Sri Lanka plantations losses too high for wage hike without more productivity

COLOMBO (EconomyNext) – Sri Lanka’s regional plantation companies say their losses from the collapse in commodity prices are too heavy to grant a wage increase to workers without higher productivity.

The Planters’ Association, which represents regional plantation companies, said a mere 26-minute increase in the ‘effective plucking time’ will enable a worker to pluck two kilos more of tea leaves, without any increase in total working time.

“We can pay only what we can afford,” PA Chairman Roshan Rajadurai said. “We can’t pay more than what we earn.”

According to the estimates of the RPCs, a one rupee increase in labour wages will automatically increase the cost of production of tea by 52 cents per kilogramme.

The RPcs are currently negotiating a new collective agreement governing wages with estate labour unions with the existing one having ended on 31 March 2015.

Rajadurai said they were proposing a wage hike linked to better productivity that would enable the firms to cope with the market downturn while better compensating workers.

“The tea market has been on a downward trend since April 2014,” Rajadurai told a news conference. “It’s not that we don’t want to pay, but it’s our inability to pay. Global prices are beyond our control.”

He said there had been an 11-fold increase in estate wages in the last 20 years after they were privatised while tea prices have gone up by only six times
“We been giving big wage hikes although tea prices have not kept pace. This year there has been significant reduction in prices and RPCs are making heavy losses.”

Workers in Sri Lankan estates have higher wages and better living standards and facilities than those in other tea- growing countries, he said.





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