Shipping’s largest and most militant seafarers' union, the International Transport Workers' Federation (ITF), is sitting on reserves of more than £90m ($120m) in its Welfare Fund, made up of cash contributions from shipowners.
A TradeWinds analysis of the ITF's finances shows that while owners' balance sheets buckle under the weight of recession — and unions worldwide struggle with falling membership — the union's financial situation has never been better.
The figures are bound to concern contributing shipowners and managers, who are seeing the ITF's coffers swell as they struggle in recession-hit markets.
The ITF’s most recent financial returns show the London-based union’s Seafarers' International Assistance, Welfare and Protection Fund — better known as the Welfare Fund — stood at £89.9m at the end of 2015.
And currency movements last year are expected to significantly boost the fund's income further in its upcoming figures for 2016. The fund is also used to generate additional investment income.
The fund comprises contributions from shipowners made as a condition of signing ITF-approved collective bargaining agreements (CBA).
The fund's income generates £38m per year for the union and is its biggest source of revenue. This has been boosted recently with an increase in the number of CBAs following the enforcement of the 2006 Maritime Labour Convention.
The money funds 141 ITF inspectors worldwide who monitor wage agreements and spearhead the union’s long-running flag of convenience (FOC) campaign.
The ITF's other main source of income — membership fees paid by affiliate unions to the ITF’s General Fund — generates approximately £6m per year.
Safeguarding
ITF general secretary Steve Cotton says the huge cash reserves parked in the Welfare Fund are necessary to safeguard the union’s future. If the union should succeed in eliminating FOCs, national wage agreements would then replace its CBAs and its Welfare Fund income would dry up.
“The ITF acknowledges that if we were to succeed with eliminating the FOC system, and thereby hopefully the exploitation of international seafarers, then this would have a dramatic impact on ITF finances.
"Therefore a decision was made to have a 'ring-fenced' reserve, which is sufficient to guarantee four years' operational costs for maritime activities, including the ITF inspectorate,” Cotton said.
However, the ITF money is not limited to the Welfare Fund. It has also been making significant contributions out of the Welfare Fund to its associated charity, the Seafarers' Trust, including a single transfer of £10m in 2015.
According to the charity’s financial returns, the Seafarers' Trust now holds about £40m in an investment fund. Those funds are intended to generate income to bankroll its charitable work on behalf of seafarers.
However, its expenditure on grants for welfare projects is only about $2m per year, met mostly through ITF contributions and investment income from its own fund.
The governance of the Seafarers' Trust is in the hands of seven trustees, all of whom are senior members of the ITF, including Cotton and the organisation's president, Paddy Crumlin.
Bargaining Forums
Thousands of owners signed up to the ITF's CBAs, but the majority participate through the International Bargaining Forum's CBAs.
However, signatories to the ITF's CBAs expressed concern over the union's financial reserves when approached by TradeWinds.
The Welfare Fund's generated sums are clearly well in excess of the revenue required to support its work protecting the interests of seafarers, and the charitable work it conducts through the Seafarers' Trust. In 2015, the ITF recorded a surplus of $7m.
In addition, there is concern among some owners that money is being diverted from seafarer welfare and used to fund the ITF’s ambitions to expand in other sectors, such as road, rail and air transport.
