President Gotabaya Rajapaksa in an election pledge late last year and after his victory assured a daily wage hike of up to Rs. 1,000 for plantation workers. A directive on this was issued to plantation companies who are yet to agree on the proposal.
Regional Plantation Companies (RPCs) represented by the Planters’ Association of Ceylon have turned down the request of workers through plantation trade unions to increase the daily wage to Rs. 1,000 given the drastic drop in tea prices in the global market from around Rs. 637 in 2018 to around Rs. 580 per kg in recent times. Discussions between plantation companies, trade unions and government officials on the proposed Rs. 1,000 wage hike for workers over the weeks, are expected to continue with neither party seeing eye to eye on the matter. The Sunday Observer Business spoke to Hayleys Plantations Managing Director and Past Chairman of the Planters’ Association, Dr. Roshan Rajadurai and Plantation Industries Minister Dr. Ramesh Pathirana to seek their views.
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RPCs insist on productivity based model
By Lalin Fernandopulle
“We have submitted our proposals to the Treasury Secretary presenting our views on the wage hike but to-date there has not been a response. We expect a favourable outcome soon,” Hayleys Plantations Managing Director and Past Chairman of the Planters’ Association, Dr. Roshan Rajadurai said.
Plantation companies have been reiterating the need to shift away from the age-old attendance based wage model to a productivity based, self-managed wage model which will enable workers to earn more and plantation companies sustain operations in a competitive market.
“We cannot go on with the archaic wage model which is not sustainable under a challenging global market environment which is subjected to various market conditions. Despite all odds, RPCs have continued to provide all the benefits to workers including healthcare and education facilities,” Dr. Rajadurai 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 competition in the global market.
According to planters, many plantation companies are continuing to incur losses due to the dip in world tea prices. Sri Lanka exports around 95 percent of its tea but has failed to be competitive due to the staggering cost of production (COP) compared to its competitors in the global market.
“The COP in Sri Lanka is higher than its competitors such as India and Kenya. If we want to compete we need to be competitive in cost. Labour and wage issues are some of the other pressing problems faced by the plantation industry,” Dr. Rajadurai said.
The daily average of plucking in Sri Lanka which is around 18-20 kgs per day is low compared to 40 in India and 60 by 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, wages 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. The productivity based Tea Small Holder model that has been practised in Sri Lanka for over 50 years has proved to be successful and a sustainable model not only in Sri Lanka but the world over,” Dr. Rajadurai said.
However, he said it will be too radical to completely break away from the age-old attendance based, management dependent wage model. Therefore, the RPCs have proposed an interim model of productivity based, self-managed, wage model for the RPC plantation sector.
“This system has resulted in more crops being harvested with improved leaf standards which has led to better prices and very much lower COPs for the estate,” he said.
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No intention of changing policy
By Sanjeevi Jayasuriya
The Government has no intention of changing the policy stance with regard to the proposed wage hike for the estate sector. The plantation companies should be prepared to pay the proposed increased wage, looking at a different business approach to accommodate the increase in expenditure by taking a revenue sharing approach or production based incentives system, Minister of Plantation Industries and Export Agriculture, Dr. Ramesh Pathirana told Sunday Observer Business.
The companies also could look at the possibility of deploying the out-grower model in meeting the cost effectively. The Government is seriously looking at improving the social and economic standards of the estate community and is confident that the plantation companies will respond positively to the Government’s initiative. “These companies could benefit from the recently introduced economic relief by way of VAT and other tax reduction in meeting the rise in cost. We look forward to a favourable outcome.
“The Government expects to arrive at an amicable solution to ensure a win-win situation for both parties, the plantation companies and the estate workers. We have the welfare of the estate workers in mind as a matter of priority in elevating their living standards. “As a segment that has not been duly recognised in terms of better living conditions and reasonable facilities to enjoy an improved and a quality lifestyle, the estate workers are entitled to a decent wage and we are conscious about this.
“The estate workers are important economic contributors and they too deserve comforts and facilities provided to other social stratas. Therefore, the Government considers that offering a decent wage will facilitate our efforts in alleviating poverty and help the under-privileged segment of society to be financially independent and to contribute more towards the national income,” he said.
A happy workforce will have a better performance and this will lead to increase in production and productivity with more revenue to plantation companies which will have multiple benefits in the long run.
As the Government is of the opinion that the tea industry will remain a key economic driver of the country, it will take measures to sustain and improve the sector by providing the requisite support and creating a conducive environment to scale up production and productivity to gain better results in terms of income and employment generation.
The plantation companies should revisit their operational model in keeping with future trends and engage in upgrading and modernisation measures to meet the growing consumer demand, both locally and internationally.
To this end, having an enabling environment for plantation companies and workers is of paramount importance. The Government’s efforts are well directed towards achieving this situation.