Labor Toolkit

Labor Reform and Related Social Issues


Port labor from crane and equipment operators to stevedores to harbor pilots is one of the keys to success or failure in today’s competitive port and international trade environment. Too often port labor is blamed for a port’s failure to play an appropriate and productive role in port operations and its nation’s economic development. Overstaffing, outdated and inefficient work rules, poor skills and training, inflated pay scales, and unreliability are among the most prominently cited problems contributing to high costs and inefficient operations in many ports. To be fair, outdated management practices can sometimes add to these problems by overlooking the benefits of a more participatory approach to port management.

Ports and port labor do not exist in isolation. They are an integral part of, and in turn are affected by, national economic and trade policies, changes in markets and services, and technological advances. Box 1 illustrates how changes in economic policies occurring over the last decades have affected port labor.

These changes in economic policies have been accompanied by other developments in technology, logistics, and transportation that have led to further reductions in the demand for dock workers. The shift from “port to port” to “door to door” cargo delivery systems, for example, and the use of inland container facilities have led to many containers being stuffed and stripped by consignors’ or consignees’ employees on their own premises, often distant from the port. Handling systems have been extensively mechanized and are also increasingly automated.

Box 2 shows how the size of work gangs in a number of ports has changed, or not, in response to changing economic and competitive markets. In many of the ports shown in Box 2, the number of workers per gang was very large, and remained mostly unchanged between 1970s and 1980s despite the fact that cargoes increasingly were being transported in containers with the use of modern equipment. In developing countries, where ports were operated for the most part by the public sector, a combination of factors such as surplus labor, strict application of union discipline, limited resources to acquire modern cargo handling equipment, poor training, and government policies to maintain or create employment contributed to overmanning in ports.

In the 1990s, private interests made significant capital investments in ports around the world. Continued imposition of large work crews and rigid work rules in many ports, however, have undermined the value of these investments, and, hence, the commercial feasibility of ports and terminals, both in developing and developed countries. For example, until April 1998, in various Australian ports there were typically 11 or 12 workers per shift per gantry crane. With the new enterprise agreement, this number was reduced to six workers per shift per crane, and substantial productivity gains were achieved (see Box 2). In the Port of Santos, Brazil, in 1997, labor and management reached an agreement reducing from 12 to 10 the number of workers per shift per crane. As a general matter, port terminal operators would rather employ a smaller number of workers per shift while complying with safety and health regulations, and pay higher wages for a highly efficient, lean team.

Port labor reform presents a difficult challenge for government decision makers and therefore it is unlikely to take place unless forced by unfavorable existing conditions. As a result, the port labor reform process is typically initiated only when at least one, or more likely a combination, of the following three influences are present:

Competition is the principal motivating force behind labor reform. In cases where ports serving the same hinterland already face competition, the propensity to undertake reform is usually higher (see Box 3). Regardless of whether there is direct port or terminal competition, global competition in its broadest sense compels port stakeholders, including labor, to assess their organizational and operational cost structures, work methods, and procedures. From this perspective, ports may be viewed as just one of several factors that contribute to a country’s or a region’s competitiveness. As such, it is in a country’s overall economic interests to improve port efficiency through labor reform and other measures.

The port and trade community, which includes manufacturers, exporters, importers, and land and ocean carriers, because of its close business relationship with the port, can sometimes press governments to modify restrictive labor regulations that govern work practices in ports. Transforming these requirements into effective modernization plans may depend on other factors, but presenting a common voice can constitute an important force to initiate the labor reform process.

Finally, political commitment is essential to initiate labor reform. Without strong support and reassurance from government decision makers for labor reform, the chances for reform to succeed are slim. Similarly, promises from aspiring political leaders could fall short after an election is won. Moreover, the need to reduce government subsidies or the desire to obtain a one off cash injection by tendering concessions, have in the recent past been common incentives for reform and port labor reform.

While a port labor reform process may be instigated by either competition, community pressure, or political push, the most favorable condition occurs when all three forces are present simultaneously (the shaded area in Box 4).

Box 5 describes the efforts of port labor reform in the European Union.


How To Use The Toolkit


Framework for Port Reform

The Evolution of Ports in a Competitive World

Alternative Port Management Structures and Ownership Models

Legal Tools for Port Reform

Financial Implications of Port Reform

Port Regulation:
Overseeing the Economic Public Interest in Ports

Labor Reform and Related Social Issues

Context for Labor Reform

Key Labor Issues

Labor Involvement in Port Reform

Organizing to Address Labor Reform: A Task Force Approach

The Institutional Framework for Labor Reform

Developing the Workforce Rationalization Plan

International Support for Labor Adjustment

Postreform Labor Management Relations

Annex I and II

Implementing Port Reform


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