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Railway Workers' Union (Open Lines)

Pakistan Railways (PR) plays a vital role in passenger and freight transportation for a country with a population of more than 160 million. In 2007, PR carried 83,899,000 passengers and 6,420,000 tonnes of freight. The 7,791 km rail network has 589 railway stations and spans from Kemari (Karachi) to Taftan (Balochistan province) near the border with Iran, and up to Landi Kotal in the north. PR rolling stock comprises 544 locomotives, 1916 coaches, and 19,638 freight carriages. During the financial year 2006-2007, PR reported an operating revenue of 20 billion rupees (US$251 million), whereas the expenses remained at about 22 billion rupees (US$276 million).

Restructuring and the role of financial institutions

In the late 1970s, new governments in various countries decided to reduce the state’s role in the economy. The mainstream thinking emphasised privatisation of state enterprises and liberalisation of trade and financial markets.

The World Bank and the International Monetary Fund (IMF) made privatisation a condition for developing countries to receive funds. At the beginning, only smaller companies had been the target of privatisation in developing countries. This was the case in Pakistan as well, with the notable exception of Pakistan Telecommunications Company Limited (PCTL). However, corporatisation or what can broadly be called “restructuring” had taken place. In some cases, it meant the creation of public limited companies and the floating of shares (for example, The Oil and Gas Development Company in Pakistan). More generally, the emphasis had been on creating separate management units in order to “rationalise” production and to reduce the so-called “inefficiencies”.

Restructuring of Pakistan Railways

The process of restructuring Pakistan Railways began in 1997, when the then prime minister asked Shahid Javed Burki, a former senior official of the World Bank, to prepare a report on Pakistan Railways. Some short, medium and long term steps were suggested for splitting PR and corporatisation.

Core and non-core activities/assets were segregated. Closing its non-profitable sections and stations was proposed. Ancillary services like hospitals, schools, sports centres, hostels, and clubs were recommended to be sold or leased out. A workshop on restructuring and reform, held to prepare an action plan, was largely attended by railway consultants and experts, but no trade union leader was invited.

Following this plan, three consultants were appointed and PR was divided into three public limited companies:

• Passenger Business Unit (PBU);
• Freight Business Unit (FBU);
• Infrastructure Business Unit (IBU).
  
  

Consequently, several other measures have been also implemented:

• The workforce was reduced from 113,000 in 1997 to 95,000 in 2001.
• Travelling facilities and allowances as well as paid overtime have been halved.
• Most hospitals and schools have been sold or leased and hence medical and education facilities have been minimised.
• Ticketing and parcel operations have been partly privatised.
• Operations of several trains have been contracted out, and many more could follow soon.
• The washing and cleaning of trains, stations and railway colonies (residential areas for railway workers) have been outsourced.
  
  

As a result, the “restructuring” of Pakistan Railways has essentially meant the following:

• a reduction in the size of the workforce and an increase in contractual labour;
• decrease in production, meaning goods have been purchased from the international market instead of acquisition from the domestic market (i.e. numerous trains were bought from China, during the Musharraf’s regime);
• cut in workers’ benefits, such as education and health facilities, housing allowances, etc;
• railway real estate was used for generating revenue;
• highly paid consultants and private managers were hired to be responsible for eliminating wastage and increasing efficiency.

The “restructuring” of PR has not produced any significant reduction in the company’s deficit, nor has it necessarily improved the services provided. Instead, workers suffered dramatic consequences in terms of job security, whereas salaries and benefits of officers and hired consultants increased several times.

Private financial institutions have not played a major role in this “restructuring” process per se, as private financiers have not invested in railways. It has been already been pointed out that the international financial institutions provided the government of Pakistan with funds under the pretext of boosting corporatisation and privatisation of state enterprises. The international financial institutions have not directly invested in railways, however they have continued to ask railways to enhance revenues by reducing costs only.

It is crucial to analyse public enterprises such as railways in evaluating the success of “restructuring” initiatives. Even though the international financial institutions argue that railways could become profitable, the “restructuring” of Pakistan Railway has not produced its desired effects. Hiring highly paid consultants to strengthen the company, while claiming that major costs are incurred by employees only, cannot hide the fact that railways have always suffered because enormous resources have been wasted on salaries and in-kind benefits for management. Meanwhile, no serious attempts are made to increase productivity by improving workers’ skills and by making substantial investments in railway infrastructure. The “restructuring” of Pakistan Railways made no exemption, which re-enforced the disadvantage that PR was already facing in terms of competitiveness in a globalised economy.

Railway Workers’ Union (Open Lines) does not agree with the theory that publicly owned enterprises providing services such as railways should necessarily be profit-making. While it is true that they should not be white elephants, such enterprises serve social objectives and therefore should not be expected to conform to narrow money-making economic logic. The state should subsidize the poor as well as providing employment, but the “restructuring” of railways has been designed to impede these social objectives.

The union believes that much of the railways’ financial crisis can be addressed by reducing expenditures on bureaucracy and consultants, whilst assigning workers a greater role in managing the companies. Railway workers and the public cannot see corporatisation or privatisation as a viable option under no circumstances.

Railway Workers’ Union (Open Lines) facing tough challenges

Pakistan Railways is divided into two main establishments: Workshops (production and manufacturing units, with 16,000 employees) and Open Lines (national rail network with transport operations, with 95,000 employees).

Railway Workers' Union (Open Lines) has a collective agreement for railway workshops, but not in Open Lines, despite the fact that the union had secured an overwhelming majority of votes in the latest referendum held in 1982, during the martial law regime, because of its struggle for the restoration of democracy in Pakistan. Since 1982, no opportunity has been given to railway employees to elect their representatives.

At present, Railway Workers' Union (Open Lines) is a large and genuine representative union of railway workers in Open Lines, having a total membership of 40,000. In October 2008, the union initiated a campaign through seminars and workshops to educate railway workers. The aim is to organise and attract more than 20,000 railway workers, not only in Open Lines but also in other railway related outsourced activities. Efforts are being made to unify all other railway unions.

Railway Workers' Union (Open Lines) was founded by Mirza Inbrahim, a prominent labour leader. In 1993, 90 per cent of railway lines were declared of military interest and therefore railway staff employed to work on these lines were prohibited to take part in trade union activities. Railway Workers' Union (Open Lines) had no access to railway employees during the ban on trade union activities since 1993, so workers were unorganized.

Railway Workers' Union (Open Lines) bitterly opposed the ban of trade union activities on Open Lines and held thousands of rallies, processions, organised token strikes and took all steps to restore trade union activities, but their struggle has been suppressed. During General Pervez Musharraf’ regime, between 2000 and 2006, more than 2,000 trade union activists were removed and/or dismissed from service and about 5,000 have been transferred to remote places or threatened to make them refrain from taking part in trade union activities.

In spite of all this repression, victimisation and discrimination, the union is continuing its struggle. The new democratic government has lifted the ban and allowed trade union activities on open lines of Pakistan Railways. Railway Workers' Union (Open Lines) has submitted to railway administration a list of demands covering problems of almost all railway employees and is campaigning to organise railway workers to fight and overcome tough challenges.

This is the edited version of the Restructuring of the railway industry in Pakistan – Preparing unions to influence the process, submitted by Rao Muhammad Naseem, General Secretary, Railway Workers’ Union (Open Lines), at the ITF/FES South Asian Railway Seminar in Bhuwaneshwar in November 2008.