The Norwegian maritime industry employs nearly 85,000 people in Norway and creates value for NOK 154 billion annually.
The maritime industry employs many and creates significant value
Norway is one of only a few countries with a complete maritime cluster. The cluster consists of internationally leading companies that design, build, operate and sell ships, and supply equipment and services. At the core of this cluster are the shipowners. They make up the largest segment of the maritime industry, measured in both value creation and employment.
For the maritime industry, a competitive tonnage tax scheme, a net wage scheme for seafarers and an attractive ship register are the most important framework conditions for facing fierce international competition.
Active maritime policy leads to flagging home
As a shipping nation, it is important for Norway to have a large share of the fleet under the Norwegian flag. This helps to maintain and further develop the competence of the maritime administrations in Norway and strengthens Norway’s impact in international fora such as the UN International Maritime Organization, IMO. The most important factor for choosing NIS over foreign registers is that shipowners are provided with stable and competitive framework conditions in Norway, in addition to a well-functioning Norwegian maritime administration.
In the last five years, almost 200 ships have been enrolled in the Norwegian registers. This is the result of predictable Norwegian maritime policies. In the membership survey, shipowners state that they are considering flagging 49 vessels to the Norwegian registers this year, NOR or NIS, divided among 22 deep sea vessels, 11 short sea vessels and 16 offshore service vessels. In order to realize and increase this potential, continued predictability is crucial.
Private ownership is important for innovation, employment and the green shift
The attractiveness of Norway as a maritime location country depends on framework conditions as a whole being stable, predictable and internationally competitive. A special feature of the Norwegian shipping industry is that it has a very high proportion of private Norwegian owners.
The wealth tax weakens the competitiveness of this ownership by systematically discriminating against Norwegian owners in favour of foreign ownership groups and publicly owned companies.
Private ownership provides welfare and drives the green shift
94 percent of shipowners believe that it is important or very important to repeal the wealth tax on working capital in order to strengthen Norwegian private ownership.
91 percent of shipowners experience that the wealth tax has negative consequences for investments and further growth in their companies.
Half of shipowners experience that the wealth tax has negative consequences for the green shift.
The wealth tax drains companies of capital that could otherwise have gone to investments in new technology, measures for the green shift and new jobs. In addition, the wealth tax is regularly levied on ownership, regardless of the company’s profitability and liquidity, which makes companies particularly vulnerable in times of recession. Dividends often have to be taken out of companies to cover the owners’ expenses for wealth tax. This also drains companies of capital.
The most important thing that can be done to strengthen access to competent and patient capital and create opportunities here in Norway is to repeal the wealth tax on working capital.
The net wage scheme ensures the competitiveness of Norwegian seafarers
In order to secure Norwegian operational maritime competence and contribute to the recruitment of Norwegian seafarers on Norwegian-registered ships, a competitive net wage scheme for seafarers is crucial. The scheme provides subsidies based on payment of Norwegian withholding tax, social security contributions and employer’s contributions, limited by an upper payment ceiling per person. The tax refund scheme is a good investment in Norwegian innovation and expertise, and shipowners benefit greatly from seafaring experience in their land-based organizations.
Government seeking a green transition in the blue industries
The scheme was weakened in the state budget for 2022. Almost 40 percent of shipowners report that this means they are now considering having to replace Norwegian seafarers with foreign crew.
Norwegian seafarers work primarily on Norwegian ships. A more competitive scheme will help ensure the recruitment of Norwegian seafarers on Norwegian-registered ships. In addition, recruitment can also be strengthened through increased use of apprentices and other training positions on board.
Norwegian wage and working conditions send jobs out of the country
The government has signalled legislation requiring ships sailing in Norwegian waters to pay Norwegian wages, regardless of in which country the ship is registered.
Ships in international trade sail all over the world, with crews from different countries. It is not feasible to replace international crews with Norwegian seafarers for the short period the ship is operating in Norwegian waters. On the contrary, higher costs in Norwegian waters will lead to Norwegian seafarers currently employed by shipowners being phased out to cover the cost, as the Norwegian wage level is not competitive anywhere else in the world.
Shipping is based on the Flag State principle, i.e. that the regulations of the ship’s country of registration govern the ship. When Norwegian ships sail internationally, Norwegian law applies. As a maritime nation, Norway would not accept that other countries override the regulation of Norwegian ships when they operate in foreign waters. In addition to these fundamental challenges, there are practical ones, such as the lack of control and sanction options.
Employees on board Norwegian ships, no matter where they are in the world, must have good and safe conditions. The Norwegian Shipowners’ Association negotiates collective agreements for seafarers from all over the world, with the seafarers’ respective employee organizations. Norwegian employee organizations contribute to this work.
The Norwegian Shipowners’ Association believes that Norwegian seafarers’ competitiveness can be strengthened through a statutory and improved subsidy scheme for seafarers, through an industry agreement for wages and working conditions on the Norwegian continental shelf, and by the public sector setting requirements for Norwegian wages and working conditions in public procurement.
Call to action:
- The tax refund scheme for seafarers must be legislated and strengthened to ensure competitive companies and Norwegian jobs
- The wealth tax on working capital must be repealed
- Legislation of Norwegian pay and working conditions in Norwegian waters would be contrary to the Flag State principle, EU rules, and would probably lead to fewer Norwegian seafarers in shipping
- A competitive tonnage tax scheme is a crucial framework condition for Norwegian shipping
- The extraordinary Norwegian delineation of the tonnage tax scheme must be changed, so that ships under the regime can also be used for assignments that are taxed ordinarily. Such a change in the scheme would not provide a tax advantage, but ensure that shipping-taxed vessels in the Norwegian scheme can be used for more types of assignments than today
- Access to use NIS must be allowed in areas where there are currently no shipping companies that have ships in NOR, for example shuttle tankers operating on the Norwegian continental shelf