From the creation of the seafarers’ pension system to the year 2016
Seafarers as pioneers of the earnings-related pension scheme
When the Seafarers’ Pensions Act (Merimieseläkelaki, MEL) entered into force on 1 June 1956, the provision of earnings-related pensions to employees who were in the service of private-sector employers was an unprecedented novelty in Finland. Several pension or aid funds had been established in the late 1800s and early 1900s, including mutual funds for specific occupational groups or funds offered by employers, but they were all based on voluntary membership and their role was mainly to supplement one’s livelihood. One of these funds was the General Pension Institution for seafarers, which was operational from 1880 to 1937, as described in the first article of this series.
Overall, for the majority of people engaged in paid work, the idea of an employment pension that is based on individual earnings and accrued during one’s working life and which would provide livelihood in old age or in the case of disability or the death of a spouse or family supporter, was quite a strange notion still in the 1950s. The old-age and disability pensions paid by the National Pensions Institute (or Social Insurance Institution, currently known as Kela) and providing a minimum livelihood had been safeguarded by law since 1939. Old-age pensions within the national pension scheme were paid out for the first time in 1949, only six years before the foundation of the Seafarers’ Pension Fund. Thus, there was an in-between generation of sailors who reached old age during or after the Second World War and who, unfortunately, were unable to enjoy the old-age security provided by either the old Pension Institution or the new national pension.
The Seafarers’ Pensions Act (MEL) was the first pension scheme concerning paid employees in the private sector. It led directly to the enactment of the Employees’ Pensions Act (Työntekijäin eläkelaki, TEL) for the private sector in 1961, and the subsequent Temporary Employees’ Pensions Act (Lyhytaikaisissa työsuhteissa olevien työntekijäin eläkelaki, LEL) a year later. Probably there would not have been any separate pension system set up specifically for Finnish seafarers if Niilo Wälläri, as Chairman of the Finnish Seafarers’ Union, and Tyyne Leivo-Larsson, as Minister of Social Affairs, had not actively accelerated the preparation of the law and its processing in Parliament. It was a radical idea that pensions would accrue from short periods in working life. To disseminate information, the Finnish Centre for Pensions produced, jointly with Fennada-Film, an educational film that explained how the pensions were determined for a Mr. Järvinen, who had worked in a factory for 35 years, for a Miss X, who had served as the secretary for the director of the factory for 7 years, or for Ritva, who had worked as domestic help for Järvinen’s family for a short while. The film underlined that the employment pension and national pension did not have a decreasing effect on one another.
Although the seafarers were already covered by their own earnings-related pension scheme, they also benefited from the fact that pension accrual now accommodated the realities of working at sea: the temporary nature of the work, seasonal variation and the commonly occurring change-over to a completely different field. The minimum criterion for a pension accrued from seafaring work was set at 100 months, in other words, the total accrual period had to be slightly over eight years. The pensionable age was flexible so that the sum of age in years and the service years had to be at least 80 years for crew (retirement age usually 60 years), and correspondingly, 90 years for officers (usual retirement age 65 years). However, they had no obligation to retire.
The pension security for seafarers was supplemented by the survivors’ pension in 1961 and the right to apply for a funeral grant in 1964. Seafarers were provided with healthcare either in the form of occupational healthcare arranged by the employer or through public healthcare. Medical care, training or rehabilitation were offered for those who were unable to work. The employee unions were responsible for unemployment insurance. Pension was accrued even for those foreign seafarers who were in the service of Finnish shipping companies, whereas no pension accrued for Finnish sailors for any periods of work served under foreign flags. This was one means of slowing down the leakage of the workforce to, for example, other Nordic countries.
Carefully planned social welfare
The Seafarers’ Pension Fund is part of a larger social construction project aimed at transforming post-war Finland into a welfare state. The process involved societal engineering based on accurate calculations, and it endeavoured to improve individual citizens’ opportunities to be educated, get a job, have a family and to be prepared for exclusion from the labour market. This was facilitated by creating a range of services and establishing organisations to safeguard their implementation. Thus, society assumed responsibility for many such tasks that had earlier been the responsibility of individual persons and families themselves. The development was gradual; for example, until the year 1970, children were obligated by law to take care of their ageing parents. Underlying the social planning was the idea that, by means of active guidance and measures, it would be possible to steer towards an even distribution of workforce across various fields and, thereby, increase productivity and citizens’ purchasing power. As part of this construction phase of the welfare state, the intention was to make seafaring a paid occupation among others and with conditions corresponding to occupations on land.
