---|---|---|---|
| Hourly labour cost for manager in logistics, warehousing and transport | £16.55 | £22.71 | £26.35 |
| Number of firms in scope | 100 | 110 | 120 |
| Hour per manager of familiarising | 0.5 | 1 | 1.5 |
| Total cost (rounded to nearest £1) | £827 | £2,498 | £4,743 |
There are an estimated 100 firms or seafarer employment agencies. A +/- 20% range has been used to allow for some uncertainty.
Using the assumptions set out above, the familiarisation costs for business are anticipated to be between £827 and £4,743, with a central estimate of £2,498 (2022 prices, rounded to nearest £1) in the year 2024.
Familiarisation cost for seafarers
For seafarers, a small familiarisation cost is assumed for seafarers to familiarise themselves with the new documentation. The labour cost is assumed to be the average of two ASHE categories, ‘marine and waterway transport operatives’, and ‘ship and hovercraft officers’. A low, central, and high scenario has been used to account for uncertainty. Due to the minor nature of the change, the familiarisation time is expected to be low.
The 2014 impact assessment for recruitment and placement estimated that 7,000 to 8,500 seafarers were using UK recruitment and placement agencies. This data is not held and was obtained by stakeholder engagement. For this impact assessment, the number of seafarers has been estimated by assuming the growth in the number of seafarers on the UK flag is consistent with the growth of seafarers impacted.
Table 3: Familiarisation assumptions for seafarers for recruitment and replacement (rounded)
| Low | Central | High | |
|---|---|---|---|
| Hourly labour cost for seafarers | £20.17 | £25.21 | £30.25 |
| Number of seafarers in scope | 5,000 | 6,300 | 8,500 |
| Hour per seafarer of familiarising | 0.5 | 1 | 1.5 |
| Total cost (rounded to nearest £1) | £50,599 | £159,629 | £387,735 |
Using the assumptions set out above, the familiarisation costs for seafarers are anticipated to be between £50,599 and £387,735, with a central estimate of £159,629 (2022 prices, rounded to nearest £1) in the year 2024.
Implementation costs
There is a one-off implementation cost for firms amending documentation and notifying seafarers.
Table 4: Assumptions for one-off implementation cost (rounded)
| Low | Central | High | |
|---|---|---|---|
| Hourly labour cost for manager in logistics, warehousing and transport | £16.55 | £22.71 | £26.35 |
| Number of firms in scope | 100 | 110 | 120 |
| Hour per manager of familiarising | 3 | 5 | 7 |
| Total cost (rounded to nearest £1) | £4,964 | £12,489 | £22,134 |
There are an estimated 100 firms or seafarer employment agencies. A +/- 20% range has been used to allow for some uncertainty.
This results in a cost to business of between £4,964 and £22,134, with a central estimate of £12,489 (2022 prices, rounded to nearest £1) in the year 2024. This does not change the current entitlement to compensation. However, the increased clarity could lead to increased claims of compensation. This would impact the EANDCB, but the net present value would not be impacted as it would be a transfer between firms and seafarers.
This is a potential direct cost of the policy change, and this has not been monetised due to uncertainty about the number of compensation claims currently made, the potential increase, and the average size of compensation payouts. More information on this will be sought out as part of the post implementation review through stakeholder engagement. Further information will also be sought at consultation.
Indirect costs
No indirect costs are anticipated as a result of this policy. This does not present a new or extended duty to firms or to seafarers.
Benefits
An unmonetised benefit will be reduced time to clarify and find the relevant compensation information, for both firms and seafarers.
- Standard A2.5.1 – repatriation
Under the MLC, there is a requirement on governments to ensure that when seafarers are stranded on ships when abandoned or brought into abandoned situation, arrangements are made to ensure that they continue to receive their entitlements. This not a new or extended duty and is a clarification of existing requirements.
A familiarisation cost has been estimated for firms. No further costs are anticipated.
Table 5: Familiarisation assumptions for firms for repatriation (rounded)
| Low | Central | High | |
|---|---|---|---|
| Hourly labour cost for manager in logistics, warehousing and transport | £16.55 | £22.71 | £26.35 |
| Number of firms in scope | 4,549 | 5,686 | 6,823 |
| Hour per manager of familiarising | 1 | 2 | 3 |
| Total cost (rounded to nearest £1) | £75,265 | £258,221 | £539,373 |
Using the assumptions set out above, the familiarisation costs for business are anticipated to be between £75,265 and £539,373, with a central estimate of £258,221 (2022 prices, rounded to nearest £1) in the year 2024.
