RPCs to launch new campaign for productivity-based wage model

• RPCs and trade unions expected to meet for wage negotiations early next year
• RPCs to push for wage model similar to model seen in tea smallholder sector  
• PA intends to closely work with govt. to resolve issues and develop new vision for the sector 
• Calls for proper govt. policy based on privatization agreements

By Nishel Fernando
With multitude of challenges hampering the plantation sector, the Regional Plantation Companies (RPCs) last week vowed to launch a renewed effort to migrate into a  productivity-based wage model linked to the commodity price replacing the current outdated model.

The RPCs and the plantation sector trade unions are expected to sit on the discussion table shortly to reach a  collective agreement on salary revisions early next year, which takes place biennially. 

The negotiation process is highly politicised and it hindered several previous attempts by the RPCs to introduce a productivity-based wage model similar to that of the model seen in the tea smallholder sector.

“We wish to unequivocally state that it is long past time that we implement a sustainable wage model if we are to take this prestigious 150-year old industry towards a brighter future. 
By sustainability, we mean nothing less than a radical shift in the way wages are paid in order to provide significantly stronger incentives and create an entrepreneurial mindset among workers. Such an alternative model must be linked to productivity in a similar manner to what has been implemented in the smallholders for decades,” Planters Association (PA) of Ceylon newly elected Chairman Bhathiya Bulumulla said.

He was addressing the 166th Annual General Meeting of the PA in Colombo last Friday. 

Delivering his remarks, PA Outgoing Chairman Sunil Poholiyadde pointed out that the main reason for the success of the smallholder sector was their wage model. 
The smallholders currently account for 75 percent of the country’s tea output and almost 65 percent of the rubber production overtaking tea and rubber production of RPCs. 

 “We believe the improvement in this sector is mainly due to this payment structure where the smallholder is paid based on the selling average of the factory, which is to say price and the poundage they bring in, which is productivity,” he said.

The RPCs have been pushing for a productivity-based wage model while the trade unions opposed such a transition. However, RPCs achieved a short-lived success when they succeeded in introducing a partial productivity-linked wage structure 4 years ago.

“Unfortunately in the last negotiations, which took place in 2019 January, and following agitation from the unions, the productivity link was removed while a 40 percent increase in the basic wages was granted. This wage applies for two years irrespective of productivity or price,” noted.

Elaborating on further discrepancies in the current wage model, he pointed out that the current wage model applies to all crops despite the drastic differences in the revenue generating capacity of each crop.

“As a result, where tea is concerned, the price of a kilo of tea, which was double the wage in 1992 has increased to 50 percent of the wage as at present. Where rubber is concerned, wages were fixed at a time when rubber was selling at Rs.600, and they have remained at these levels even though the price of rubber has since collapsed to Rs.300,” Poholiyadde explained. 

Meanwhile, it was also pointed out that tea auction prices declined by almost Rs.100 as compared to prices prevailing in April-May, indicating that RPCs would struggle to grant an wage increase for their employees without an increase in productivity. 

The new government earlier pressured RPCs to increase the daily wage of a plantation worker to Rs. 1,000 with  effect from March 1 this year from the current Rs.720. Bulumulla stressed that RPCs intend to work with the new government closely in resolving the issues faced by the plantation sector while developing a new vision for the plantation industry’s future.

“My vision is that we start working towards an alternative wage model that will benefit the plantation workers and sustain our industry for generations to come. In this mission, we require everyone’s support,” he appealed.  The RPCs also face multiple challenges arising from impacts of climate change as well as government policy changes. 

Meanwhile, Poholiyadde also  urged  the government to adopt a proper policy, which protects State  land leaseholders and their investments, particularly  ensuring the protection of investors from arbitrary reaquisition of such land parcels. 

“We also believe that there should be proper policy laid down by the government based on the privatization agreements, which include permission for diversification and the institution of a land policy which specifically prevents lands which RPCs have invested substantially in from being acquired, which has unfortunately been the case in the recent past. Such measures would undoubtedly help to attract more investors and larger, long-term investments into the plantation sector as a whole,” he elaborated.