The federal government has decided to close down the Karachi Dock Labour Board (KDLB) by December this year as part of its landlord port strategy and under the National Trade Corridor (NTC) programme. The closure of KDLB would cost around Rs 4.2 billion ($70 million) to the national exchequer.
In this regard, the Prime Minister gave the formal approval for the KDLB closure in July and a consensus on the issue was developed for its closure through Voluntarily Separation Scheme (VSS) option.
The federal government has assigned the ports & shipping ministry to look into this "very important" matter and settle issues relating to the KDLB peacefully.
The government has chalked out a comprehensive plan for ports improvement and modernisation to reduce dwell time for cargo at lower charges. Efficient ports can save $457 million annually to the national kitty.
The World Bank in its report suggested, in case of closure the KDLB would have to pay about Rs one million to each employee. There are about 3895 employees and officers on its payroll. Of which about 3673 are dock workers; 185 staff members; and 37 are officers. The total payoffs calculated by the bank would be around Rs 4.2 billion.
This would be equivalent to a minimum of seven years salary and is considered to be extremely generous as per international standards (for example the United Kingdom dock workers received a maximum of about 15 months salary).
It would have to be available as lump sum amount, enabling those who wish to set up other businesses to do so.
The federal government has decided to close down the KDLB by December this year after developing consensus with workers and the management as part of its landlord port strategy (LPS) and under the National Trade Corridor (NTC) programme, but was unable to formulate mutually agreed separation scheme.
The LPS concept was adopted in 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. Sources told Business Recorder three possible options are under consideration for generating financial resources for the closure of KDLB.
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, sale of the KDLB property and the third option is the government funding, or alternatively, a loan from the World Bank or a commercial bank.
The World Bank, 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 major 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 THE TIME. ITS MAIN DEFICIENCIES WERE:
-- It was overstaffed from the start. When the KDLB opened in 1973, about 8,598 dockers reported for registration. This was more than had been expected and almost twice the requirement.
-- The dockers (dock workers) were guaranteed an employment at a time when containerisation and other forms of mechanical handling were reducing the need for manual workers.
-- 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).
-- The wages for the dock workers rose to levels several times higher than those for workers in comparable work elsewhere in Karachi and the cost if medical and other benefits for relatives as well as dockers are included have increased steadily.
-- The KDLB staff receives further payments under an incentive scheme. These were based on very low, outdated "norms" for cargo handling, which resulted in the dock workers getting bonuses even if handling speed is very low.
-- The registered dock workers, however, do little work on quays. In fact, they were trained mainly for outdated general cargo, break-bulk operations, while two thirds of the Karachi's dry cargo is containerised. The port operators, however, were 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.
-- 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 were needed). They were based on outdated productivity norms.
MAIN EFFECTS OF THE KDLB ON EFFICIENCY AND COST AT THE 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 competition between the KPT and Port Qasim Authority (PQA) as the PQA does not have a Dock Labour Board (DLB).