On Thursday, the International Labour Organization (ILO) launched a pilot Employment Injury Scheme (EIS) in collaboration with BIMCO to strengthen the protection and rights of workers at ship recycling yards in Bangladesh, the world’s biggest ship recycling nation.
The scheme works as a social insurance where the risk is pooled and shared by the industry. By paying into the EIS, sellers of end-of-life ships can help ensure that workers and their families receive adequate and timely compensation, in line with international labour standards, in case of permanent injury or death. In support of the scheme, BIMCO has assisted in the development of a Letter of Intent.
Working on a voluntary basis, the EIS is a temporary protection mechanism that will support Bangladesh as it progresses from its current employer-liability system. A new system will replace the EIS and work as a national, wage-based employment injury insurance scheme, anchored in the law and administered by a national institution. Bangladeshi authorities have committed to this transition, and the new system is expected to become mandatory in July 2027.
“I welcome the replication of the Employment Injury Scheme - Pilot in the Ship Recycling Sector in Bangladesh. Social insurance is more than a mechanism for compensation—it is a cornerstone of social justice. By ensuring that workers in high-risk sectors such as ship recycling are protected against injury and loss, we affirm our collective commitment to fundamental principles and rights at work. This pilot scheme is not just about payments; it is about dignity, security, and the right to a safe and healthy working environment,” said Gilbert F. Houngbo, Director-General of the ILO.
The EIS Pilot has been successfully implemented in the Ready-Made Garment sector in Bangladesh where it covers around four million workers and continues expanding to other sectors.
“Ship recycling is the most environmentally sound way of disposing a ship when it reaches the end of its operational life. But it is a high-risk industry, so we strongly support closing the gap until the national employment injury insurance scheme is operational in Bangladesh. The ILO scheme offers the shipping industry a tool to strengthen the protection, safety and rights of the workers that recycle our ships,” says David Loosley, Secretary General & CEO of BIMCO, the world’s largest international shipping association.
A Hong Kong Convention commitment
Under the Ship Recycling Pilot, the seller of a ship can pay 0.5 USD/Light Displacement Tonnage (LDT) into the scheme by signing the BIMCO Letter of Intent. By signing, the seller commits to the EIS contribution while recycling at a facility in Bangladesh that lives up to the standards of the Hong Kong International Convention for the safe and environmentally sound recycling of ships.
The ILO plays a central role in the Ship Recycling Pilot. Contributions are transferred to the organisation through a pass-through account, and the Pilot is governed by a national tripartite Governance Board under the ILO oversight. The contributions are ring-fenced, used exclusively for employment injury benefits and Pilot-related administration and managed in line with international standards of transparency and good governance.
Supporting the ILO and the EIS project, BIMCO has offered advice relating to establishing the price per tonnage for contributions, helped develop the pilot project and the drafting of a Letter of Intent.
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