• COPF questions legality of State-funded Rs. 200 payment
• Govt. adamant it is on right track; plantation companies issue warning

Sri Lanka’s plantation wage debate has once again surfaced at the highest levels of Government, but this time the dispute is no longer only about how much an estate worker should earn at the end of the day.

The debate has evolved into a wider confrontation over public finance discipline, legal authority, labour market distortions, and the future structure of the plantation economy – with a parallel Government push to reclaim unused fertile land, attract new investors, and diversify economic activity in the Malaiyaga community. 

At the centre of the issue is the Government’s Rs. 200 daily attendance allowance for estate workers – an allowance officials say is funded through allocations approved in the 2026 Budget, but which the parliamentary Committee on Public Finance (COPF) has now instructed officials to place on a clear legal footing. 

The COPF’s intervention has triggered strong public comments from the committee’s Chairman, Samagi Jana Balawegaya (SJB) MP Dr. Harsha de Silva. De Silva has framed the controversy as a matter of principle: public money cannot be spent through an instrument that lacks a durable legal basis, especially when it involves payments linked to private institutions.

“I am not willing to approve public money to be spent on a Memorandum of Understanding (MOU),” de Silva said. “It has to have a legal basis. What is the legal basis on which you are spending this money?”

But while Parliament’s financial oversight has come into sharp focus, the Government argues it is simultaneously working on a bigger structural agenda – one that aims to address the long-standing inefficiencies of plantation land use. 

Deputy Minister of Plantation and Community Infrastructure Sundaralingam Pradeep has set out plans to audit cultivated acreage, challenge plantation companies’ claims of losses, reclaim unused fertile land, and bring in new investors to generate employment and profitability – steps he says will ultimately allow higher wages to be paid without constant reliance on public subsidies.

“We have made agreements with the companies, so we have a right to get the companies’ land back,” Pradeep said. “As for the lands that the companies are not using, we will find a way to make those lands profitable as well.”

The allowance controversy

The immediate controversy revolves around the mechanism used to implement the Rs. 200 allowance. According to discussions that took place at COPF, the payment has been made under an MOU entered into with private plantation companies. Critics argue that the MOU model is problematic because it lacks the permanence and enforceability of statutory instruments. 

The arrangement, as described in the political debate, is also linked to definitional uncertainty over which workers qualify as ‘estate workers,’ and whether the allowance should count towards social protection contributions such as the Employees’ Provident Fund (EPF) and Employees’ Trust Fund (ETF).

De Silva has repeatedly stressed that COPF is not objecting to the broader goal of increasing estate workers’ incomes. Rather, he says the committee is questioning whether the State is complying with the principles required when it spends public funds – particularly when the money effectively supports wages in private enterprises. 

“In my view, the MOU is not a valid document to spend public money,” he said. To underscore the constitutional logic behind the COPF’s scrutiny, de Silva invoked Parliament’s authority over public finance: “Parliament has full control under Articles 148 and 149 over public finance. Finance is all revenue and expenditure. So, when they came to our committee, we asked them this question.”

According to him, his objection is not technical for the sake of procedure; it is rooted in what he describes as “financial discipline”. In his view, spending public money through an MOU is especially dangerous because it may be temporary, unstable, and subject to cancellation. “First, I wanted the Attorney General to go through this MOU and thereafter advise us on how to make a deal between two parties,” he said. “It can be cancelled within 30 days.” 

And then came his central warning: public expenditure cannot rest on a document that can be terminated easily – especially if the payment functions as an ongoing policy. “You can’t be spending money on things that are impermanent like that,” he said. “If it is for two months or three months, then that’s another matter. But if it is an ongoing thing and it can be cancelled due to the whim and fancy of one party, that’s not good financial discipline, in my view.”

Part of de Silva’s criticism is directed at how the allowance has been categorised in budget discourse. The payment has been described as a “development subsidy,” but de Silva has challenged what that label means and whether it reflects a clear policy objective. 

“What the agent says is that it is a development subsidy,” he said. “What is a development subsidy? Is there a productivity improvement that is expected?”

If productivity is the goal, he argues, then the Government must show the terms under which productivity gains are expected and measured, and how public money is transferred to private companies in a transparent, accountable way. 

“If so, what is the mechanism by which this money is to be transferred to these companies?” he questioned, adding that it went to the heart of a question COPF appeared to be asking: is the State paying for a social welfare goal (income support for workers), or is it funding private sector productivity? The difference matters because each objective could require different legal instruments, safeguards, and accountability mechanisms.

De Silva said he wanted the Attorney General to clarify the legality of the MOU arrangement and advise how to establish a proper legal basis for the payments. “I have written to the Finance Ministry to immediately seek the Attorney General’s view on how to create a legal basis for this payment,” he said. “This happened just last week. I think I’ve given them two weeks.”

In practice, the Attorney General’s review – if sought and delivered – could become a turning point: it may determine whether the allowance continues in its current form, is formalised through regulation or gazetting, or is redesigned entirely.

Beyond the legal instrument itself, de Silva has raised a separate concern: the Government’s working definition of “estate workers”. He said he had been shocked to hear claims that estate workers are only those working for Regional Plantation Companies (RPCs). “It’s only for three years. That is the craziest thing,” he said, before describing what he had been told. “They are saying estate workers are only RPC workers.” 

His argument is that plantation labour exists across multiple ownership types and cannot be limited to one subset. “Estate worker means all estates. Some estates are owned by RPCs, some estates are owned by private individuals, some estates are owned by the State,” he said. 

