The Federation of Pakistan Chambers of Commerce and Industry is concerned at the "go-slow policy" adopted by the Karachi Dock Labour Board as reported in Business Recorder. This policy was adopted by the Labour Board's workers at the Karachi Port from Dec26 to 30. Going slow is an industrial action through which employees do perform their duties but with the intent to reduce efficiency or productivity. It is usually applied as a pressure tactic for the acceptance of their demands. FPCCI senior vice president Khalid Tawab urged all sides to amicably resolve their issues and stressed that the Labour Board should refrain from extreme measures and agitation as the country can ill-afford such disruption. The go-slow has resulted in serious congestion at the port with vessels having to wait for several days for want of berthing space, and cargoes piling up inside the port awaiting clearance, causing serious losses to trade and to the economy. The backlog resulting from this disruption is still being felt at the Karachi Port. Let us explore the origins of the Karachi Dock Labour Board and to the issues related to the troubles.
The Board finds its origins in the pre-mechanized era of ship handling when the loading and discharge of cargoes from freight vessels was done by way of physically handling of the cargoes. Traditionally, ships' cargo was hoisted in large cargo nets that were hoisted under a crane's hook and first lifted and then lowered into place either in the vessel's hatch or on the quay deck. The dock labour would physically carry these pallets, bales, barrels, cases and sacks onto or off the net and stack them in an orderly fashion. This was back breaking work that required dock workers to shift cargoes quickly in order to minimise the time that the vessel remained at port while it waited for the loading and discharge operation to conclude. At times this required the vessel to remain in port for several weeks. Regardless of how swiftly the dock workers managed the discharge and loadings, the logic behind physically shifting cargos remained an inefficient and inhumane concept.
With the advent of intermodal freight handling through containerised cargoes in the 1950s, the need for physically handling these cargoes subsided and cargos loaded into standardised containers dramatically reduced transport costs, supported the post-war boom in international trade and was a major element in globalisation. Containerisation did away with the manual sorting of most cargo shipments within the port area and moved this activity to the off-dock warehousing. As the economics of intermodal cargo handling became apparent to businesses the world over, it displaced many thousands of dock workers who formerly handled break bulk cargo. Containerisation also witnessed a swift reduction in congestion at ports, significantly shortening shipping times and was key for the reduction of cargo losses from damage and pilferage.
In response to the Dock Strike of 1945, the British Parliament introduced the "Dock Workers' (Regulation of Employment) Scheme" in 1947. The scheme was administered by the National Dock Labour Board and was financed by a levy on the employers. The board was responsible for keeping a register of employers and workers, paying wages and attendance money, controlling the hiring of labour and was responsible for discipline. The British National Dock Labour Scheme was abolished in 1989 by the Conservative government under Margaret Thatcher whose Employment Secretary, Norman Fowler, told MPs that the scheme had become "a total anachronism" and that it stood in the way of a modern and efficient ports industry.
With respect to dock labour, the Port of Karachi has remained stuck in the 1960s with the unnecessary burden of the Karachi Dock Labour Board. The government of Pakistan promulgated the Dock Workers (Regulation of Employment) Act, 1974, to regulate the activities of dock workers and to improve their standards of living. At present, there are about 2,800 workers registered with the Labour Board. The scheme introduced under this Act requires that a payment of cess be made to the Board for cargo handling at the Karachi Port. This cess is charged at the rate of Rs 48 per metric ton for general cargo and at Rs 800 per TEU for containerised cargo. In addition to this cess, gangs of dock workers are required to be hired in shifts for the length of the vessel's stay at the port. The cumulative cost for containerised cargo comes to about Rs 1,300 per TEU. This cost is eventually transferred to the owner of the cargo who will naturally pass on the cost to the person next in the supply chain, thus increasing the overall cost of transportation for the economy.
The two container terminals currently fully operational at the port, KICT and PICT, handle a cumulative volume of about 1.9 million TEUs per annum. At Rs 1,300 per TEU the Labour Board charge comes to approximately Rs 2.47 billion per year. This number translates to about Rs 882,000 per worker per year, given a total of about 2,800 workers registered with Labour Board at present. It must be kept in mind that these numbers only relate to the two container terminals occupying seven berths at Karachi Port and not to the other shipping activities at the other 23 berths of the port. To sum up, approximately Rs 882,000 is paid per worker per annum for doing no work at all, resulting in a straight line loss of approximately Rs 2.47 billion to the economy. With another container terminal coming into full operations by February at the KPT's flagship project, the Pakistan Deep Water Container Port, this loss to the economy is set to increase exponentially. It is the need of the hour to direct government policy towards avoidance of this loss to the economy of Pakistan. The mostly bulk cargo loading and discharge at the other non-containerised berths is also undertaken through mechanical rather than physical means, thus rendering the entire Labour Board scheme irrational and out of date.
No charges related to dock workers are prevalent at the Port Bin Qasim situated at a distance of about 48 kms from the Karachi Port as it does not fall within the jurisdiction notified by the government for the imposition of a Labour Board charge. Even liquid cargo including crude oil, molasses and petro products, handled at the Karachi Port are exempt from the Labour Board levies, given the logic that these are not physically handled and instead pumped through pipelines.
Similarly, in the case of containerised cargo, no physical handling is required with the container terminal operator managing all loading and discharge to and from the vessel by deploying cranes. The aim of the game for container terminal operators is to keep costs down and to ensure a swift turnaround times for vessels. Dock workers physically handling cargos cannot and does not factor into this equation. If this is the case, where the KDLB is paid for each container handled at the Karachi Port thus increasing overall costs.
It is time that the government of Pakistan took a cue from the British Conservative government of 1989. It should rethink the Labour Board scheme has already proved to be an anachronism and which stands in the way of turning the Karachi Port into a modern and efficient port. A compulsory payment for no work done cannot be justified on the grounds that it is backed by legislated. The legislation may have been relevant when it was formalised. However, times and methods have changed since then and so should the legislation. These unskilled workers need to be eased into skilled trades so that they can also contribute towards the uplift of the economy of Pakistan.
The Federal Minister of Ports and Shipping personally intervened to normalise the port operation, as reported in the print media.
It is food for thought for Ministry of Ports and Shipping to take a policy decision which may be a win-win situation for all stakeholders. In 2006, some initiative was taken, but it was left half way, without resolving the issue. At KCCI, trade complains of high handling cost, thus, issue may be amicably resolved, so that extra burden on trade is minimised.
(The writer is Adviser to the Karachi Chamber of Commerce and Industry)