By Skandha Gunasekara While President Gotabaya Rajapaksa’s instructions to have the daily wage of estate sector workers increased was commended by many, the discussions between the Government and the regional plantation companies (RPCs) appear to be at an impasse, with neither side willing to budge. President Rajapaksa, on 14 February, fulfilling one of his election pledges, gave directives to ensure that the daily wage of the plantation sector workers be increased to Rs. 1,000 by 1 March this year. The President noted that the new Government had taken several initiatives such as the introduction of tax exemptions and fertiliser subsidies to increase the quality and standards of this major sector and stressed the need to pass these benefits onto the workers. The President’s Office explained that the Government’s aim was to avail opportunities for workers to enjoy the benefits from the growth in the manufacturing and industrial sectors. Currently, plantation sector workers are getting paid under the provisions of the Collective Agreement signed between the RPCs and the estate sector workers’ unions. The Collective Agreement has been signed between the two parties since the privatisation of the plantation industry in 1992 as a means to uphold the dictates of freedom of association and the right to collective bargaining. The agreement is renegotiated and revised every two years. The Employers’ Federation of Ceylon (EFC) said it was “deeply perturbed” by the salary increase proposed by the Government for estate sector workers. The EFC noted that at present, the RPCs and two signatory unions, namely the Ceylon Workers’ Congress (CWC) and the Lanka Jathika Estate Workers’ Union (LJEWU), “are covered and bound by the Collective Agreement entered into in terms of our law that decided on current wages and which will be effective at least till January 2021”. The EFC also warned that the move to increase the daily wage could have a domino effect financially for the entire industry. “Financially, it will have a disastrous impact not only on the RPCs but also on the smallholders and eventually lead to the collapse of the industry. Therefore, we urge the authorities to refrain from going ahead with such (a) proposal,” it said in a statement earlier this month. As things stand According to the most recent revision of the Collective Agreement, from 2019-2021, the base daily wage of an estate sector employee was Rs. 700 (up from Rs. 500) in addition to a Price Share Settlement (PSS) of Rs. 50 per day (up from Rs. 30), an attendance allowance of Rs. 60 per day, and a productivity incentive of Rs. 140 per day. Additionally, the tea pluckers who achieve a daily target of 18 kg of plucked raw leaf were entitled to an over-kilo payment of Rs. 25/kg for each additional kilogramme of plucked raw leaf, and the common in-kind benefits workers receive include access to a medical clinic, maintenance of estate housing, provision of water to the estate houses, access to a nursery or kindergarten crèche, and tea rations – although not all tea estates provide these. Planters’ Association General Secretary Lalith Obeyesekere told The Sunday Morning that discussions with the Government were underway. “However, nothing has been finalised,” he said. However, a senior Planters’ Association source, citing various reasons, from low productivity to falling prices in the international market and a threat of the industry “collapsing” altogether if they were to increase already high costs by way of a wage hike, stood firm that it would not be possible to grant a daily increase to Rs. 1,000 without a change in other variables such as the stable market price for tea. He said a fixed price of Rs. 730 per kilogramme was needed. “Right now, the price of a kilo of tea is Rs. 510 while we are paying a daily wage of Rs. 750. If we are to increase it to Rs. 1,000 then the auction price must be fixed at Rs. 730 at least.” He said that the tea industry had been incurring continuous losses annually for many years. “In 2014, there had been a loss of Rs. 1.7 billion, a loss of Rs. 3.1 billion in 2015, and Rs. 2.2 billion in 2016. We only recorded some profits in 2017 – Rs. 2 billion,” he said, adding that 2018 and 2019 had also seen losses, but they were not calculated. The Planters’ Association source said that they had made several proposals to the Government to change the current archaic wage system. “The current wage system has been in place for over 150 years and is outdated; it constrains the productivity of the workers,” he said, while charging that if the wage hike to Rs. 1,000 is implemented as things stand, the tea industry would incur an annual loss of Rs. 12 billion. He said that a productivity-based wage system had been proposed which would easily see a worker getting a daily wage of Rs. 1,000. “We have proposed to pay Rs. 50 per kilo but a worker has to pluck a minimum of 20 kilos. When you look at it, plantation sector workers already pluck 18 kilos on average. Therefore, it will be easy for them to earn the Rs. 1,000 each day.” Takeover not yet on table Meanwhile, Minister of Plantation Industries and Export Agriculture Dr. Ramesh Pathirana said that negotiations were still underway between the Government and the RPCs and that an agreement was yet to be reached. “The President has taken a policy decision and the Cabinet of Ministers has approved it. We have decided to provide the much-needed economic relief to the estate sector workers. We are discussing different modalities with the companies, including a productivity-based incentive scheme for workers,” he told The Sunday Morning. When questioned as to whether the Government would carry out a sudden takeover of the estate sector if the RPCs did not agree, the Minister responded that such an option was not yet on the table. “We are still discussing the matter so we haven’t thought of any takeovers,” he said.