The Seafarers’ Pensions Act was the creation of Teivo Pentikäinen, Director of the Insurance Department of the Ministry of Social Affairs, Niilo Wälläri, Chairman of the Finnish Seafarers’ Union, and lawyer Mikko Mannio as the representative of the Finnish shipowners. International co-operation was of help when the issue of seafarers’ pension security was advocated towards the State. In 1946, together with two Government representatives and one representative of the employer party, Wälläri participated in the international maritime conference of the International Labour Organization (ILO) in Seattle, in which seafarers’ pension security was one of the main themes. The conference adopted the Seafarers’ Pension Convention, according to which the general pensionable age should be 55–60 years and the size of the pension should be adjusted to correspond to the pensions of industrial workers. After the conference in Seattle, Nordic collaboration proved its strength in the form of a shared declaration urging national Governments to ratify the Convention. In Finland, positive pressure was caused by the fact that extensive systems of pension security for seafarers had already been accomplished in other Nordic countries accomplished by the end of 1940s.
Pentikäinen chaired both the committee preparing the legislation and the first Board of the Seafarers’ Pension Fund, on which Wälläri and Mannio also served as members. Pentikäinen’s experience was utilised in the preparation of the general Employees’ Pensions Act and, later on, he served as the Managing Director of Ilmarinen Pension Insurance Company and as an actuarial researcher. Upon the suggestion of the shipowners based in the Åland Islands, a last-moment amendment was made to the proposal for the Seafarers’ Pension Act, stating that the Board of the Seafarers’ Pension Fund should include representatives of not only the largest but all employee and employer organisations acknowledged in the field of navigation. It was highly justifiable that Ålands Redarförening, the association of the shipowners in the Åland Islands, should have a member on the Board along with the representative of the mainland shipowners: one quarter of the entire merchant fleet of Finland in the 1950s was owned by shipowners in the Åland Islands. In the Åland Islands, the pension security issue had also been addressed independently, and their own pension fund, namely Ålands pensionkassa, had been operational since 1953. The Ombudsman for Ålands Redarförening, Maritime Counsellor Stig Lundqvist was elected to serve on the first Board of the Seafarers’ Pension Fund. To manage his tasks in this capacity, he travelled between the Åland Islands and Helsinki during four decades, until the year 1991.
The operations of the Seafarers’ Pension Fund were, from the very start, based on the principle that part of the annually paid pension contributions were funded. Contributions were paid by both the employees and employers at the rate of 4% of the earnings or payroll. The State’s share constituted one third of the Fund’s income, and that share was not funded but, instead, it was used for the payment of actual pensions. The State does not participate in a similar manner to the financing of any other pension scheme, except for the national pensions and pensions payable under the Public Sector Pensions Act. Such special treatment applicable to one field alone was criticised by President Urho Kekkonen, whose long-term presidency had started exactly three months before MEL entered into force. The arrangement, however, had weighty grounds. Through the co-financing of seafarers’ pensions, the State compensated for the fact that, during the long periods of working abroad, seafarers were not benefiting from the various public services provided by their homeland. By covering a part of seafarers’ pension expenditure, the State also indirectly supported the entire field of shipping, which was responsible for 80 percent of foreign transports at the time the law became valid.
The funded share was used for granting study loans to the insured as well as housing production and vessel loans for the shipowners. Once the war reparations to the Soviet Union had been paid in full, the shipyards needed some boosting as the Finnish merchant fleet was increasingly lagging behind in terms of international development. Up to 58 percent of the tonnage were over-aged vessels while in the other Nordic countries the corresponding proportion was 20 percent at most. Moreover, the costs of Finnish shipping were high, with a negative effect on cost-effectiveness. For a Swedish shipowner, the average cost for a voyage was, in the currency of the time, 1.1 million Finnish marks, including pension costs, whereas a Finnish shipowner had to spend approximately 1.3 million marks. It is estimated that, by the year 1968, the Seafarers’ Pension Fund had indirectly contributed to the creation of 800 jobs each year through the provision of vessel loans.
