The Tea Industry Expresses Concern Over Wage Hike 

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A proposed 70% minimum wage hike for tea plantation workers in Sri Lanka has ignited widespread concern among industry stakeholders. While the goal of enhancing workers’ livelihoods is commendable, the Planters Association of Ceylon warns that such a drastic increase could have dire consequences for the industry, potentially harming both employers and employees.

Sri Lanka’s tea industry is a cornerstone of the national economy, being one of the highest foreign exchange earners for the country. It encompasses 21 Regional Plantation Companies (RPCs), 427 small and medium-sized tea factories and with 500,000 Small and Medium Tea Estate Owners. However, the industry is already under significant pressure due to the highest production costs globally, making it challenging to compete in the international market. Implementing a 70% wage increase overnight would exacerbate this issue, given that Sri Lanka is already the most expensive tea producer worldwide. Additionally, tea productivity has been on the decline over recent years, compounding the industry’s struggles.

Roshan Rajadurai, Managing Director of Kelani Valley Plantations & Talawakelle Tea Estates PLC

Roshan Rajadurai, Managing Director of Kelani Valley Plantations & Talawakelle Tea Estates PLC said, “While the proposed 70% wage hike for tea plantation workers is well-intentioned, it threatens to cripple the tea industry due to the already exorbitant production costs. A productivity-based pay system is a more viable solution, balancing fair compensation for workers with the economic realities of the industry, thereby safeguarding both their welfare and the industry’s future”.

In response to these challenges, the Planters Association of Ceylon has introduced an alternative productivity-based wage scheme. This model is designed not only to safeguard the industry’s viability but also to enhance the welfare of estate workers. Based on current industry standards, employees could potentially earn a minimum of Rs. 1820/- and onwards, under this proposed structure. This approach strives to strike a balance between ensuring fair compensation for workers and acknowledging the economic constraints that impact the tea sector.

Most workers currently earn more than Rs. 1700, with many earning over Rs. 50,000 per month in a market-based model that benefits both the worker and the company. Expanding this model across the upcountry estate sector without state interference in increasing fixed wage costs without corresponding output compensation would be beneficial. A state-mandated 70% fixed wage increase could lead to financial ruin for many companies, resulting in job losses and negative impacts on the financial sector due to the companies’ heavy borrowings.

The Planters Association of Ceylon is calling for a meeting with all concerned stakeholders to discuss this matter further. Such a dialogue is crucial for reaching a solution that ensures the prosperity of the tea industry and the well-being of its workers. The association has expressed its readiness to collaborate with the government to find a sustainable and mutually beneficial resolution.

While improving plantation workers’ wages is essential, it must be done without jeopardizing the industry’s viability. The proposed productivity-based wage scheme offers a balanced solution, ensuring both fair compensation for workers and the industry’s survival. It is now imperative for all stakeholders to unite, discuss, and implement a strategy that supports the long-term health and sustainability of Sri Lanka’s tea industry. Only through collaborative efforts can we secure a prosperous future for both the workers and the industry.

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