The closure of Karachi Dock Labour Board (KDLB) would cost around Rs 4.2 billion ($70 million) to the national exchequer. According to a World Bank report available here, in case of closure, KDLB will have to pay about one million rupees per employee.
There are over 4200 employees on it rolls; the total pay offs calculated by the World Bank would be around Rs 4.2 billion.
This would be equivalent to a minimum of seven years salary. Is extremely generous by international standard (For example the United Kingdom dock workers received a maximum of about 15 months salary). It would have to be available as lump sum, enabling those who wish to set up other businesses to do so.
The federal government had decided to closedown the KDLB by June 30, this year, as part of its Landlord Port Strategy (LPS) and under National Trade Corridor (NTC) plan, but was unable to formulate mutually agreed separation scheme. The LPS concept was adopted in the early 1990s that envisages the role of the port authority as a facilitator for investment in the private sector to operate various port handling facilities.
There are possible three options for generating financial resources under consideration for the closure of the KDLB. That includes; firstly, the continuation of the 'KDLB Cess' for the next three years to repay a bank or from another loan, eg from the Karachi Port Trust (KPT) surplus account, which would be used to pay the lump sum now, with future 'Cess' payments as security. This would not be an unacceptable burden in practice, as the Cess would have to be paid if the KDLB were retained.
Secondly, the sale of DLB property and the third option is Government of Pakistan funding or, alternatively, a World Bank loan or a commercial bank loan. The World Bank as well as being a possible source of funds has an extensive track record of assisting with sensitive labour reductions eg in coal mining in Russia.
The World Bank could also assist with a social audit of the likely consequences of closing the KDLB and make provision for worker counselling, retaining and other social safety net measures.
The cargo handling companies to be operated by the private sector would replace the KDLB after its closer. There are no significance problems with the terminal operators' own labour. The problems are caused by the KDLB, whose registered dockers the terminal operators are obliged to employ and subsidise.
The original aim of the KDLB, when it was set up in 1973 was reasonable like similar schemes in other countries. The Karachi Dock Workers Scheme (Regulation of Employment) was promulgated through an ordinance in 1973 which was eventually passed as an Act in 1974. The KDLB was established to provide regular work and income for dock workers who had previously been employed on a casual basis.
In practice, however, the scheme started badly and it has become more unsatisfactory over time.
ITS MAIN DEFICIENCIES CONSIDERED AS:
I. It was overstaffed from the start, when the KDLB opened in 1973, about 8598 dockers reported for registration. This was more than had been expected and almost twice the requirement.
II. Dockers were guaranteed employment at a time when containerisation and other forms of mechanical handling were reducing the need for manual workers.
III. The reduction of KDLB via natural wastage was slowed by the introduction in 1987 of the hereditary right of a son to replace a retiring dock worker (Phased out in 2000).
IV. The wages for the dock workers rose to levels several time higher than those for workers in comparable work elsewhere in Karachi and the cost if medical and other benefits for relatives as well as the dockers have increased steadily.
V. The KDLB staff receives further payments under an incentive scheme. These are based on very low, outdated "norms" for cargo handling, which result in the dock workers getting bonuses even if handling speed is very low.
VI. The registered dock workers, however, do little work on the quays. In fact, they are trained mainly for outdated general cargo, break-bulk operations, while two thirds of Karachi's dry cargo is containerised. The port operators, however, are obliged to employ the KDLB gangs and to pay for them essentially to watch the operations. The general consensus within the port is that the KDLB staff are neither needed nor wanted.
VII. Worse, the manning levels for KDLB gangs are several times as high as would be necessary, even if they worked (eg KDLB container gangs consists of 24 men while only four to six dock labourers are needed). They are based on outdated productivity norms.
The main effect of the KDLB on efficiency and cost at Karachi port can be summarised as:
I. The KDLB does not detract significantly from port productivity, because its members do not participate greatly in the work.
II. The KDLB adds significantly to the cost. Firstly, the cargo handling companies are obliged to employ the unnecessary KDLB gangs and in most cases, pay unnecessary incentive payments. Secondly, the cargo handling companies have to pay a 'Cess' (ie a levy) to provide minimum salaries for KDLB staff when they are not "working" and medical as well as other benefits.
III. The KDLB impairs the level-playing field competition between KPT and Port Qasim Authority (PQA) as the PQA does not have a Dock Labour Board (DLB).
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