Seafarers’ pension security adapts to changes in work at sea
The general strike on 19 March 1956, three months before the Seafarers’ Pensions Act became valid, was a memorable event. More than half a million workers stopped working and demanded pay raises. For maritime traffic, the date fell in the middle of the quiet spring season, when exports traffic, in particular, was interrupted because the Baltic Sea was covered with ice. Overall, the impact of the ice situation on the winter navigation and, thereby, job opportunities was not any more as significant as it had been earlier. An increasing number of ports were operational in winter thanks to icebreakers. The first State-owned diesel-engine icebreakers were Sisu (built in 1939) and Voima (1954). During the1950–1980s, the fleet was reinforced by an additional 10 vessels that were built with icebreaking capacity. The year-round traffic to and from Finland and the regular liner operations changed seafaring jobs significantly. The major legislative reforms, such as the Act on working hours at sea (Merityölaki) in 1976 and the Act on annual holidays for seafarers (Merimiesten vuosilomalaki) in 1984 with its manning rules and rotation systems, also affected seafarers’ work, for example, by providing the right to regular free time on board and on land.
The first decades of the history of seafarers’ pension security coincided with the rapid development of not only freight traffic but also passenger traffic. In the 1960s, passenger-car ferries were introduced to the traffic for Sweden and Germany. The joint shipping company established by the Finnish steamship companies SHO/FÅA and Bore, together with the Swedish Svea, was accompanied by several rival companies, including Rederi Ab Sally (Viking Line), Silja Line and Finnlines. Along with the end of the Cold War and the independence of Eastern Bloc countries, the traffic to and from Tallinn was opened in the early 1990s, with Eckerö Line (former Eesti Linjat) being the most important Finnish shipping company.
Despite the improved working conditions, navigation has always been challenged by pressure to ensure a sufficient workforce. The compulsory earnings-related pension scheme was seen as a means to motivate seafarers to continue working at sea and to advance their professional development through increased mobility from one task and shipping company to another. This was the ideal, but was it successful in practice?
When the Seafarers’ Pension Fund had operated for roughly 10 years, researchers in Social Policy investigated the progress of the new system and what people working in different occupational categories thought about their job and pension security. At that time, the payments of old-age pensions, in particular, had just started. In the 1960s, an average of 31 insured seafarers per year retired on an earned old-age pension. Of all pensions granted during the first decade of the Fund’s operations, only 10% were old-age pensions. The operations concerned mainly survivors’ pensions and funeral grants.
The number of persons insured by the Seafarers Pension Fund was at its largest in 1973, with nearly 17,000 persons insured under MEL. After the 1970s, the number began to decline and settled at around 10,000 in the 1990s. In 2008, the numbers of pension recipients and those insured under MEL were almost equal, about 8,500 individuals. Thus, the ageing of the population is seen in navigation as well. As of 2010, for the first time in the history of the Seafarers’ Pension Fund, the number of pension recipients has continually been higher than that of the insured.
Considering how much resistance the old Pension Institution and the preparation of the Seafarers’ Pension Act met because of their expensive pension fees and contributions, it is interesting that the seafarers of the 1960s neither complained about the deduction of the pension contributions from the pay nor demanded that the pension contributions be reduced. They had clearly understood the purpose and intent of pensions, and the ratio between the pension contributions and pay level was considered reasonable. The pensionable age was perhaps the main source of dissatisfaction. Seafarers felt that around the age of 55 would be a suitable retirement age.
On the other hand, the goal of lengthening work careers appeared as partly utopistic after the first decade of operations: only every fourth seafarer intended to continue working at sea until the pensionable age and one fifth estimated they would stop working at sea within a couple of years. More than half of the members of the Finnish Seafarers’ Union, however, planned to continue working at sea for several years to come. In addition, both crew members and officers were highly willing to further educate themselves professionally, but it was often hindered by financial matters. The questionnaire surveys showed that there was often a discrepancy between the plans and realities. Many seafarers studied in their free time, for example, through a correspondence school. The onboard work offered opportunities for studies in free time, and the Union also trained its members to serve as study counsellors. The Seafarers’ Pension Fund responded to the membership’s need for financial support to facilitate studies, and by the 1970s, nearly 900 seafarers had received a study loan from the Fund.
