World Bank Port Reform Toolkit Module 7 : Labor Reform and Related Social Issues.

World Bank Port Reform Toolkit

Module 7 :Labor Reform and Related Social Issues

Module 72World Bank Port Reform Toolkit

Labor Reform and Related Social Issues

• Context for Labor Reform• Key labor issues to be addressed• Organizing to address labor reform : a task force approach• The institutional framework for port reform• Developing the work force rationalization plan• International support for labor adjustment• Post-reform labor-management relations


Port Labor Environment

• Overstaffing • Outdated and inefficient work rules

• Inflated Pay scales• Unreliability• Limited skills

Port Labor

Development in Logistics and

Transportation

National Economic and Trade Policies

Change in markets and services

Technological advances

Union discipline

Poor training, limited resources

Government policies to maintain or create employment

Out-dated management practices


Factors Prompting Port Labor Reform

Within the port or from other ports

-Manufacturers-Exporters-Importers-Carriers

-Government support-Need to reduce government subsidies



• Context for Labor Reform

• Organizing to address labor reform : a task force approach• The institutional framework for port reform• Developing the work force rationalization plan• International support for labor adjustment• Post reform labor-management relations

• Key labor issues to be addressed


Aspects of Port Labor Potentially Affected by Reform

• Restrictions on which entities can offer services in the port• Reducing overstaffing• Rigid and outdated job descriptions and duties• Limitations on working hours and days• Inefficient overtime allocation at excessive wage rates• Hiring of port labor exclusively through the unions• Restrictions on output• Unsettled and combative workplace culture• Insufficient training and retraining opportunities• Lack of clear and meaningful productivity objectives• Inadequate occupational health and safety procedures


Securing Constructive Involvement of Labor in Port Reform (1/3)

Principal areas of interest for port labor : Principal areas of interest for port labor :

• Stable and fulfilling employment

• Reasonable incomes

• Decent working conditions

• Social security and pension provisions

• Education and vocational training

• Health, safety and the environment

• Workplace democracy

• Freedom from discrimination, corruption and coercion


Involving labor in port reform allows to…Involving labor in port reform allows to…


• avoid mistrust stemming from the recurring conflicts between capital-labor trade-offs

• avoid inadequate and untimely preparation of port reform proposals

• find solutions to problems thanks to a trained personnel, with practical experience in port operations

• tap a source of ideas to add value to services to customers



Main Challenges :Main Challenges :

• Commitment from trade union leadership

• Ability to unify workers’ short- and long-term interests

• Need to improve expertise within the union

• Introduction of new trade union structures

• Finding solutions to social problems caused by privatization

• Acceptance of privatization

• Dealing with the new culture of competition

• Understanding the need for new labor relations




•The institutional framework for port reform• Developing the work force rationalization plan• International support for labor adjustment• Post reform labor-management relations

• Key labor issues to be addressed• Organizing to address labor reform : a task force approach


Composition of the Task Force

• Ministries of transport, labor, finance, economics, planning

• Port Authorities

• Main port customers and users

• Private investors, terminal operators, cargo-handling companies and stevedoring companies

• Port labor

The task force should include representatives of…The task force should include representatives of…


Scope of Work of the Task Force

• Undertaking or commissioning studies

• Organizing seminars or workshops

• Informing the community and consumers

• Fostering the creation of joint committees between unions and private terminal operators

• Defining government’s role with respect to ports

• Developing a workforce rationalization plan




• Developing the work force rationalization plan• International support for labor adjustment• Post reform labor-management relations

• Key labor issues to be addressed• Organizing to address labor reform : a task force approach• The institutional framework for port reform


The Institutional Framework for Port Reform (1/3)

-Economic regulatory reform -Decentralization

- Job education and experience requirements- Training courses

Objectives Labor’s Participation

Meeting Commercial NeedsMeeting Commercial Needs

Defining the Relationship between Governments, Ports and LaborDefining the Relationship between Governments, Ports and Labor

Objectives Labor’s Participation

-No involvement of governments in • port-labor relations• collective negotiations• informal dispute resolution

- Negotiation- Suggestion of measures to improve productivity- Facilitate the work and reduce costs- Share decision authority



