RPCs shoot down estate worker demand:

Rs. 1,000 daily wage impossible

The demand of plantation sector trade unions for an unconditional 62% percent increase of the daily wage of estate workers, from the present Rs. 620 to Rs. 1,000 is inconceivable in any industry, a spokesman for Regional Plantation Companies (RPCs) said.

He said the productivity-based wage proposal enables workers to meet their aspirations of earning Rs. 1,000 per day.

RPCs find even the present daily wage to be significantly above production costs and are experiencing negative cash flows.

RPCs have proposed an 11% increase in the basic wage to Rs. 500 (from Rs. 450 at present) for a minimum daily plucking average of 15 kg of tea leaves. Each additional kilo plucked will be paid at Rs. 40 (an increase from the Rs. 23 paid at present), thus enabling a worker who plucks 25 kg of tea leaves to earn Rs. 1,000 a day (including EPF and ETF), thereby enabling productive workers to significantly increase income.

The productivity based proposal of the RPCs has 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.

An unconditional increase of the daily wage to Rs. 1,000 is impossible at present, as it would need the average revenue from a kilo of tea at the Colombo Tea Auction to be Rs. 660, for a plantation company to merely breakeven.

In contrast, in June 2015, the average price of a kilo of tea at the Colombo Tea Auction was only Rs. 400 (according to brokering firms) while the production cost of a kilo of tea exceeds Rs. 450.

The Planters’ Association of Ceylon, which represents the interests of the 22 Regional Plantation Companies, calls on trade unions to seriously consider the proposal of the RPCs as it offers the only viable alternative to solve the present crisis in the tea and rubber industries, which even the government has recognised in providing certified prices to smallholders.

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

There is significant room for improvement of productivity, particularly through increase in ‘effective plucking time,’ (time actually spent on the plucking of tea) as 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 18kg, in Kenya and Assam (in India) the figures are 48 kg and 28kg.