Government approves Rs5bn support for Karachi dock workers layoff plan

ISLAMABAD: The government has approved a Rs5 billion contribution toward a compensation package for the layoff of about 2,545 workers registered with the Karachi Dock Labour Board (KDLB), while the Karachi Port Trust (KPT) will arrange the remaining amount from its own resources.

The move follows the outsourcing of Karachi Port’s bulk and general cargo and container terminal operations to AD Ports, which did not take on the dock workers and has not been using their services. According to the Ministry of Maritime Affairs (MoMA), the workers’ reduced role after the outsourcing left them with limited utility at most terminals.

Cost of abolition and funding dispute

MoMA told the Economic Coordination Committee (ECC) that laying off the workers would cost more than Rs24 billion. KPT said it was not in a position to absorb the full burden because it is financing projects worth around Rs200 billion. It also maintained that it would still need to arrange roughly Rs10 billion in surplus funds despite limited resources.

AD Ports had asked KPT to retain responsibility for all liabilities related to the dock workers, saying it neither required their services nor would contribute to any related payments. The proposed abolition is also expected to face resistance from dock workers’ unions over concerns about job security.

Earlier, the finance division had declined to provide funds for the layoffs and asked KPT to meet the cost from its own resources. MoMA later sought a review of that position, arguing that the winding up of KDLB was a federal government decision and that the finance division should therefore share the burden.

Legal framework and repeal process

MoMA informed the ECC that KDLB operates under the Dock Workers (Regulation of Employment) Act, 1974. Under that law, a dock worker is defined as a person employed at a port for loading or unloading ships. Workers are registered under a scheme framed under Section 3 of the Act, and around 2,545 workers are currently registered under that arrangement.

The board was created under the law to ensure regular employment and income for dock workers and to oversee labour relations between the workers and KPT. MoMA said the prime minister’s task force on revamping the maritime sector had directed KPT to initiate legislation to abolish the Act.

The matter was later referred for official clarity. MoMA said the Law and Justice Division stated that, since the issue concerned employees, it fell within the domain of the Establishment Division. The Establishment Division, in turn, said the example of the proposed layoff plan for Pakistan Public Works Department employees was not applicable because those workers were civil servants.

Committee deliberations and ECC decision

A draft bill to repeal the 1974 law and the Karachi Dock Workers (Regulation of Employment) Scheme, 1973 was prepared and sent to the Law and Justice Division for vetting, which was completed. MoMA also said an implementation committee of the prime minister’s task force, in a meeting held on March 11, 2025, found KPT’s layoff proposal too expensive at over Rs24 billion and directed the ministry to seek further clarity from the Management Services Wing of the Establishment Division.

Later, a committee headed by the deputy prime minister held meetings on October 31, November 12 and December 1, 2025, and examined three compensation packages ranging from Rs7.582 billion to Rs12.780 billion. The committee decided that the finance division would provide Rs5 billion, with KPT covering the rest from its own funding.

Although the finance division initially said it lacked the fiscal space for budgetary support, citing KPT’s healthy liquidity position, the ECC ultimately approved the Rs5 billion contribution through a technical supplementary grant in the current fiscal year for the compensation package for KDLB workers.