ECONOMYNEXT – Sri Lankan regional plantation company Kelani Valley Plantations is testing a revenue sharing model with workers in an effort to control wage costs after repeated wage hikes wrested by labour unions.
The company’s chairman Mohan Pandithage said the issues arising from increasing labour wages has become a “daunting challenge” amid the volatility of tea and rubber prices.
“Our response was to develop a more sustainable wage model that would strike a balance between the company’s costs and the benefits accruing to the worker,” he told shareholders in the company’s latest annual report.
“We commenced a pilot project to introduce a revenue sharing model which was structured in line with the smallholder concept.”
The initiative is now at a pilot testing stage, and Pandithage said he was confident that once implemented successfully, the firm will be able to replicate it to develop a “fully-fledged out grower model that will improve the long term scalability and sustainability of the business.”
Kelani Valley Plantations Managing Director Roshan Rajadurai said the protracted wage negotiations that led to a mandatory 11% wage hike for the entire estate workforce from September 2016 had increased cost of production.
The issue of labour wages in the tea industry was becoming more and more complicated each year, Rajadurai said.
He called for “greater consistency in policy standards and stringent action by the authorities to develop a clear long-term strategy to provide a permanent solution to this lingering issue.”
(COLOMBO, June 15, 2017)