Stop playing politics with tea industry

There has always been a lot of talk related to conditions in which families depend on income from providing labour to the tea industry. Politicians, typically when elections are around the corner, put it all down to low wages. They propose and if in power enforce wage increases. On the face of it, this seems quite sensible. Higher wages mean greater purchasing capacity and it is assumed that this will automatically transform into better living standards. 

The truth is that it doesn’t really work that way. There have been many studies about the household dynamics of this particular segment of the labour force, especially in the upcountry tea estates. There is, for example, a high incidence of alcoholism among men in these areas resulting in a situation where women working as tea pluckers essentially provide money to feed the drinking habits of their spouses. 

Regardless of such sociological concerns there is a dire need for State intervention when it comes to providing infrastructural facilities including upgrading of housing. Much has been done, but obviously there’s a long way to go. Neither the Government or the tea companies have done anything effectively to address the  alcohol addiction in the estates

What is concerning is the fact that a holistic approach to these issues seems to have been consistently shelved in favour of wage hikes. The recent proposal to raise the daily wage from Rs. 1,000 to 1,700 is a case in point.

This proposed 70% overnight salary hike will no doubt impact both tea and rubber industries. The question is, why now? The easy answer is, ‘it is long overdue.’ There is much that falls under ‘long overdue,’ and yet it would be unfair to argue for patience until everything can be resolved all at once. Policymakers seldom have the luxury for comprehensive review based on which all-encompassing strategies can be formulated. The problem is that impatience is selective, especially when elections and votes have to be considered. 

This move, it is understood, has been prompted by a request made by trade unions headed by Jeevan Thondaman. Thondaman, understandably, has to keep his constituency happy. Tea and rubber, however, are important elements of the national economy; any drastic change in direction can have wide and dangerous repercussions not just for the industry but the country as a whole. This is why such decisions are prudently preceded by a process of consultation with all key stakeholders. In this case, the Government did not sound the RPCs (Regional Plantation Companies) and heeded their concerns. Clearly, it is a decision that had everything to do with targeting the approximately 300,000 votes in the estates.

Let’s consider the overall context. The tea industry is made up of 21 RPCs (responsible for 30% of the tea production), 427 small tea factory holders and 500,000 small and medium tea estate owners (responsible for 70% of Ceylon tea). This 70% wage hike will therefore have a massive impact. Consider the fact that Ceylon tea is already the most expensive in the world. Our cost of production is the highest. The incremental cost of this simple, vote-targeting move, will be in the region of Rs. 81 billion! Now it might be argued that desperate conditions of workers required desperate measures to alleviate grievances. One could go along with that if there were no other alternatives. However, there are. For example, an alternative mechanism proposed is Productivity Based Pay, i.e. to pay a basic figure and top it with per kilogram of tea plucked. This model, it is estimated, will guarantee a minimum average payment of 1,830 per day. Let us not forget the fact that workers in tea and rubber industries earned the second highest minimum wage even before the wage hike. A garment worker, for example, who works for eight hours a day, gets only a minimum wage of Rs. 24,000. So why would a proposal to raise wages by 83% without harming the industry be shot down in favour of something less? Simply, it would create greater degrees of self-sufficiency and thereby undermine local politicians. Trade unions would slip.

So what is the rush? Again, why now? Clearly the Government is refusing to see the big picture and cares little about the negative outcomes in the long run. This is very poor and absolutely flawed thinking. The Government talks much about the necessity for austerity measures, about the need for thinking long-term, the need to get the plan right and the determination to implement reforms to turn things around. This ad hoc and politically motivated wage hike goes against the ‘economic logic’ that the Government has articulated and has called upon the people to support. It is shortsighted, dangerous and absolutely ill-conceived. It will come at a cost to this Government, but more seriously to the long-term stability so necessary for economic recovery.