Negotiations among plantation companies and the Plantations Ministry on the proposed wage hike ended inconclusively last week with no party agreeing to a workable solution that would create a win-win scenario for the trouble-hit perennial industry.
President Gotabaya Rajapaksa issued a directive last week calling on the plantation industry to increase the daily wage of workers to Rs.1,000 from March this year amidst a Collective Agreement reached between Regional Plantation Companies (RPCs) and trade unions a year ago.
The RPC represented by the Planters’ Association (PA) of Ceylon held a round of discussions with the Plantation Industries and Export Agriculture Minister Dr. Ramesh Pathirana last week on the proposed wage hike. However, PA sources said given the current state of the industry with global tea prices falling drastically and the high cost of living such a wage hike is not feasible.
“Granting a Rs. 1,000 wage per day would result in cost of production going up to Rs. 730 per kilo. The auction price per kg of high grown was Rs. 510 late last year and meeting the shortfall is daunting task,” sources said.
RPCs came up with a productivity based wage model instead of the nonviable traditional attendance based system.
Hayleys Plantations Managing Director and Past Chairman of the Planters’ Association Dr. Roshan Rajadurai said the PA had proposed the new wage model as the way out for the plantation sector which is going through a tough time due internal and external factors.
“Moving away from the 150-year old attendance based, management dependent wage model towards a productivity based, self-managed, wage model has been long overdue,” he said adding that wages must be linked to productivity as practiced in many countries that have excelled in production.
He said RPCs had proposed the ‘Revenue Sharing Wage Model’ several years ago to replace the old wage based model which is not sustainable for the industry which is facing stiff completion in the global market.
He said it is not sustainable to offer a wage hike of this amount under an archaic system where workers depend on the management for wages instead of increasing productivity. According to planters many RPCs are incurring losses due to the drastic fall in global tea prices following the escalating tensions in tea importing countries. The cost of production in Sri Lanka is higher than its competitors such as India and Kenya while the quantity picked by local pluckers is around 18-20 kgs per day when it is around 40 kgs in India and 60 kgs in Kenya.
The new wage model will guarantee workers 10 days work per month on the current estate wage model and for the rest of the days wage to be paid on a productivity based scheme where for every kilogram plucked a specific rate will be paid as it is done in the Tea Small Holder sector. According to PA sources the cost of wages including gratuity payments would increase between Rs.12-14 billion if the daily wage of workers is increased to Rs. 1,000.