Benefits
No monetised benefits have been estimated for this analysis. A potential non-monetised benefit is increased certainty for seafarers and firms.
- Standard A3.2 – food and catering
Under the amendments to the MLC, meals must be “balanced” in addition to the existing requirement that meals should be varied and nutritious. This is a minor change, with little impact expected. This impact applies to UK flagged merchant vessels. Industry nutritional guidance already existed, prior to the 2022 Amendment, within MSN 1845 Food and Catering; provision of food and fresh water within Annex 1(3).
Two costs have been identified with this amendment, including familiarisation costs and implementation costs.
Direct costs
Familiarisation costs
For each firm, it is assumed that each firm has one manager in logistics, warehousing and transport review the regulations. A low, central and high scenario has been used to account for uncertainty. Due to the minor nature of the change, the familiarisation time is expected to be low.
Table 6: Familiarisation assumptions for food and catering (rounded)
| Low | Central | High | |
|---|---|---|---|
| Hourly labour cost for manager in logistics, warehousing and transport | £16.55 | £22.71 | £26.35 |
| Number of firms in scope | 4,549 | 5,686 | 6,823 |
| Hour per manager of familiarising | 0.5 | 1 | 1.5 |
| Total cost (rounded to nearest £1) | £37,643 | £129,111 | £269,686 |
Using the assumptions set out above, the familiarisation costs for businesses are anticipated to be between £37,643 and £269,686, with a central estimate of £129,111 (2022 prices, rounded to nearest £1) in the year 2024.
Implementation costs
There will be cost as firms review their menus to implement the guidance. This is also anticipated to be a one-off cost to account for the change to the guidance as, beyond the first year of implementation, firms will take the new requirement into account as part of their existing menu review process. Implementation costs are assumed to be one-off and incurred in the implementation year. It is assumed that each vessel would have one ship’s cook review the menu in response to this policy change. There will be a wide range of arrangements for, and levels of, catering on board ships in the UK fleet. In the absence of data on this, we have used a standard cost across the fleet.
Table 7: Implementation cost assumptions for food and catering (rounded)
| Low | Central | High | |
|---|---|---|---|
| Hourly labour cost for a ship’s cook | £12.50 | £14.88 | £15.83 |
| Number of vessels in scope | 4,668 | 5,835 | 7,002 |
| Hours reviewing the menus | 1 | 2 | 3 |
| Total cost (rounded to nearest £1) | £58,342 | £173,608 | £332,423 |
No additional ongoing implementation cost for the changed menu is assumed in the analysis, as ships’ cooks do not need to buy more or more expensive food and can instead substitute to items which provide better balance or use the same ingredients in different combinations. There are many ways in which ships’ cooks can meet the requirements for food standards.
Using the assumptions set out above, the implementation costs are anticipated to be between £58,342 and £332,423, with a central estimate of £173,608 (2022 prices, rounded to nearest £1) in the year 2024.
Benefits
The benefit of this policy would be due to increased seafarer welfare. This has not been monetised.
The Seafarers Happiness Index, produced by the Mission to Seafarers, asks “How happy [are you] about the food on board?”in their quarterly reports. Food is often raised as an issue in these reports, including variety, cultural and nutrition concerns. The latest report (Q1 2023) raised the quality of food given the impact of food inflation. This policy will help to ensure seafarers receive balanced meals.
- Appendix A2-I - evidence of financial security
In the preferred option, abandonment and security documents may be in the name of registered shipowner name if differs from ship owner. The costs identified in this policy option are familiarisation costs only. P&I clubs already issue insurance to the registered owner, therefore no additional paperwork is required for businesses. The UK already accepts this, and therefore there is no anticipated cost to business.
Direct costs
Familiarisation costs
For each firm, it is assumed that each firm has one manager in logistics, warehousing and transport review the regulations. A low, central and high scenario has been used to account for uncertainty. Due to the minor nature of the change, the familiarisation time is expected to be low.
Table 8: Familiarisation assumptions for financial security (rounded)
| Low | Central | High | |
|---|---|---|---|
| Hourly labour cost for manager in logistics, warehousing and transport | £16.55 | £22.71 | £26.35 |
| Number of firms in scope | 4,549 | 5,686 | 6,823 |
| Hour per manager of familiarising | 0.5 | 1 | 1.5 |
| Total cost (rounded to nearest £1) | £37,633 | £129,111 | £269,686 |
Using the assumptions set out above, the familiarisation costs for business are anticipated to be between £37,633 and £269,686, with a central estimate of £129,111 (2022 prices, rounded to nearest £1) in the year 2024.
