Wage bargaining in plantations:
One size fits all approach, not appropriate - Study
Sapumali GALAGODA
The one size fits all approach to wage bargaining is not the most
appropriate for the plantation sector states a study done by the
Regional Plantation Companies through the Employers' Federation of
Ceylon on the sustainability of the industry. The study themed the Long
Term Profitability and the Productivity of Sri Lanka’s RPCs Tea and
Rubber Sectors Implication for Wage Determination was done by Dr Ramani
Gunatilaka a well-known economist of Monash University.
According to the findings of the study the high grown, mid grown and
Uva teas have been making losses for at least half the period under
consideration. The low grown tea sector profitability is dependent on
the large bought leaf component which has effectively subcontracted
green leaf production cost. Rubber is profitable because of good prices
and high productivity levels.
The high grown, mid grown and Uva sectors are clearly unsustainable
at current operating costs. Labour productivity has been either stable
or has declined while the yield per hectare has risen only in mid grown
and rubber sectors.
The high grown and Uva are the worst off as labour productivity and
yield have declined. RPCs with more exposure in the low grown and the
rubber sectors are able to withstand the losses generated by the high
grown, mid grown and Uva sectors.
These sectors are clearly in trouble if they had not invested in
replanting in earlier and/ or diversified into other profitable economic
activities says the study.
The unit labour cost or nominal daily wages paid in the sector are
lower than those prevailing in the informal market. The fact that the
high grown, mid grown and Uva sectors have been posting persistent
losses suggests that these sectors cannot afford any further increase in
costs without implementing urgent structural reforms that can increase
productivity levels. The low grown and rubber sectors are arguably in a
better position to increase wages especially as the share of labour
compensation in total value addition has declined in these sectors in
recent years. The high labour costs is only one aspect and it should not
blind stakeholders to what else is wrong in the sector.
The study further suggests that the RPCs need to decide whether
processing or green leaf production makes more economic sense and also
decide how much replanting needs to be undertaken.
The industry wide wage rate appears to have prevented the movement of
labour between RPCs, sectors and divisions leading to acute labour
shortages on some estates and labour surpluses in some others.
In many ways privatisation of the management of plantations has not
entailed a sufficiently positive paradigm shift in the sectors
orientation towards the market, states the study.
The RPC sector needs to be unbundled into profitable and loss making
sectors so that profits as well as losses are immediately identifiable
and quickly addressed.
The study states that wage bargaining also needs to be decentralised
to free the movement of labour within the sector and enable wages to be
determined on the basis of supply and demand providing incentives for
workers to migrate from labour surplus plantation areas to labour
deficit areas and help stem its migration out of the sector.
The Planters Association is the umbrella organisation of Regional
Plantation Companies (RPC). |