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Monday April 15th, 2024

Sri Lanka plantations call for new model as wage talks loom

ECONOMYNEXT – Sri Lanka’s commercial tea and rubber plantations are calling for a wage model in the style of small holders moving away from the fixed rates that is reducing output and worker earnings as collapse of the rupee slashes real wages.

The newly appointed head of Sri Lanka’s Planters’ Association which represents the managers of large public traded companies or Regional Plantations Companies, Senaka Alawattegama said “fresh negotiations looming.”

Sri Lanka’s President Gotabaya Rajapaksa ordered 1,000 rupees a day wage to workers who already have a collective agreement as part of promises made in the run up to the elections in a series of state interventions including a fertilizer ban.

Sri Lanka’s small holder farms are already practising a model where a group of workers have responsibility over a farm who are paid according to the volumes they pluck and also keep owners informed of the need for fertilizer and other inputs to boost leaf growth.

Some plantations companies have also tested other wage models. Until the flat rates was re-introduced by manifesto a partial productivity based model was in place.

“The success of the tea smallholder sector – in terms of increasing the earnings of workers and increasing productivity proves that this model is effective,” Alawattegama said in the prepared text of a speech made at the annual meeting of the Planters’ Association.

“The experiences of RPCs (Regional Plantations Companies) that have now reliably shown that worker earnings increase drastically when wages are linked to productivity.

Sri Lanka’s RPC have been losing its workforce steadily to other sectors and there are shortages especially in farms closer to the Western Province which is partly blamed on the lack of the current wage model and the lack of mobility of labour.

“Looking to the future, our biggest challenges may well be ahead of us,” Alawattegama ssaid.

“Chief among them is the shortage of labour across the plantation sector.”

The workforce of the RPC’s which were at 327,000 in 1992 when privatization of the sector began to 115,000 so far.

There were no signs of it stopping he said.

“Especially if Sri Lanka is to achieve its national production targets our first priority is to implement every viable measure to reverse the migration of labour out of the plantation sector,” Alawattegama said.

“The only way to accomplish this is to introduce a model of work that actually serves the interests of our employees.

“The same flat daily wage system which has been in place since the colonial era is simply not suited to the task.

“As our Association has stated time and again, a productivity-linked wage is the only way forward.

“With it, we can pay workers substantially more than the flat daily Rs. 1,000 they currently earn, and even more than the new flat daily wage rates that are now starting to be demanded.”

Politically connected plantations workers had in the last instance intimidated estate managers, he said.

“In several instances, our fellow planters were forced to put their life and limb at risk as a result of mob violence incited by politically connected individuals,” he said.

“Sadly, in recent years, good-faith negotiation has increasingly given way to similar kinds of thuggery.” (Colombo/Sept26/2022)

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Sri Lanka to discuss two contentious points with bondholders: report

ECONOMYNEXT – Sri Lanka and sovereign bondholders are to discuss two matters in the near future which the two sides failed to reach agreement at March talks in London, a media report quoting a top aide to President Wickremesinghe as saying.

Sri Lanka and bondholders had discussed four matters on restructuring international sovereign bonds in late March and agreement had been reached on two, President’s Chief of Staff Sagala Ratnayake was quoted as saying on state-run ITN television.

A restructuring proposal by bondholders was not in line with IMF requirements, and Sri Lanka had sent a counter proposal, he said.

The matters will be discussed at round of talks in the near future.

Sri Lanka was optimistic of reaching an agreement with the bondholders before June, officials have said.

According to matters already in the public domain, sovereign bond holders are keen to get a bond tied to dollar gross domestic product, as they feel IMF growth projections are too low.

In past re-structuring so-called value recovery instruments, a type of warrant, gave their owners extra payments if a country did better than expected and were tied to items like oil prices.

Bondholders had initially proposed bond which would have a lower hair cut initially, and it will have additional hair cuts if growth is low (about 3.1 percent) as projected in an IMF debt sustainability analysis. (Colombo/Apr15/2024)

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BIMSTEC Secretary General visits Sri Lanka, discusses regional cooperation

ECONOMYNEXT – The Secretary General of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), discussed measures to enhance regional cooperation, during his visit to the island last week.

Ambassador Indra Mani Pandey, Secretary General of BIMSTEC visited Sri Lanka from 07 – 12 April 2024, following his assumption of office as Secretary General of BIMSTEC in January this year.

The Secretary General “met with senior officials of relevant Ministries/Agencies to discuss measures to enhance regional cooperation under various BIMSTEC initiatives,” the Foreign Ministry said in a statement.

Several BIMSTEC countries have bilateral trade agreements, such as Sri Lanka and India, Thailand and Myanmar, Sri Lanka and Thailand, but no collective regional agreement to enable intra-regional leverage.

During the visit, Secretary General Pandey held discussions with Ministry of Foreign Affairs officials and paid courtesy calls on the President and the Minister of Foreign Affairs.

Secretary General Pandey participated at an event on “Regional Cooperation through BIMSTEC” organized by the Lakshman Kadirgamar Institute (LKI) on 9 April. (Colombo/April15/2024)

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Sri Lanka rupee closes weaker at 299.00/10 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 299.00/10 to the US dollar in the spot forex market on Monday, from 298.50/55 on Wednesday, dealers said, while bond yields were broadly steady.

A bond maturing on 15.12.2026 closed stable at 11.30/35 percent.

A bond maturing on 15.09.2027 closed stable at 11.90/12.00 percent.

A bond maturing on 15.12.2028 closed at 12.10/20 percent up from 12.10/15 percent.

A bond maturing on 15.09.2029 closed stable at 12.20/40 percent. (Colombo/Apr15/2024)

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