“You can’t say that estates are only RPCs. I was astonished and shocked. I think if the Attorney General looks at all this, he will be able to clarify. There are a lot of grey areas in this. It’s not a gazette, it is just an MOU.”

While de Silva has focused on constitutional finance and sector distortions, Democratic Workers’ Congress Head and Tamil Progressive Alliance (TPA) Leader Mano Ganesan has provided a narrative that reveals how the policy was politically supported – and why he now sees major shortcomings in its implementation. 

“At the second reading of the Budget, when we, the TPA, came out of our Opposition stance and voted with the Government, three of our MPs, including myself, supported it,” he said.

But he said he had explicitly warned in Parliament that the Rs. 200 increase should apply across the sector, not only to certain employers. “Before voting, I stated in Parliament that this increase of Rs. 200 should be given to all workers of the same category, that is, the RPC workers as well as all other plantation workers.”

He then broke down the sector into four categories: “First, the RPCs, second, the State plantation companies, then the tea smallholders, and finally the private estates. But that is not happening. In private estates and smallholder sectors, where the workers are in the same category, this increase is not happening. That is one issue.” 

Ganesan also noted that even where the allowance applied, it may not translate into real additional income because of how productivity norms were being increased. “Only the RPCs and State plantation companies are being considered for this,” he said. “Even there, the output has been increased from 18 kg to 25 kg.” 

He said that the “extra” pay was coming through an old system of output-based earnings rather than a true wage uplift.  “When you bring more kilos – more output – you are given Rs. 50 extra per kilo,” he said. “That system has been there for a long time.” 

In his view, that means the so-called increase is not a new benefit. “More weight, more pay. Therefore, this is not a real wage increase. The Rs. 200 is effectively earned through producing additional kilos at a fixed per-kilo rate. Because the outputs have been increased, when workers bring the additional kilos, they earn an extra Rs. 200 rupees – Rs. 50 per additional kilo,” he said.

Ganesan distinguished between the private side and the Government side of the allowance: he said the Government’s Rs. 200 was a real public transfer, but one that depended on annual budget allocations. 

“This Government may allocate it in this budget,” he said. “But sometimes, when we are nearing a crisis, especially when we have to start repaying our international loans, the Government may refrain from allocating money. And how do you know this Government will remain forever? What if a new government comes and decides not to continue it? That is why we need a permanent solution,” he said.

Government’s point of view

However, Deputy Minister Pradeep framed the debate within a broader structural response: making the plantation economy profitable by forcing better land use and bringing in investment, so wage increases become sustainable. 

He argued that the Government had legal and contractual authority to intervene in plantation land use. “We have made agreements with the companies so we have a right to get the companies’ land back,” he said.

He claimed that the aim was to ensure that unused plantation land was not left idle. “The lands that the companies are not using, we will find a way to make those lands also profitable,” he said. “It’s a waste for the country to leave them be.” 

This is the heart of the Government’s ‘system change’ pitch: profitability and productivity, driven by land utilisation and investment, should create the conditions for better wages. “There will be no hindrance for us to increase the salaries of the estate workers if we become profitable,” Pradeep opined. 

The Government’s first initiative is essentially an accountability mechanism: asking RPCs how much land they have cultivated and evaluating the quality of that land to prevent under-reporting or manipulation. “We will consider the amount of acres and the amount of fertile land so that the companies cannot cheat us with the amount of crops they can grow,” he said. 

This is directly aimed at a claim plantation companies often make: that they are operating under heavy losses and therefore cannot increase wages. “The RPCs are claiming that they are incurring heavy losses and so cannot make any wage increases or additional allowances. But by auditing land use, the Government aims to determine the reality of profitability. This way we can determine how much of the land they have utilised and the amount of profits or losses they are actually making,” Pradeep said.

According to him, the Government’s second initiative is more aggressive: reclaiming unused fertile land and opening it up to investment. “The second initiative is in tandem with the first. The Government will take back any fertile land that is not being used by the RPCs and offer it to investors.” 

This plan suggests a shift away from the traditional model where land remains within the operational control of plantation companies regardless of utilisation. Instead, the State would actively reassign idle land to productive ventures. 

Pradeep argued that the goal was not only higher tea output but diversified livelihoods for the Malaiyaga community. “There are so many programmes besides growing tea that the Malaiyaga community can engage in. We will find the most suitable, profitable industry and help them find employment there,” he said, emphasising localised opportunity rather than urban migration.

The planters’ warning

Yet the planters’ perspective complicates the Government’s confidence. Planters’ Association (PA) General Committee member and PA immediate past President Senaka Alawattegama has signalled that the plantation industry does not see itself as capable of sustaining the allowance once the MOU period ends. 

“No, we are not looking to pay the allowance ourselves even after the three-year MOU is concluded,” he said. He avoided speculating about what would happen after the agreement expires, stating: “I cannot comment on what will happen after three years.”

However, he stressed that companies argue that they cannot carry the financial burden now. “We are currently unable to pay for it ourselves because it is not affordable,” he said. “We are finding it very difficult.” 

The most immediate question is whether the Government will deliver the legal basis the COPF is demanding, possibly through gazetting, legislation, or another enforceable framework. De Silva has been clear that he wants the Attorney General to guide that process.  

But politically, the debate also pivots on Ganesan’s warning that wage support tied to annual budgets will remain unstable.