A field for youth and the ‘old sea dogs’
Throughout history, the mean age of seafarers has been relatively low. The age distribution on board may have been wide but the extremely young age of many newcomers has dragged down the average age. Prior to the age restrictions provided by the Maritime Act in 1921, it was usual to exploit child labour in the field. Interestingly, still after the Second World War, the workforce was exceptionally young. According to the seafarer register compiled by the National Board of Navigation in 1938, approximately 15 percent of ship’s officers were under the age of 20. The surveys conducted in 1965 showed that the share had increased to nearly 28 percent. Of crew members, up to more than one half of the employees were under the age of 30.
In addition to young men, another group whose share increased were shipmasters who were older than 40 and, even more prevalently, 50 years of age. At the end of the 1930s, only four out of one hundred captains or mates were older than 50 years but in the 1960s, the corresponding number was 13 out of one hundred. The trend may be explained by the encouraging effect of pension security, unwillingness to seek to a new field at an advanced age or the development of navigation as a substantial option for a lifelong career. It is interesting that the increase in the share of those seafarers who were approaching their pensionable age occurred in the 1960s, when the number of the elderly population in Finnish society was relatively small. The population was mainly comprised of children, adolescents and working-age people.
An alarming aspect of the survey in the 1960s was that the number of shipmasters aged 20–40 was declining within Finnish shipping companies. The post held by an individual and related work tasks seemed to have a major effect on attitudes towards a lifelong maritime career. Nearly one half of the sea captains were certain about staying in the field until retirement, while only 17 percent of the mates had the same intention. Most of the radio-telegraphers were of the opinion that there would be a demand for their professional skills on land as well.
The decline in the number of middle-aged seafarers suggests that many changed from working at sea to an occupation on land at the prime working age, which also coincided with other topical aspects of life, such as starting a family or buying a home. Nearly 90 percent of engineers, officers and radio-telegraphers viewed the lack of a normal family live as a disadvantage of seafaring. The old sayings about the freedom and adventures of sailors did not seem to be relevant when the surveys asked about motivations for seeking maritime occupations or about significant aspects of the work. More recently, in 2014, a survey was conducted at the Kymenlaakso University of Applied Sciences to investigate which factors have an impact on one’s desire to remain in seafaring occupations. The difficulties related to the balance between work and family life were found to be one prominent factor pushing people away from these occupations. This was true despite the advanced level of communications technology in the 2000s, when it is possible for parents to raise their children remotely from the other side of the world through Skype, Wilma, Snapchat and Whatsapp.
When drawing comparisons between the 2010s and 1960s, it can be stated that advancements have taken place in precisely those matters that are viewed as attractive aspects of maritime occupations: the onboard working and living conditions have improved along with the work contract terms and pay; thanks to the lowering of hierarchy, the work community is, at its best, like a family; and the increased appreciation for navigation is an aspect that makes the work enjoyable. Gone is the stereotypical idea of sailors having a bad reputation, which still prevailed a few decades ago and could make it difficult for them to get a job, loan or home on land. There are differences between the surveys of the 1960s and 2010s as well. In the 1960s, having the same rights as tourists to import alcohol and tobacco was viewed as being equally important as the matters related to social security or occupational health and safety. The isolation related to working at sea could also sometimes be viewed as beneficial: you are closed off in a special time dimension beyond the reach of daily issues and routines. Nowadays, working life is often fragmented, it requires stretching in many directions and the continuity of employment is uncertain. Seafaring still offers occupations with a fairly steady and clear career path.
Building homes in locations where seafarers wanted to live
In addition to the provision of study loans, the Seafarers’ Pension Fund offers another, even more significant form of support: housing production. Right from the start, the housing production has aimed to support the seafarers in leading a full life both at sea and on land.
In post-war Finland, seafarers typically lived in coastal towns with a large or medium-size port, such as Helsinki, Turku, Kotka or Mariehamn. A major part of those seafarers who lived in inland towns or in the coastal countryside also wanted to move to coastal towns. In Finnish society, urbanisation had a direct impact on navigation. The so-called peasant sailing, which was an important source of livelihood in the coastal rural areas still in the early 1900s, gradually ended.
Urbanisation was associated with the centralisation of port operations to fewer locations with proper railway or road connections. After the Second World War, a container revolution took place that transformed the ports into closed production facilities with extremely rationalised loading operations and logistics so that the vessels only needed to stay in the port for a minimal time. Various ports also specialised in different types of transports and routes, which increased the regularity and predictability of seafaring jobs.
