Increasing the daily wages of tea plantation workers in Sri Lanka, along with ensuring their welfare, has been a long-standing issue. While frequently discussed, it is rarely addressed with the urgency it requires. 

Despite the substantial representation of the plantation community across the country, meaningful support from leaders has often been inconsistent. According to stakeholders, the challenge in wage increments lies in finding a wage model that balances fair compensation for workers with the financial sustainability of the plantation companies.

At a May Day rally of the Ceylon Workers’ Congress (CWC) this year, President Ranil Wickremesinghe announced an increase in the daily wage of plantation workers to Rs. 1,700, a record hike representing a 70% increase. However, this promise followed a series of delays and unfulfilled commitments, as well as stark resistance from the plantation companies over difficulties in payment, eventually leading to the cancellation of the gazette. 

More recently, on Tuesday (10), State Minister of Labour Vadivel Suresh claimed that a discussion held at the Wages Board had proposed a new agreement to increase the daily minimum wage to Rs. 1,350, with an extra allowance of Rs. 50 for each kilogramme of tea leaves picked. Yet, this promised 35% increase is still pending implementation. 

All the front-running presidential candidates have also promised to uphold the welfare of the plantation sector, with salary increases central to their proposals. 

President Wickremesinghe, seeking re-election, has promised to abolish the outdated line room system and provide plantation workers with free land rights, allowing them to live in modern villages with advanced facilities. 

Samagi Jana Balawegaya (SJB) Leader Sajith Premadasa has similarly focused on raising wages, ending the line room system, and ensuring that plantation residents receive the same privileges as other villagers. The National People’s Power (NPP) has also emphasised increasing wages in line with the cost of living and enhancing plantation development. 

The topic of wage welfare has often become a battleground for party politics and election agendas, with various political factions making promises in order to win the mandate and votes of plantation workers. Amidst political motivations, the core needs of the workers remain and meaningful action is still needed, where promises must translate into real and sustained improvements in the lives of plantation workers.

Business realities 

Speaking to The Sunday Morning, Planters’ Association of Ceylon (PA) Spokesperson Dr. Roshan Rajadurai expressed significant concerns about the proposed wage increases for plantation workers. 

He emphasised that the Rs. 1,000 daily wage, already in effect, was the highest among the 45 wage boards in the country. “We are well above the national minimum wage and even well above our competitors and the agriculture sector that employs almost 2.3 million people,” he stated. 

Dr. Rajadurai pointed out that the plantation sector not only offered higher wages but also provided benefits such as housing, sanitation, and guaranteed lifetime employment from ages 18 to 60.

“In the company sector, we only have 100,000 workers, whereas the smallholder sector has 500,000 operators who get only Rs. 40 per kg without any EPF, ETF, maternity benefits, or other statutory benefits that the corporate sector offers. Comparatively, our workers have an advantage.” 

He also raised concerns regarding the financial feasibility of the wage increase. “By giving wage increases, the regional plantation sector will take a significant financial hit. When this year’s auction prices are less than last year’s, where will the money be found?” he questioned. “As professionals in the industry, we can only commit to what we can pay. We have now agreed to Rs. 1,350 plus EPF/ETF,” he added.

Dr. Rajadurai further explained that with the current Rs. 1,000 wage, the price of a kilogramme of tea at the auction was around Rs. 1,150, which was also the production cost at a low output of 18 kg. He noted that if production costs increased while the selling price remained Rs. 1,150, the industry would not be able to sustain itself, leading to potential bankruptcy. 

“People don’t understand that there is a revenue and a cost. Any business can pay its employees out of the revenue it generates,” he added.

Reflecting on the 70% wage hike announcement by the Government, Dr. Rajadurai stated: “The Rs. 1,700 wage was announced without any relevance to the market. What is it being compared to? If it is compared to production and Cost of Production (COP) or sales price, what is the anchor point? If there is no basis for the numbers, the industry will collapse.” 

He cautioned that further increases could force companies to make cutbacks that might negatively impact workers’ earnings. “There is a reverse impact,” he added. “When costs rise, we will have to undertake cost-cutting measures that will reflect on workers’ earnings. 

“Sometimes we are unpopular for stating the facts. We made a decision in the long-term interest of the industry and the people involved. A drastic increase will negatively impact the industry. We cannot commit ourselves to decisions that we can’t sustain because then the whole industry would collapse.

“The current debate over wages has become a politically manipulated, manufactured story, with some parliamentarians openly threatening companies that oppose the wage hike. For the industry’s sustainability, decisions must be made carefully to avoid a collapse that would harm both the companies and the workers.” 

Ensuring the industry moves forward

Furthermore, PA Secretary General Lalith Obeyesekere told The Sunday Morning that the proposed wage increase would be challenging for plantation companies, but they were hopeful that prices would rise to help accommodate the new costs.

“For the companies, it is going to be tough, but we will grant the increase; there is a need for improved productivity to sustain the industry. While some Regional Plantation Companies (RPCs) have already implemented productivity models, efforts to tie a wage component to productivity were not met with interest by the unions. However, an agreement was reached on a basic wage of Rs. 1,350, which will become legally binding once the relevant gazette is published.” 

The delay in implementing the Rs. 1,700 wage increase was attributed to the impracticality of the initial proposal. Obeyesekere explained: “When we challenged some of the formulas indicated in the gazette, the gazette was removed, leading to a second round of wage discussions.” He noted that the timing of these discussions, coinciding with upcoming elections, also played a role in the negotiations.

