Pakistan Railways lays off 18% staff as part of IMF reforms

IMF has urged governance reforms for loss-making SOEs, plagued by inefficiencies, debt, and mismanagement.

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Pakistan Railways has terminated 18% of its "unnecessary staff" as part of its efforts to improve performance and align with the reform agenda mandated by the International Monetary Fund (IMF), Prime Minister Shehbaz Sharif was informed on Monday.

The move is a key step in implementing ambitious reforms required by the IMF under its $7 billion financial bailout program.

During a meeting chaired by the PM to review the performance of the Railways sector, the premier directed the organisation to modernise its operations. He underscored the need to attract passengers by offering competitive and improved travel services through public-private partnerships.

He also instructed Pakistan Railways to hire professional and skilled manpower, replace outdated systems with modern technology, and develop a comprehensive strategy to increase regional trade, especially with Central Asian countries.

Additionally, the premier called on Pakistan Railways to utilise its vast land assets for business activities in collaboration with the private sector to generate revenue.

The Prime Minister’s Office (PMO) reported that Pakistan Railways suffered Rs10 billion in losses during the devastating floods of 2022, when much of its infrastructure remained submerged for 35 days.

Despite the setback, the Railways improved its performance in subsequent months and has earned profits equivalent to the initial cost of its freight operations, the PMO said.

The reforms aim to transform Pakistan Railways into a self-sustaining and efficient organisation capable of playing a pivotal role in the country’s economic development.

However, the layoffs highlight the tough decisions being made to meet IMF conditions and improve the long-term viability of state-owned enterprises.

The IMF has long recommended improving governance in loss-making state-owned enterprises (SOEs) like Pakistan Railways, which have accumulated billions in losses over the years due to mismanagement, operational inefficiencies, heavy debts, and corruption.

Privatizing public sector organisations and reducing excessive staffing are among the critical reforms Pakistan has undertaken to boost its struggling economy.

Pakistan Railways, plagued by decades-old infrastructure and poor management, has been particularly affected. The organisation has faced frequent train accidents due to outdated signal systems and tracks, further tarnishing its reputation.