Plantation companies want out of traditional wage model

Following the recent conclusion of negotiations around a new Collective Agreement between Regional Plantation Companies (RPCs) and estate sector trade unions, the Planters’ Association of Ceylon (PA) has called on all stakeholders to take meaningful measures to help transition the industry out of its traditional wage model.

The newly established agreement provides employees with a basic daily wage of Rs. 700, which will attract EPF /ETF together with a price share supplement of Rs. 50 per employee. This represents a 40% increase over the previous basic wage.

The revised agreement focused primarily on increasing daily take-home wage, without emphasis to previously established Attendance and Productivity Incentives. Consequently, the agreement guaranteed a rate of Rs. 40 on every kilo harvested above the estate norm – thereby establishing a pathway for workers to earn above Rs. 1,000 per day. Previously the overkilo rate stood at Rs. 28.75 per every kilo harvested above the estate norm.

“The PA reiterates its support for delivering increased earnings to workers in a manner that is financially sustainable. With the previous collective agreement we had express commitments made from stakeholders to support a transition towards a revenue share model and we remain deeply concerned about the regression away from such a model in this latest agreement. Nevertheless, we are encouraged by the interest expressed by employees and unions alike to shift towards a revenue share model. While the new agreement still holds the potential to expand employee wages above Rs. 1,000 through the significant increase made to the over kilo rate, it is still fundamentally limited by its adherence to a traditional wage structure that is rooted deeply in the colonial past of this industry,” PA Secretary General, Lalith Obeyesekere stated.

In order to ensure the long-term sustainability of the industry, he therefore reiterated the need for sweeping productivity-focused reforms across the entire industry and called on all stakeholders to engage in a continuous dialogue in order to chart a more viable trajectory for the industry as a whole.

“Given comments that have been made by various stakeholders, we wish to reiterate that the new agreement is already binding and does not require any further action from any other stakeholders in order to proceed with the new wage among the RPC sector, therefore wages have already been paid to workers based on the new agreement. All stakeholders must come together to drive a long needed transition towards a sustainable wage model that provides maximum earnings to workers while remaining financially viable and in alignment with market conditions. This means that if workers are to earn more, they are able to do so, but only by increasing their productivity,” he stated.

In comparison to wages in the RPC sector, the legal National Minimum Wage for private sector workers stood at Rs. 10,000 per month, where a machine operator tends to receive a monthly salary of Rs. 15,000 while the basic salary of a Government sector employee stands at Rs. 16,500.

In 2016, RPC workers remained among the highest paid when compared with the Tea Smallholder sector and Garment industry – when excluding performance incentives – which provided a daily wage of Rs. 590, while average daily salaries in the tea export trade and manufacturing industry amounted to Rs. 570 and Rs. 554 respectively.

At present, Sri Lanka remains the highest in the world in terms of its Cost of Production (COP) on tea which has already exceeded the RPC’s revenue generating ability. As at November 2018, the COP is Rs. 630 per kg as compared with an average sales price of Rs. 558 per kg. Notably, 70% of Sri Lanka’s COP is comprised solely of the cost of labour. Raising productivity remains one of the only viable options for reducing total COP, given current wage dynamics.

In RPC estates where a revenue share model has been successfully implemented, workers have recorded monthly earnings between Rs. 50,000 to Rs. 80,000. (Colombo Gazette)


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