Fostering CompetitionFostering Competition

Objectives

-Application of antimonopoly law

Labor’s Participation- Ensure fair use of market

mechanisms and no abuse of port operators’ market power

Redefining the concept of social equityRedefining the concept of social equity

Objectives

- Commercial opportunity-oriented approach

- Training programs- Occupational health and safety- Collaborative process to select and introduce a new equipment

Labor’s Participation


Timeframe for Port Labor reformTimeframe for Port Labor reform


-Within the term of a single public administration

-Before concessions/investments are marketed and requests for bids tendered




•International support for labor adjustment• Post reform labor-management relations

• Key labor issues to be addressed• Organizing to address labor reform : a task force approach• The institutional framework for port reform• Developing the work force rationalization plan


Gathering the Information needed to Draw Up the Plan (1/2)

• Port master plans and strategic goals for the short, medium and long terms

• Estimates of required activity levels

• Demographic information about the current port workforce

• Current staffing levels

• Estimates of minimum staffing levels

• National and local laws about labor rationalization

• Collective bargaining and employment agreements


•Training needs and skills of workers who will be seeking alternative employment

• Existing government and private sector organizations capable of assisting with training, retraining and job searches

• General information about the overall national and regional macroeconomic situation, existing employment patterns, labor absorption capacity, skills and experience of the workforce

Gathering the Information needed to Draw Up the Plan (2/2)


Alternatives to dismissals

• Normal attrition of the workforce : retirements, deaths, resignations

• Part-time employment, flexible working hours, reduction in working hours, variable workweeks, job sharing, overtime restrictions

• General or job category-specific hiring freezes

• Sharing of reductions in hours of work and pay

• Work rotation among other government departments


Elements of a Staff Retrenchment Program

• Compensation, with incentives, for early retirement and voluntary separation

• Compensation for involuntary separation

• Provision of training and demand-driven retraining

• Guidance and assistance in job searching and outplacement


Pitfalls in Designing and Implementing Severance Packages

• Paying too much

• Adverse selection : the best employees leave, the worst remain

• Revolving door : re-hiring of employees after the reform


• Applying rules of thumb to identify overstaffing or insufficient productivity areas

• Reversing the sequence : (1)Identify the services to be cut ; (2) identifying the specific overstaffed jobs and chasing away “ghost” workers, and (3) offering a severance package to those targeted to leave

• Develop alternatives to the standard severance package, to keep the best employees

Ways to Shrink Smartly


Rationalizing the Workforce (1/2)

• Pre-reform/privatization

Advantages

-“cleaner” business decision presented to potential concessionaires and investors, reduction of their uncertainty-the government pays for its previous decisions (overstaffing, rigid work rules…)-less disruption to port operations

Drawbacks

-Too little cut from the workforce, because of political pressure-Under-optimized cutbacks, severance packages and lack of incentives to retain the best personnel


Rationalizing the Workforce (2/2)

• Post-reform/privatization

Advantages- Decisions are efficiency-minded and profit-oriented

Drawbacks- Uncertainty and risk for investors => lower concession or selling price- More likely pursuance of industrial actions by port labor

- Give the operator the freedom to determine the firm’s required number of staff and skill mix

A piece of advice…


Who should pay for Offsetting Dislocation Expenses ?

• Governments, as former employers

• The private sector, as new employers

• Port customers, as beneficiaries




• Post reform labor-management relations

• Key labor issues to be addressed• Organizing to address labor reform : a task force approach• The institutional framework for port reform• Developing the work force rationalization plan• International support for labor adjustment


Main Programs and Funding Sources

• World Bank support : Technical assistance Conditional direct financing for severance payment Poverty alleviation programs

• Training support from International Labor Office PDP (Port

worker Development Program) or from UNCTAD (United Nations

Conference on Trade And Development):

General education, broad industry-focused vocational training Specific job instruction Communication and social skills courses Health, safety and environmental training



• Context for Labor Reform• Key labor issues to be addressed• Organizing to address labor reform : a task force approach• The institutional framework for port reform• Developing the work force rationalization plan• International support for labor adjustment• Post reform labor-management relations


Post-reform labor-management relations

• Cooperation and communication of labor and management (joint committees, participation of workers in workplace decisions)

• Balance of commercial goals of employers with social goals of their employees

• Agreement of all stakeholders about the proposed changes in labor regimes, collective agreements and work practices

World Bank Port Reform Toolkit Module 7 : Labor Reform and Related Social Issues.

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