“We are happy about the settlement and we expect everyone to cooperate and ensure the industry moves forward. The outcome is dependent on the publication of the gazette to confirm the agreed settlements.” 

Need for a decent wage

Plantation workers face ongoing challenges and their demands include establishing rural development societies, improving hill country schools, upgrading Government estate hospitals, and resolving salary issues. 

A recent study estimated that for a tea estate worker’s family of four, the total monthly household expenditure needed to live a decent life, factoring in inflation as of September 2022, would be Rs. 86,897.71. This translates to a requirement for a daily wage of at least Rs. 2,321.04, raising concerns regarding the current wage earnings of the plantation workers. 

Speaking to The Sunday Morning, Minister of Estate Infrastructure Development Jeevan Thondaman claimed that the initially advocated wage increase to Rs. 1,700 for estate workers had been broken down into a basic salary of Rs. 1,350 and a productivity allowance of Rs. 350.

“The discussions with the companies are still ongoing. The basic salary component of Rs. 1,350 is settled, but the remaining amount tied to productivity is still under negotiation. We’ll hold discussions and arrive at a mechanism on how it can be given.” 

Responding to a question asked by The Sunday Morning regarding the delay in the implementation of the increments, he added: “The companies – the RPCs – did not attend the board meetings earlier, and it’s not easy for us to make decisions without them. This time, for the Rs. 1,350 increment, the companies came and were supportive.” 

The gazette for the announcement of a Rs. 1,350 basic salary is yet to be released. Thondaman emphasised that there was a standard 14-day objection period for any gazette, during which further clarifications could be made. “Whether the companies can afford it or not, the reality of the matter is that workers need to be paid a decent wage.” 

He added that the Government had also appointed a committee to assess the financial capabilities of the companies to meet the wage increase, given that some companies had already managed to meet previous wage demands despite initial resistance. 

“So far, they haven’t submitted anything to courts stating an inability to make payments. Back when the Rs. 1,000 basic wage was proposed, the same companies stated that they couldn’t afford to pay but they ended up paying. This will be a similar scenario.”

“I believe it is feasible to reach Rs. 1,700 in the long term. Discussions are ongoing about incorporating the productivity allowance and we need to reach a consensus with the companies on the mechanism for this payment. While these talks may take some time, with the Rs. 1,350 base wage already agreed upon, the most challenging part of the negotiation is behind us,” the Minister added.

Labour shortage in the sector

Speaking to The Sunday Morning, Colombo Tea Traders’ Association (CTTA) Chairman Sanjay Herath noted the importance of implementing productivity models in order to address workers’ wage concerns as well as company concerns. “What the plantation companies and the factory owners are saying is that it should be related to a productivity model, which I believe is fair.” 

Herath underscored that the labour shortage in the plantation sector was a significant challenge, with the workforce dwindling from approximately 450,000 to just about 100,000. Moreover, productivity levels remain low, as the minimum wage specified is based on a full day’s work, generally eight hours. He suggested that a productivity model could benefit workers, noting that wages constituted nearly 60-70% of the production cost. 

Herath also emphasised the need to be competitive in the international market while ensuring fair wages for workers. While noting the financial difficulties faced by workers due to current economic conditions, he highlighted the need for a balanced approach. 

“I believe the best solution is a productivity-based wage model that is currently under discussion. My understanding is that all sides have to come to an agreement. There has to be a give-and-take policy. At the same time, we understand the salary that the workers get may not position them well today given the economic conditions and cost of living.” 

Worker dissatisfaction and demands 

On the other hand, All Ceylon Estate Workers’ Union Secretary J.M.A. Premaratne told The Sunday Morning that the union was not satisfied with the proposed wage settlement of Rs. 1,350. 

“Not only us, but most of the workers do not agree. Initially, we asked for an increase up to at least Rs. 2,000.” He further explained that during the initial discussions, the increment of Rs. 1,700 had been proposed and gazetted but later withdrawn due to objections. Moreover, the Rs. 50 allowance for each extra kilogramme of tea leaves picked has not been received by many workers, with workers essentially being left with a wage of Rs. 1,350. 

Commenting on the financial impact on regional companies, Premaratne stated that companies had never clearly declared their profits, making it difficult to understand their financial positions. He added many of the issues faced by companies, such as high taxes or Value-Added Tax (VAT), should be addressed through the Government rather than by compromising workers’ rights.

“We have no displeasure against the companies since they anyway exist to earn profits,” he stated, but pointed out that it was the Government’s responsibility to intervene and resolve wage issues. He also claimed that the Government had acted in a similar manner to the companies by failing in its duty to protect workers’ rights. 

Looking forward, the union is advocating for a wage structure that adjusts to the cost of living and a focus on increasing production through proper fertiliser provision and value-added production. “If revenue increases, the workers should be provided a justifiable amount,” he emphasised. 

Reflecting on previous attempts to settle the wage dispute, Premaratne noted that the Rs. 1,700 wage proposal had been gazetted with political motivations in mind, specifically targeting the Presidential Election.

“The daily wage should be around Rs. 3,000 considering the cost of living, but such an amount is not feasible for companies to bear. Even though we don’t officially represent companies, we have understood their challenges as well. 

“The Government’s decision-making process was arbitrary, lacking adequate consultation with both plantation companies and unions. This should have been discussed with the plantation companies and unions with the intervention of the Labour Department. 

“The Government tried to portray an image that the companies had not agreed to,” he noted, explaining the confusion that followed the gazette’s withdrawal and the subsequent legal actions that were dismissed.