Plantation companies say massive wage hike “inconceivable”

Published : 10:06 am  July 14, 2015 | No comments so far |  | 


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tea2The Regional Plantation Companies (RPCs) yesterday said the call for unconditional increase of the daily wage of estate workers to Rs.1,000— a massive 62 percent increase from the present Rs.620—is “inconceivable” given the current predicament the country’s tea industry is in.  

Estate workers, backed by trade unions, are currently carrying out a ‘go-slow’ campaign to push RPCs to win their demands. In response, the RPCs have closed the tea factories and removed the staff. As a result, the RPCs said they are collectively incurring a loss of Rs.120 million per day.

However, RPCs noted that the productivity-based wage model they have proposed enables workers to meet their aspirations of earning Rs.1,000 per day.

While the RPCs find even the present daily wage to be significantly above production costs and are experiencing negative cash flows, nevertheless, being conscious of the needs of workers, they have made the following proposal.
The RPCs have proposed an 11 percent increase in the basic wage to Rs.500 from Rs.450 at present for a minimum daily plucking average of 15 kilogrammes of tea leaves.

Each additional kilogramme plucked will be paid for at Rs.40 (an increase from the Rs.23 paid at present), thus enabling a worker who plucks 25 kilogrammes of tea leaves to earn Rs.1,000 a day (including EPF and ETF), thereby enabling productive workers to significantly increase their incomes.

“The productivity-based proposal of the RPCs have been presented to and discussed with the estate sector trade unions and offers a more sustainable solution to the workers’ needs for an increase in income,” Planters’ Association of Ceylon said in a statement.
“An unconditional increase of the daily wage to Rs.1,000 is impossible at present, as it would require the average revenue from a kilogramme of tea at the Colombo tea auction to be Rs.660, for a plantation company to merely breakeven.

Say productivity-based formula allows workers to earn daily wage of Rs.1,000

In contrast, in June 2015, the average price of a kilogramme of tea at the Colombo tea auction was only Rs.400 (according to broking firms) while the production cost of a kilogramme of tea at present exceeds Rs.450,” it added.  The Planters’ Association of Ceylon, which represents the interests of the 22 RPCs, urged trade unions to seriously consider the proposal of the RPCs as it offers the only viable alternative to mitigate the present crisis in both tea and rubber industries, which even the government has recognized in providing certified prices to smallholders.

While rubber prices have slumped to historic lows, key export markets to which more than 70 percent of Ceylon tea is exported – Russia, the Middle East and Ukraine – is in crisis due to military conflict, economic sanctions and depreciation of the Russian rouble.

Further, there is significant room for improvement of productivity, particularly through increase in ‘effective plucking time,’ (time actually spent on the plucking of tea) as both the labour productivity and effective plucking time is among the world’s lowest in the tea industry in Sri Lanka – despite wages and other benefits including housing being among the best among tea producing economies.
While the daily plucking average of a tea plucker in Sri Lanka is approximately 18 kilogrammes, in Kenya and Assam (in India) the figures are 48 kilogrammes and 28 kilogrammes, respectively.