Sri Lanka tea plantations propose new wages based on smallholder model

ECONOMYNEXT – Sri Lanka’s Regional Plantations Companies have proposed new wage model based on smallholders, which the firms say can raise output and provide more earnings for workers, unlike a flat daily wage.

“We urge all stakeholders to carefully consider the extremely valuable benefits that our proposals offer,” Bhathiya Bulumulla asserted, Chairman of the Planters’ Association of Ceylon which represents the companies aid.

“We must move away from the traditional wage system and look towards the sustainability of the industry, where workers can become empowered entrepreneurs.

“Once productivity models are implemented, workers will have the benefit of flexi-hours, and worker mobility where other family members can contribute towards the earning process as well.

“Our workers will have a say in when and how they work, and drastically improve their earnings in the process,”

The new wage model, which allows for a variation had been handed over the Minister of Labour and trade union leaders.

Unlike the smallholder sector where there is room for market-based innovation, in the RPC sector, it is heavy-handed state intervention.

At least one minister had threatened to expropriate the firms unless wages are raised according to state dictates, at a time when the country is trying to attract foreign direct investment.

Under the new proposals, RPCs said they will offer a fixed daily wage, re-introduce attendance and productivity incentives.

The companies have proposed a mix of 3 days of daily wage and 3 days of productivity-based earnings, where workers will have the capacity to expand their earnings based on their output.

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The model is explained below

Alternative I

The first alternative under the productivity-linked proposal is a system where workers are paid Rs. 50 for every kilo of green tea leaf plucked (inclusive of EPF/ETF).

Where a high plucking average of between 30-40kgs a day is attained (over and above the existing norm), workers have the potential of expanding their earnings exponentially.

In the case of the Rs. 50 rate, a worker who plucks 20 kg will receive Rs. 1,000 per day, and a monthly pay of Rs. 25,000.

Current annual plucking averages among RPC companies are between 20-22kgs a day. However, a majority of the best harvesters have plucking averages between 30-40kgs, this means that earnings can now be expanded to over Rs. 37,500-62,000 per month.

Alternative II

The next alternative is that workers are remunerated based on a share of the National Sales Average (NSA) ratio of 35%.

Under the new daily-wage component of the proposal, workers will be paid a total Rs. 1,025 for a day’s work.

The breakdown is as follows:

Basic Wage – Rs. 700, EPF/ETF – Rs. 105,
Attendance Incentive – Rs. 70,
Production Incentive – Rs. 75
and
Price Share Supplement – Rs. 75.

If workers are to be compensated purely on this model, they will see an increase in their monthly earnings by Rs. 4,250. If workers exceed the plucking norm, they will receive higher compensation.

The firms say in pilot projects conducted on RPC estates and according to studies conducted by the Tea Research Institute, productivity-linked models have increased the take-home pay of workers.

The RPC proposal has also asked that firm be given the discretion be given to companies to choose between the models. (Colombo/Dec24/2020-sb)

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  1. This is all a load of hogwash. Productivity has dropped because non of the RPCs have kept up to the promised replanting percentage. While small holder yields have increased by leaps and bounds the big RPCs yields have fallen year by year. They are only interested in sucking our resources dry.

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