Sri Lanka plantations firms warn of higher losses from wage hike

ECONOMYNEXT – Sri Lankan plantations companies have warned that a wage hike demanded by labour unions would increase losses at a time when commodity prices remain low, with workers themselves losing if the industry collapses.

With wage talks deadlocked, the Planters’ Association of Ceylon, which represents listed regional plantations companies, said unions would have to accept either the PA’s proposal for productivity linked wages or a revenue sharing model.

PA Chairman Roshan Rajadurai said the 1,000 rupee wage hike demanded by unions “is plainly impossible and completely unaffordable.”

He said in a statement the RPCs understand the demand of the workers for a higher wage and have continuously provided significant wage increases – in some years even exceeding 35% – whenever they were able to. 

The PA said that if the wage hike was granted, the cost of production of the RPCs, which is in the region of 450 rupees per kilo, would exceed 610 rupees.

Since the total sale average of tea at the Colombo tea auction in the last week of November 2015 only amounted to 409 rupees, the loss from a single kilo of tea produced by RPCs would increase from around 50 – 70 rupees at present to over 200 rupees.

This would make their operations “completely financially and economically unviable and impossible.” 

Rajadurai said that for the unions to adamantly stick to “impractical demands which cannot be fulfilled is a short-sighted policy akin to ‘killing the goose that lays the egg.’

“An adverse impact on the Regional Plantation Companies and its eventual collapse would be totally detrimental to the workers themselves and the nearly one million resident population living in RPC estates, who enjoy many facilities provided by the RPCs despite not being part of our workforce,” he added.

The PA said that since the privatisation of the estates in 1992, the labour wages have increased 13 fold, although the tea prices have increased only by 6 fold in the same period.  





Many of the RPCs are listed companies which are answerable to shareholders.

“We cannot simply agree to draconian terms which will inevitably put the companies further in financial jeopardy and to its eventual collapse,” the statement said.

The RPCs have provided viable alternatives; productivity based wages and revenue sharing – which will be a win-win, workable method, enabling workers to earn their desired income by increasing output, which unfortunately the unions have failed to agree with.”   
(Colombo/December 17, 2015)

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