• Critics question Govt.’s move to provide taxpayer subsidy for plantation companies
• Growing calls for review of proposed scheme
• Mixed views from Opposition parties

While the Government’s plan to increase the daily wage of plantation workers has received commendation for its social welfare aspect, it leaves much to be desired in terms of enforcing national fiscal discipline.

President Anura Kumara Dissanayake in his Budget 2026 speech outlined the Government’s plans for uplifting the living standards of plantation workers, noting: “It is our position that estate workers should be paid a fair daily wage commensurate with their service.”

Accordingly, the Government has proposed to increase the current minimum daily wage of Rs. 1,350 to Rs. 1,550 from January 2026. Furthermore, in addition to the salary of Rs. 1,550, it is proposed to pay Rs. 200 as a daily attendance incentive by the Government. Rs. 5,000 million has been allocated for this purpose.

Aiding companies at the expense of taxpayers

However, the plan has come under strong criticism for its economic weaknesses. University of Colombo (UOC) Department of Economics Prof. Priyanga Dunusinghe pointed out that such incentives must be provided by companies and not the Government, noting that this move took the pressure off companies to increase wages.

“The issue isn’t about increasing the wage of estate workers; it is the intervention of the Government to pay the wages of workers of 22 major plantation companies, or, alternatively, the Government paying the wages of workers at major companies using public funds.”

He further questioned the inability of these companies to pay the wages of their employees, highlighting this as the core issue that needed to be solved. 

“When the Government pays wages in this manner, it is the company that benefits. These are profit-making companies earning millions on the stock market; why should the taxes of the public be spent on employees of such companies? 

“Why are these companies unable to pay the wages of their workers when they bring in millions in profit? Why can’t they be compelled to provide a portion of this profit to their workers? If these major companies are unable to pay their workers, a solution should be provided to this instead,” he added. 

The solution, he noted, would be for the Government to undertake a proper financial analysis of these companies and compel them to pay appropriate wages when entering into collective agreements with trade unions. Moreover, the Government should create alternative economic opportunities associated with plantations for these workers to earn additional incomes, alongside improving their education.

Further, Prof. Dunusinghe questioned how justifiable it was to spend public funds in this manner. “Taxes are intended to benefit the people. Instead, it is the large-scale plantation owners who benefit from this move.”

Fiscally unsound

Prof. Dunusinghe further outlined the move’s potential fallout, describing it as fiscally irresponsible and asserting that such measures should only have been embarked upon following a deeper analysis.

Firstly, he pointed out that while the current Government had pledged Rs. 200, future governments would be compelled to increase the amount while they would also be unable to extricate themselves from this pledge politically. 

This would mean that when it came to future demands of workers for increased wages, the pressure would inevitably be on the Government, since the Government was claiming a portion of the wage.

While the incentive amounted to Rs. 200 per person, the fiscal weight to be borne by the Government was Rs. 5,000 million, Prof. Dunusinghe noted, adding that this amount would only increase as the years went by. “In a situation where the Government can’t afford to bear such an expenditure, why would it provide relief to workers of large-scale industries?” he questioned. 

“On the one hand, this is a grave transgression in terms of public financial discipline,” he said, adding that on the other hand, with the majority of tea producers being smallholders, the workers on these estates would not receive this incentive of Rs. 200.

Likening this to depending on ‘Aswesuma,’ he noted: “At a moment when we should be moving away from a culture of welfare and dependency, the Government is continuing to provide welfare. If we consider that estate workers do face living challenges, welfare should be provided through ‘Aswesuma,’ since this is meant for those living below the poverty level. However, giving workers a separate incentive in this manner does not solve the problem.”

Meanwhile, when questioned about the incentives for estate workers being funded through taxpayers, Ministry of Plantation and Community Infrastructure Secretary Prabath Chandrakeerthi noted that the proposal intended to promote the industry, with the Government providing the Rs. 200 as an incentive.

“‘Aswesuma’ is also paid through taxpayer funds. We have a goal to produce 400 million kg of made tea and achieve $ 2.5 billion in export earnings by 2030. To achieve this, these incentives are being provided in order to promote tea cultivation.”

Questions about execution

Meanwhile, speaking to The Sunday Morning, Institute of Social Development (ISD) Executive Director P. Muthulingam noted that the wage increase was a positive move given the revenue the Government received through tea exports.

However, he noted that a problem that would arise was how far the Government would be able to continue funding this. “It’s a very good idea, but the success of this programme is questionable.”

Secondly, he pointed out that the promise to pay Rs. 200 needed to be gazetted, without which the company would decide how many days of work would be required for the payment. “The Government should categorically assert that it will pay Rs. 200 even if the worker reports to work even 10 days, five days, or one day.”

Muthulingam also pointed to several uncertain areas related to the proposal. “We were told that the companies had agreed to pay, but we don’t know the details of the agreement. Nobody knows when the agreement was signed,” he noted. 

Moreover, he raised concerns about the fate of those working on plantations other than Regional Plantation Companies (RPCs), given that there were about 200 privately owned estates, and questioned whether these workers would be included in this proposal.  

Nevertheless, he pointed out that the currently agreed wage for plantation workers was still far below the living wage standard, noting that a 2024 ISD study on living wage had found that a daily wage should amount to a minimum of Rs. 2,000.

Meanwhile, Tamil Progressive Alliance (TPA) MP Palani Digambaram, speaking in Parliament, also commended this move. He urged Opposition MPs not to oppose the allocation of State funds for estate workers, noting: “They must know that these plantation workers have earned foreign exchange for this country for 200 years.”

Attempts by The Sunday Morning to contact the Planters’ Association of Ceylon for comment proved futile.

Opposition concerns 

Concerns were also raised by the main Opposition Samagi Jana Balawegaya (SJB), with Executive Committee member Mahesh Senanayake speaking to the media on Friday (14) and questioning how the Rs. 5,000 million allocated to plantation workers would be paid. 

While noting that the SJB was completely unopposed to the provision of an allowance of Rs. 200 to plantation workers, he said: “The Government has informed the plantation companies that the Rs. 200 to be given to estate workers will be given only if they work for 25 days. However, employees in the estate sector are not given the opportunity to work for 25 days. It is also difficult for estate workers to work for 25 days. Accordingly, there is some deceit in this.”

He further stated that the Government should take steps to provide an even higher salary for the estate workers while ensuring that the Rs. 200 provided by the Government and the Rs. 200 provided by the plantation companies were legalised.