Benefits
There is a benefit to firms due to a reduced risk of detention in a Port State Control inspection as a result of this policy change. This is an unlikely occurrence and therefore has not been monetised. However, the policy is expected to provide some certainty to firms.
- Standard A3.1 – accommodation and recreational facilities
Under this amendment, UK flagged vessels must ensure that the seafarers on board have access to social connectivity (such as social media and messaging apps). Costs include familiarisation costs, costs of implementation, ongoing costs of supply, and costs of charges for seafarers.
Direct costs
Familiarisation costs
For each firm, it is assumed that each firm has one manager in logistics, warehousing and transport review the regulations. A low, central and high scenario has been used to account for uncertainty. Due to the minor nature of the change, the familiarisation time is expected to be low.
Table 9: Familiarisation assumptions for accommodation and recreational facilities (rounded)
| Low | Central | High | |
|---|---|---|---|
| Hourly labour cost for manager in logistics, warehousing and transport | £16.55 | £22.71 | £26.35 |
| Number of firms in scope | 4,549 | 5,686 | 6,823 |
| Hour per manager of familiarising | 1 | 2 | 3 |
| Total cost (rounded to nearest £1) | £75,265 | £258,221 | £539,373 |
Using the assumptions set out above, the familiarisation costs for business are anticipated to be between £75,265 and £539,373, with a central estimate of £258,221 (2022 prices, rounded to nearest £1) in the year 2024.
Ongoing costs
There are two approaches to providing internet access on vessels.
One approach is to provide access through 4G. This has approximately a £2,430 set up cost, and a £27 ongoing monthly cost, per vessel. The low scenario assumes that all ships will use 4G for access. The other approach is to use satellite internet connection, at around £770 per month. The high scenario assumes that all ships use satellite internet.
The central scenario assumes mixed use, with 30% of vessels opting for 4G and 70% using satellite, as 4G is only available at a certain radius from the coastline. This scenario assumes a £729 instillation cost per firm (including non-merchant vessels) and a monthly cost of £547. Using the assumptions set out above, the implementation and ongoing policy costs are anticipated to be between £13,872,009 and £53,914,427, with a central estimate of £33,473,445 (2022 prices, rounded to nearest £1) in the year 2024.
Identifying the appropriate level of internet provision will depend on the working practices across a range of vessels - from a deep sea cargo ship to a small workboat operating relatively close to shore, primarily on day work. Guidance is being developed to reflect the differing needs in such scenarios, in order to meet the objective of the measure. In the absence of data on the number of vessels falling into different groups, it has not be possible to take this into account in the costings.
Indirect costs
While the presumption is that costs to seafarers should be avoided if possible, there could be an optional charge for seafarers to access connectivity. This has not been costed, as seafarers would only choose to pay the fee if the benefit to them was equal or greater than the cost. The Maritime Labour Convention specifies that the charge, if any, must be “reasonable”.
There could in theory be an indirect cost to consumers, as firms could increase their prices to cover the additional costs. However, the costs are expected to be minimal, so per unit of freight this increased cost would be negligible.
Benefits
Benefits for seafarers
This amendment would have benefits to seafarers accessing the social connectivity.
Seafarers would be more able to contact their friends and family. The Seafarers’ Happiness Index asks “How happy [are you] about contact with family when at sea?” Internet or Wi-Fi access often comes up as a concern for seafarers in the reports.
The Department for Transport’s research into seafarer welfare highlighted boredom and isolation as a contributing factor to seafarer’s poor mental health. The report states that “concerns over the wellbeing of family or friends have been heightened by the internet connectivity on ships – poor and inconsistent internet connectivity at sea was deemed to frustrate and disappoint seafarers eager to connect with their loved ones.”
In addition to improved wellbeing as a result of improved connectivity with family and friends, the Department for Transport report identified that the “lack of connectivity and limited internet access onboard ships was a barrier for seafarers wishing to access mental health support online and through apps”.
It is therefore reasonable to conclude that improved social connectivity would benefit seafarer’s wellbeing.
Benefits to firms
Benefits to firms include improved seafarer recruitment and retention. Evidence shows that levels of connectivity provided by operators influenced seafarer decisions over which operators to work for, for example, the 2018 Crew Connectivity Survey Report stated that “75% of seafarers said the level of connectivity provided on board did influence which ship operator they worked for.”