Most seafarers in Finland lived along the western coast, in the old Province of Turku and Pori. Still in the 1960s, the majority of those people who earned their livelihood from onboard work were living in the Province of Turku and Pori. In the late 1900s, however, the centres of shipping shifted to the Provinces of Uusimaa and Kymi, or in practice, to Helsinki and Kotka. Between the years 1917 and 1939, a total of 12 percent of all Finnish seafarers had their home address in the Åland Islands. By the 1960s, the islanders’ share declined but, in relation to the overall population, the Åland Islands remained the location with the highest percentage of maritime workers.
Larger cities were growth centres in all aspects, and the lack of homes was significant especially in the Helsinki metropolitan area. More than half of seafarers owned their home, either a flat or a house. However, the side effects of the mobile occupation, namely homelessness and non-affiliation with any particular hometown, still cast a shadow over the field. An interview among the membership of the Finnish Seafarers’ Union revealed frequent homelessness: up to 23 percent of respondents stated that the vessel they worked on was their home.
The residential buildings constructed by the Seafarers’ Pension Fund became a visible part in towns. By the year 1968, the Fund had a total of 426 flats built in different locations. In Mariehamn, for example, a total of five buildings with 234 flats were constructed by the year 1981.
60 years of Pension Fund operations in Finland
In 2016, the Seafarers’ Pension Fund celebrated its 60th anniversary. It means six decades of safeguarding the old age for several seafarer generations. Today, in 2020, various pensions are enjoyed by approximately 8,000 members of the Seafarers’ Pension Fund, who were mostly engaged in work at sea during the 1960–1980s. The number of those who retire due to disability is declining. A similar development is being seen in other fields as well. According to the Finnish Centre of Pensions, old-age pensions account for approximately 83 percent of the earnings-related pensions and pensions paid by Kela. Work careers have become longer, which is a common trend in society at large. For seafarers, a typical age at retirement is currently 63–68 years.
Historically, the development of the mean age among seafarers in working life is interesting. The mean age is currently around 42 years for both crew members and officers. Among crew members, the mean age is almost the same for men and women, but among officers, the wheel is held by younger women: the mean age of female shipmasters is 33.5 years which is nearly 10 years less than the mean age of the group overall. Prior to the Second World War, women accounted for about eight percent of seafarers, but during the past decades, their share has settled at 30–40 percent of the workforce.
Seafarers, like the rest of our population, are healthier today than ever before. Changes have taken place in lifestyle habits. For example, in 1999, altogether 48 percent of seafarers smoked occasionally or regularly, whereas in the early 2000s, only 14 percent were smokers. There is still much to do in terms of activities to prevent absences due to illness and to maintain working ability. Seafarers have a medical examination every two years in order to ensure the ability of onboard workers to carry out work that has been defined as being moderately loading and which requires good balance and body control. The work is mentally and physically loading, which is still reflected in the fact that, as compared to other fields, retirement on disability pension is 1.6–2 times more frequent among seafaring men and women, respectively, and mortality 1.3 times more frequent. The latest surveys (Kuntoutussäätiö 2015) have resulted in completely new types of well-being services. One example of these is ForMare, the health promotion programme jointly provided by the Seamen’s Service, the Seafarers’ Pension Fund and Alandia Insurance. Also, the Seafarers’ Pension Fund has initiated plans for developing a dedicated occupational health service for seafarers. The history of the well-being of seafarers will also be written in the future.
Text: Pirita Frigren
Literature:
Brunila, Mikael. Näin luotiin Merimieseläkekassa eli kertomus Suomen ensimmäisen työeläkelaitoksen synnystä. Merimieseläkekassan julkaisuja VIII. Merimieseläkekassa. Helsinki1978.
Haavisto, S., Kallunki, V., Kirvesniemi, T., Korpivaara, L., Lehtonen, O., Oravasaari, T., Pekkola, J. Stay onboard: Suomalaisten merenkulkijoiden pysyminen ja lähteminen merityössä. Kymenlaakson ammattikorkeakoulu. Kotka 2014.
Lampikoski, Kai. Merimieseläkejärjestelmä merenkulkijain kokemana. Merimieseläkekassa. Helsinki1968.
Kuntoutussäätiö. Merenkulkijoiden työkyvyttömyys ja kuolleisuus. Loppuraportti 2015.
Turkka, Jaakko. Merenkulkijain vanhuudenturva. Merimieseläkekassa. Helsinki1966.