2019-02-18

Under the national flag

“To make the operation of ships under the Polish flag profitable, comprehensive changes must be introduced in the tax and social security regulations, referring to shipping companies, a properly formed ship registration system, a new law on the employment of sailors and the introduction of the already developed Maritime Code”, says Ireneusz Kuligowski, president of the Polish Ship Managers Association.

The PZZS, as part of cooperation with the National Development Council, developed the program suggesting changes that are needed to make the operation of the ship under the Polish flag economically viable. The group of trade union experts proved in its calculations (not simulations based on abstract assumptions) that the introduction of changes will be profitable for the state budget. According to president Kuligowski, this is the first and only project based on specifics and calculations, not on good ideas and sentiments, and an economic project. The studies show that the main barrier is in this case the labour costs of sailors who would have to be employed by the Polish ship owner - this is particularly about the costs of social insurance contributions.

What are the assumptions of the program? In short, it is about creating a system that will give companies operating ships under the white and red flag competitive operating costs compared to other flags. Today, the Polish company bears almost the same costs as in the case of operation of the fleet under other flags, with the exception of labour costs of sailors, which are many times greater in the case of Bahamas, Cyprus or Malta flag. Therefore, the mechanisms of public aid allowed by the European Union should be used to reduce these costs. The costs associated with the introduction of such a system will be quickly reimbursed from income related to increased flag availability. There are countries for which sharing their flag is the main source of the state income, where direct and indirect sources of income for the state budget are created, the importance of the country in the international arena increases and well-paid jobs for highly-qualified specialists are created. The creation of the so-called level playing field for the shipowner using the Polish flag would require solving the question on how and in what amount social security contributions should be paid for the Polish shipowner to remain competitive on the global maritime market. It would be a system based on the EU public support mechanisms that would cover the basic social benefits paid by the shipowner and sailor, but at the same time direct the revenue stream from shipping to the state budget, where the surplus would remain, today remaining abroad.

The measurable benefit will depend on the number of ships that could be imported under the Polish flag. According to calculations of PZZS experts, in 2028, with 
200 units under the Polish flag, our country would earn PLN 33.26 million net, while the combined effect in the 10-year perspective (2019-2028) will amount to 
PLN 182.02 million (income: PLN 274.42 million, expenditure: PLN 92.40 million).

“We must remember that Poland can only be truly maritime if we have our own shipping under the national flag,” I. Kuligowski explains.

Article developed in cooperation with "Namiary na Morze i Handel" magazine.

phot. frame from the movie "Restore the Polish flag"