New wage agreement unsustainable: planters

• Planters and workers reluctantly agree on Rs.730 daily wage
• Planters say a better model will be hammered out next time
• Productivity clause included in the new agreement 
• PA Chairman says new agreement still puts tea industry in jeopardy 

The Regional Plantation Companies (RPCs) which signed the Rs.730 daily wage tripartite agreement with the plantation trade unions and the Sri Lankan government yesterday, said that the agreement was not sustainable, and stressed that a completely different model would be hammered out during the next wage negotiations in two years time. 

With statutory payments, total wages under the new agreement will be at Rs. 805 per day. An estate worker was previously paid Rs. 620 a day for picking 18kg of tea leaves. However, the workers demanded Rs.1, 000 as daily wage. 

“The trade unions were unhappy to come down, and we were unhappy to go up. This is not a sustainable model,” Planters Association of Ceylon (PA) Immediate Past Chairman Roshan Rajadurai told Mirror Business.

The newly signed agreement includes a productivity clause as well. The agreement includes Rs.500 in basic wages and a price share supplement of Rs.30, leading to a total guaranteed wage of Rs. 530.
“A further attendance incentive of Rs 60 will be provided to workers who maintain a minimum attendance of 75 percent, while a new productivity incentive of Rs. 140 will also be provided for workers who obtain the estate/divisional norm, leading to a minimum total wage of Rs. 730,” a PA statement added.

A worker who plucked 25 kilogrammes of tea leaves could earn as much as Rs. 975 a day, in addition to communist style welfare benefits including education, health and housing provided by the RPCs, which call it a ‘cradle to the grave’ programme. PA Chairman Sunil Poholiyadde noted that the new productivity-linked model would still put the tea industry in jeopardy. Rajadurai said the next wage negotiations in 2018 would transform the RPC labour into entrepreneurs, with either a revenue share model, or the outgrower model practiced by the smallholders.
“We signed this with an understanding that in the next round of negotiations we would go for a revenue share or outgrower model, which is sustainable,” he said.
The labour wages had accounted for almost 70 percent of the production cost of a kilogramme of finished tea in the past.

“At present, Sri Lanka’s cost of production rates among the highest in the world at Rs. 575 per kilo, as compared with Rs. 450 per kilo in 2015. Meanwhile, current sales averages at the Colombo Tea Auction for Western High Grown tea stood at around Rs 440 per kilo,” the PA statement said.
The RPCs have accrued nearly Rs. 15 billion in losses over the past 3 years due to rising labour costs and poor international prospects for tea. Plantation Industries Minister Navin Dissanayake had recently opined that the RPCS should have pushed for a productivity based model several years ago.