Sri Lanka tea estate wage talks deadlocked

ECONOMYNEXT – Talks between Sri Lanka’s regional plantations companies and estate labour unions to raise wages are deadlock with a union demand to double the basic pay unaffordable at a time of low tea and rubber prices, officials said.

The two-year collective agreement between regional plantations companies (RPCs) and unions was to be renewed on 15 October 2018.

But no agreement has been possible despite three months of talks which will be continued, said Sunil Poholiyadde, chairman of The Planters’ Association of Ceylon, representing the RPCs.

“The trade union demand to double basic pay to 1,000 rupees a day is totally unaffordable to the companies,” he told a news conference.

The RPCs, represented at talks by the Employers’ Federation of Ceylon, have proposed raising the basic wage of an estate worker by 20 percent to 600 rupees from 500 rupees.

Under the previous agreement, workers also got an attendance inventive (AI) of 60 rupees, a Productivity Incentive (PI) of 140 rupees and a Price Share Supplement (PSS) of 30 rupees and Employees’ Provident Fund (EPF) and Employees' Trust Fund (ETF) contributions of 75 rupees, amounting to a total daily wage of 805 rupees.

The RPCs have proposed a 33 percent increase in the AI up to 80 rupees, and a 20 percent increase in ETF/EPF up to 90 rupees in addition to the PI and PSS, leading to a maximum total daily wage of 940 rupees.

This amounts to an average increase of 3,375 rupees a month per worker, Poholiyadde said.

Additionally, tea harvesters who are able to bring in harvests above the norm of 16-18 kilos wil continue to be entitled to ‘over-kilo’ pay of 28.75 rupees for every kilo in excess of the plucking norm.

The productivity incentive of 140 rupees a kilo was introduced in the last agreement after a lot of debate with union agreement.

“Currently, there are workers who earn well over 1,000 rupees a day - productive workers,” Poholiyadde said.

“Our pay records reveal over 75 percent of workers are achieving this target and earning the 140 rupees productivity incentive. It means workers can actually achieve this target and earn over 1,000 rupees a day.”

While the plucking norm on estates was around 18-20 kilos a worker, some workers pluck 30 kilos.

The current plucking average in Sri Lanka is 18 kilos with harvesters working for about 40 percent of an eight-hour day in the field and where men typically work for only four hours per day, a PA statement said.

“Even then, more than 80 percent of RPC workers receive the Performance Incentive (PI) on their daily norm. In companies that have offered cash plucking on such a basis, the PA stated that the 15-20 kilo norm was achieved in just two hours.”

By comparison, the plucking average in Sri Lanka’s largest competitor nations, Kenya, stood at 60 kilos, South India at 50 kilos and Assam 36 kilos, where the norms in those nations had been set at 40 kilos, 34 kilos and 24 kilos.

The daily labour wage, in comparative rupee terms, in Kenya stood at 443.3, South India at 487.2 and Assam at 342, against 805 in Sri Lanka in 2016.

Poholiyadde said they introduced a productivity incentive into the wage agreement for the first time in the last agreement since Sri Lanka has to compete on the world market against tea producers with higher productivity and lower wages.

“We believe our productivity has to increase if we were to pay higher wages,” he said. “We compete in the same global market so affordability and productivity become major factors in our wage negotiations.”

Tea prices had slumped to 550 rupees a kilo on average today from 700 rupees a year ago, while that of the second major crop, rubber, had crashed to 250-275 rupees a kilo from 600 rupees a few years ago.

“The basic wage hike of 20 percent is substantial considering the price drop compared to a year ago,” said Roshan Rajadurai, former chairman of the PA. “We proposed a basic wage we can honour at today’s price level.”

The RPCs cannot raise basic wages further at current tea prices as gratuity payments will go up and add to the cost of production, making it unviable, he said.
(COLOMBO, 25 Octber, 2018)