The International Maritime Organization also highlighted the potential of improved internet access of allowing seafarers to access training on board. There is also a benefit to firms from improved welfare from seafarers, from both improved retention and improved productivity.
Total costs
Over the ten year appraisal period, the following costs are estimated, all direct, over the ten-year appraisal period (2019 prices, rounded to nearest £1)
| Description of costs | Costs to | Low | Central | High |
|---|---|---|---|---|
| Familiarisation costs | Firms | £226,623 | £777,161 | £1,622,862 |
| Familiarisation costs | Seafarers | £50,599 | £159,629 | £385,735 |
| Policy costs | Firms | £13,935,314 | £33,659,541 | £54,268,984 |
| Total | All | £14,212,536 | £34,596,331 | £56,277,581 |
Costs and benefits to business calculations
Using the costs estimated in the section above, the impact assessment calculator, August 2023 has been used to calculate a net present value (NPV), a business net present value (BNPV), and equivalent annual net direct cost to business (EANDCB), in 2019 prices, 2020 present value.
| Low | Central | High | |
|---|---|---|---|
| NPV | -£10.8m | -£23.9m | -£38.1m |
| BNPV | -£10.7m | -£23.8m | -£37.8m |
| EANDCB | £1.2m | £2.8m | £4.4m |
In the central scenario, the EANDCB is £2.8m. This is within the +/- £10 million EANDCB threshold for a de minimis assessment.
Costs and benefits to households calculations
Using the costs estimated in the section above, an annual net direct cost to households (EANDCH), in 2019 prices, 2020 present value has been calculated. This includes the costs to seafarers as employees/individuals. The EANDCH is estimated as £14,470 and is made up of familiarisation costs from recruitment and placement.
Impact on small and micro businesses
There is no specific exemption for micro, small or medium businesses. As the amendments are intended to improve working standards for seafarers, exemptions for micro, small or medium businesses would not be appropriate.
The size of the firm and number of vessels are not directly proportionate – some firms may have fewer vessels with large gross tonnage. There may therefore be some disproportionate impacts on small or micro businesses. However, an exemption is still not appropriate as it would not meet the requirements of the MLC.
If recruitment and placement agencies relating to seafarers are similar to the national employment agencies market, then it is reasonable to assume that micro businesses dominate the industry and are therefore more likely to be impacted by this policy change. Familiarisation costs may disproportionately impact small businesses, as all businesses experience the same costs, but this cost is likely to be small.
Costs and benefits to households’ calculations
Seafarers as individuals will experience a familiarisation cost. However, overall, seafarers are expected to benefit from improvements to conditions of their work.
Indirect costs to firms could be passed onto consumers, resulting in increased prices. This is unlikely, as the cost increases to business will be small compared to their total operating costs, and transport costs make up only a portion of total costs a consumer pays for a good.
The household NPV and EANDCH are expected to be £14,500, as seafarers have a familiarisation costs. No pass-through costs are anticipated.
As a result from this policy, the benefits from improved conditions experienced by seafarers have not been monetised but are expected to be positive.
Business environment
The measure will make the UK flag relatively more attractive to seafarers by providing better working conditions for seafarers and those employed on vessels, however costs to business will increase whilst there is an increase in regulatory burden. Therefore, it is uncertain whether this policy allows UK businesses to compete better with vessels flagged to other states.
Trade implications
No impact is anticipated on trade.
Environment: natural capital impact and decarbonisation
No decarbonisation or natural environment impacts are anticipated.
Other wider impacts
No wider impacts are anticipated.
Risks
No risks have been identified in introducing Option 1 as regulation.
There are risks associated with Option 0. Not bringing in these amendments into UK legislation will result in seafarers on board UK ships or in UK territorial waters being at risk of not receiving full MLC protection, whilst there is a reputational risk to the UK to doing nothing.
Assumptions
Assumptions have been detailed in the cost section above, including references to sources in the footnote. The key sources are listed below.
- assumptions around vessels in scope come from IHS World Fleet data.
- labour cost estimates from MCA comes from MCA internal information (not published).
- the Annual Survey of Hours and Earnings (ASHE), Table 14.5a, is used to provide a cost estimate of hourly pay for the category “managers in logistics, warehousing and transport “.
- wage costs are uplifted by 26.5%, in line with TAG guidance (Unit A4.1 Social Impact Appraisal) to produce a labour cost.
- GDP deflators are taken from the TAG data book, version 1.22, November 2023.
- the NPV, BNPV and EANDCB calculations are produced using the Impact Assessment Calculator, August 2023.