Modality for estate worker wage hike still to be finalised

• RPCs awaiting further discussion, confirmation on submitted productivity-based wage proposal
• Minister claims with tax reductions, plantations’ financial situation better

By Charumini de Silva

The modality for the wage hike for plantation sector proposed to be effective from March is yet to be finalised, official and industry sources said yesterday.

“The RPCs have submitted a proposal looking at a different model based on productivity and a share of revenue. We are now in the process of exploring how best we can work this out to be able to provide a Rs. 1,000 daily wage for the estate workers from 1 March,”  Plantation Industries and Export Agriculture Minister Dr. Ramesh Pathirana told the Daily FT.

He said the main focus of the submitted modality proposed by the industry was to increase productivity of labour.

The Minister was of the view that the RPCs would be in a better position once the savings on tax cuts and relief on fertiliser come into effect.

“We have provided them with a financial relief package, which includes reduction in VAT and economic service charge and a moratorium in relation to loans. Considering all this assistance, RPCs should be able to fall in line, and pass on that benefit to provide the daily wage increase to the estate workers,” he added.

Noting that a practical and reasonable modality has been submitted to the Government, RPCs said they were now waiting for a favourable response from the authorities on the way forward.

“During our meeting with President’s Secretary Dr. P.B. Jayasundara we submitted our proposal and are now awaiting for their confirmation from the Government based on the modality we proposed,” a spokesperson for the plantation companies told the Daily FT.

He said no deadline was given as to how soon the Government will finalise the modality of the new wage hike. “We have done our part and it is now the Government’s responsibility,” he added.

However, when asked from the Minister he assured that the final decision will be announced before the end of this month for the wage hike to be implemented from 1 March.

The wage increase was first promised during the Presidential Election campaign by Gotabaya Rajapaksa, to win support from the estate worker community.

On 14 January President Rajapaksa said the Government has taken several initiatives such as tax exemption, fertiliser subsidy to increase the quality of this vital sector. The President emphasised that these benefits should pass onto the workers.

According to the present Collective Agreement between Regional Plantation Companies (RPCs) and trade unions, workers receive a daily wage of Rs. 855, which consisted of a basic daily wage of Rs. 700, Rs. 40+ for each additional kilo of tea leaves plucked, and a daily EPF and ETF transfer of Rs. 105.

Noting that the labour component contributes to nearly 70% of the cost of production of RPCs, they estimate that the 17% or Rs.145 hike will shoot up the wage bill to Rs. 12 billion (including gratuity), higher than the value of the bond scam.