Wage woes continue for planters

• Higher pay demanded by unions not possible with prices at 2-year low
• Iran deal could give lifeline but likely to take months to materialise 
• Talks deadlocked for 5 months, strikes threatened

By Shiran Illanperuma

With the appointment of new Plantation Industries Minister, the Planters’ Association (PA) is set to continue deadlocked negotiations with trade unions but faces an uphill battle due to declining tea prices.

Union leaders are demanding a wage hike from Rs. 620 per day (including incentives) to Rs. 1,000 per day. Currently the PA shells out an estimated upper limit of Rs. 18 billion per month for worker’s wages. Submitting to union demands would require an additional Rs. 12 billion which the PA insists it cannot afford.

PA Chairman Roshan Rajadurai insisted under different circumstances they would concede but cited poor sales as a reason for not being able to meet demands. “Wages account for 70% of our production costs already and we are currently operating at a Rs. 45 loss per kilogram due to the global decline in commodity prices,” said Rajadurai.

With dwindling oil prices and ongoing unrest in the Middle East and Russia – Ceylon tea’s key export destinations – profits are on the decline. “The average price of tea per kilo sold has fallen to a two-year low,” said Rajadurai. As of August, Ceylon Tea has sold at an average rate of Rs. 406 per kilogram, a year-on-year Rs. 66 drop. 

The imminent deal between USA and Iran may pose a potential lifeline for both the PA and workers as a resumption of trade with the West Asian nation could result in a much-needed boost for tea sales. Sri Lanka has been unable to trade under current sanctions imposed on Iran.

If a deal does come to pass, it will take at the very least two to three months for Iran to prepare its own system for resumption of trade with Sri Lanka, thereby delaying any positive affects trade may bring to the island, Rajadurai noted. Furthermore, local producers are still faced with the difficulty of wresting back their share of the Iranian market from India, which has encroached on Sri Lanka’s share into Iran.

However, Ceylon Workers Congress (CWC) Chairman Muthu Sivalingam says that union demands are based on increasing costs of living. “The cost of flour has gone up and sometimes there is no rice. Plantation workers are not like villagers and have no time to grow their own food so must purchase it,” said Sivalingam.

Plantation workers are usually provided with housing, healthcare, water and electricity, however food security remains an ongoing concern as children in the community report the highest rates of malnourishment in the country.

The PA has proposed an alternative wage scheme based on productivity. “Under a productivity-based payment scheme, most workers, especially the women, will actually earn more,” said Rajadurai.

Thus far, unions have rejected all productivity-based proposals. “We believe such a scheme will only benefit a small number of workers. Many of our workers are sick or elderly and will suffer more under such a scheme,” argued Sivalingam.

Both parties express a desire for the Government to provide subsidies in the plantation sector in order to lower the cost of production and raise wages. Plantation smallholders who receive such subsidies are able to provide better wages while maintaining profits when compared to their estate counterparts, according to Rajadurai.

The biennial agreement over wages is now five months late from expected settlement and implementation. Three official meetings between union representatives and the PA have ended in successive stalemates, further hampered by the onset of Parliamentary elections.

With discussions having dragged on, frustrated unions have already engaged in a 10 day ‘go slow’ strike earlier this year. “We hope the PA will put forward an alternative proposal and not push us to another strike,” said Sivalingam.