Port labor reform is a balancing act that must consider workers’ rights and social equity, port users’ and operators’ commercial needs, the need to foster competition, and the interaction between governments and port interests.
The current concept of social equity (that is, job and wage security) was developed at a time when governments believed they could insulate their economies from the rigors of fierce international competition. Developing countries, in particular, often pursued policies designed to reserve domestic markets for national entrepreneurs while seeking to create broader export markets through the receipt of preferential treatment under multilateral trade agreements. In this environment, dock workers (and other labor) were sheltered from the full force and effect of international competition, or so it may have seemed.
Similarly, governments were temporarily spared having to make difficult decisions associated with adjusting labor conditions and relationships to conform to global market forces. Governments, therefore, guaranteed dock workers’ jobs, purchasing power, and benefits. At the same time, they were often reluctant to make investments in new technology or to take steps to reduce costs and improve productivity. The unfortunate truth is that this interpretation of social equity raised the costs and prices of imported and domestic products in national markets and contributed to a downward spiral of noncompetitiveness. As such, this concept of social equity was unsustainable.
The concept of social equity today has shifted to a commercial opportunity-oriented approach. Under this approach, job security, which ultimately depends on expansion of trade and transport activities, is not achieved through government guarantees of work, but through education, training, and retraining programs. By this means, the enhancement of workforce skills and abilities, together with greater participation in workplace decisions, lead to better job opportunities and improved productivity. Box 11 compares past and present aspects of job security.
For workers displaced as a result of reforms, fair compensation should be granted for the relinquishment of their acquired rights and privileges. To facilitate their early reentry into the national workforce, displaced workers should be offered retraining programs and job search assistance, and above all, an institutional structure that ensures that benefits and privileges given up by these workers will not be appropriated by some other group within the port or trade community. Labor’s possible role in this area would be to ensure that training programs become an integral component of the modernization process, promote occupational health and safety, and establish a collaborative process for the selection and introduction of new equipment.
Establishing interport, intraport, interunion, intraunion, and nonunion competition is key to addressing shipping and port companies’ needs for improved productivity and cost effectiveness.
Creating this competition usually requires economic regulatory reform, including the elimination of bureaucratic obstacles to the free interplay of market mechanisms affecting the supply and demand of dock workers and decentralization, including the assurance that labor responds to local market signals without crosssubsidies among related labor organizations in competing ports.Labor’s possible role in this area would be to negotiate with port employers to establish job education and experience requirements and provide training courses that address local market needs.
Antimonopoly laws must be applied to terminal operators and dock labor alike to ensure that market mechanisms do not result in the creation of cartels. Labor’s possible role in competition should be to ensure that market mechanisms are used to compete fairly and that port operators do not abuse their market power.
To avoid pressures to modify market outcomes, governments should remove themselves from direct involvement in port labor relations, collective negotiations, and informal dispute resolution. A proper commercial setting should be able to function without political influence, although the government has a major role to play in labor rationalization and its funding. Labor’s possible role in this area would be to negotiate on a transparent basis without political manipulation; suggest measures to improve productivity, facilitate work, and reduce costs; and share decision authority at the operational level.
Port labor reform is an economically and politically challenging process. As such, it can be expected to elicit strong political emotions both for and against. Consequently, the port labor reform process should be begun and completed within the term of a single public administration. The reason for this is that the changes to existing labor regimes that are considered “objective” by one administration could be judged to be “biased” by succeeding administrations. Trying to carry over this reform process from one administration to the next often results in significant delays or even the discontinuation of the entire reform process.
Further, if port reform includes inviting potential investors to operate state-owned port facilities, it would be advantageous to conclude the labor reform component before the project is marketed and a request for bids is tendered. This will clarify the potential investors’ future labor relations and costs, thereby reducing the degree of uncertainty and risk and, with the right labor reforms, making the offering more attractive to reputable investors and operators.
Nevertheless, one can expect that labor reform will be a continuing process that will involve adjustments to respond to changing market conditions.