Plantations looking towards sustainable growth – PAC Chief

Planters Association welcomes CESS levy on tea, requests Govt. not to pass down to the producers

Chairman of the Planters Association of Ceylon (PA) Lalith Obeyesekere

With another round of wage negotiations scheduled in early next year, Chairman of the Planters Association of Ceylon (PA) Lalith Obeyesekere in a press statement issued this week said wage increases for Sri Lanka’s largest worker population, plantation workers, must be sustainable to allow continuity of the plantation sector over the coming years.

The plantation companies do understand the aspirations of the workers in terms of a living wage; however, in granting same, affordability plays a key role and therefore has to be linked to productivity, thereby ensuring a win-win situation for both the employer and the employee.

The PA, the representative body for 23 Regional Plantation Companies (RPCs), as well as other private estate and factory owners, said that the general impression is that a wage increase is confined to the quantum of increase granted, and does not take into reckoning other related costs that have an escalating effect on overall operating expenses.

Regularising gratuity provision for plantation workers

One such component is the Gratuity provision which increases significantly each time there is a wage increase, placing a considerable financial liability on the RPCs which carry very large workforces.

Under the present Gratuity Act, plantation workers are not required to work a minimum number of days per annum to qualify for gratuity. In a worst case scenario, a worker can put in one day’s work per month and retain his name in the check roll, thereby qualifying for gratuity amounting to 14 days wages whereas he has worked only 12 days for the year.

Considering the requirement for plantation workers to be provided 300 days work per annum, what is requested is a very reasonable figure of 60% attendance or 180 days work, as the benchmark to qualify.

Obeyesekere went on to say that the PA has been having a dialogue with the Policy Makers and the Trade Unions on this issue with a view to correcting this anomaly. However, although discussions have been held on this matter during the past several years, the Companies have not been successful in reaching finality.

The Government’s role

Talking about the role of the Government, the PA said the plantation industry was happy with the effort of the Ministry of Plantation Industries to assist the sector.

 “We are very fortunate to have Minister Mahinda Samarasinghe as our Minister because he has a plantation background and he has, since his appointment, assisted to resolve various industry issues,” said Obeyesekere.

Among other initiatives, the PA said Minister Samarasinghe was instrumental in reviving the Golden Shareholder’s meeting which was a long felt need at which an opportunity was afforded to the Companies to discuss and resolve operational issues which surfaced from time to time.

The PA also noted that the new Marketing & Promotion Levy, introduced from 1 November 2010, would be used to further boost the image of Ceylon Tea. However, the PA looks to Minister to ensure that the additional levy of Rs.3.50 per kg is not passed down to the producers, who should also benefit from this initiative.

Increase in productivity

The PA noted that since the RPCs were formed and the management handed over to the private sector in 1992, the plantation sector productivity has increased, while removing the burden of financing plantations from Government coffers. The sector has also seen significant improvements to the quality of life of estate communities over the past 18 years, said the PA.

According to Ministry of Plantation Industry statistics, the yield per hectare of tea has increased from 1,300 kg in 1992 to 1,500 kgs by 2007. To maximise returns and overcome market volatility RPCs have also diversified into non-traditional crops such as oil palm, forestry, cinnamon and other spices. Timber extents among the 23 RPCs, for instance, now total nearly 20,832 hectares.

Meanwhile, Sri Lanka’s tea exports alone are expected to bring in close to US$ 1.5 million in foreign exchange this year. World rubber prices have also been encouraging and many RPCs continue to undertake Rubber replanting and new planting.

The PA also expressed confidence that Government initiatives would further support development of Sri Lanka’s plantation industry, which is a significant contributor to the national economy, in a sustainable manner.