30 years after privatisation, RPCs seek productivity-based wages to boost sustainability

Monday, 21 March 2022 02:04 -     - {{hitsCtrl.values.hits}}

Planters Association Chairman Bhathiya Bulumulla gestures during the briefing to the media last week on the 30th Anniversary of the privatisation of the sector. Others from left: Deputy Chairman Senaka Alawattegama, Media Spokesperson Dr. Roshan Rajadurai, Secretary General Lalith Obeyesekere and Plantation Human Development Trust Director General Lal Perera – Pic by Ruwan Walpola 


  • Political interference with wages hampers cost of production and viability
  • RPCs supporting over million citizens despite real workforce dwindling within
  • Line homes being replaced by individual units

By Darshana Abayasingha

The Planters’ Association, last week, marked 30 years since the privatisation of estate in Sri Lanka calling for enhanced support to its proposed productivity-based revenue share model with workers.

This is as opposed to the current attendance-based daily wage model, which is impractical, unsustainable and is affecting the viability of our industry and exports, PA said.

Estate labour and benefits constitute 70% of production cost, the Association said, adding that staff and management costs constituted only 9% despite claims otherwise. They added the value of a kilo of tea was 1.5 times the labour wage pre-privatisation, but revenue has now declined from 150% to 79% due to unsound regulations and the price of tea not keeping pace with wage increase.

Kelani Valley, Talawakelle and Horana Plantations Managing Director Roshan Rajadurai said: “Since 1992 labour wages have increased sharply, as a percentage it has increased 20 times. Plantation labour wages sit well above the Colombo Consumer Price Index (CCPI), and have now increased well above the cost of production. This is why we are promoting a productivity-based revenue share model. 

When the industry is not sustainable and strong, we cannot thrive. Wage rates were acceptable until about 2002, and then unfortunately politics and governments interfered and mandated unaffordable impractical rates. At this rate of increase it becomes difficult to maintain plantations at a sustainable rate.”

Rajadurai pointed out plantations are mandated to pay Rs. 1,000 a day in addition to EPF and ETC, but the real cost is Rs. 1,757 per day when considering the numerous non-wage benefits. Even the much-boasted garment industry pays Rs. 16,800 basic wage for 40 hours of work, whereas plantations are already paying Rs. 25,000 and are above all other wages boards in the country, he added. 

However, in Kenya, the normal tea plucking average is 40kg a day but the actual output is 60kg daily, whilst in South India the norm was 30kg a day and actual output is over 50kg. Assam requires 24kg but the output is 36kg. In Sri Lanka the norm and the output is 18kg. 

“In Sri Lanka they are fighting for 16-18kg. Our green leaf cost is four times that of our competitors. Even before we entered the race, we had conceded a huge lead. If we have these cost structures then we cannot be competitive in the global marketplace. In 2021 our national prices were lower than 2020, and still we gave a 35% increase in wages. This is the real state of the industry,” Rajadurai averred. 

Regional Plantation Companies (RPC) are considered the flag bearers of Sri Lanka’s plantation sector since privatisation in 1992, which followed the disastrous nationalisation and state management in the 1970s. 

Planters’ Association Secretary S.K. Obeysekere, said the first collective agreement was signed in 1994 with regular arrangements every couple of years, and the formation of the Plantation Human Development Trust that includes Directors, Unions and representatives of affiliated ministries ensure the welfare of workers. 

“We have been at the receiving end and subject to much vitriolic unfounded debate. Up to 90% of estates are with us, but some people visit 5% of what is not ours and generalise issues faced by workers there,” he said. 

It was revealed the private sector invested Rs. 8 billion in 1992 to obtain lands for plantation and continue to pay over Rs. 10 billion annually on lease rentals. The RPCs have spent over Rs. 81 billion in replanting, field and human capacity development, and have replanted up to 72,00 hectares of rubber over the past 25 years. This is in contrast to the Rs. 5 billion subsidies paid by the Government to the plantation sector pre-privatisation, and a further Rs. 1.5 billion in losses. 

Despite the significantly low daily – 22kg at RPC plantations – workers at these plantations receive guaranteed lifetime employment from 18 to 60 years and receive all statutory benefits, medical and housing in addition to not being required to come to work daily. 

RPCs offer 61 hospitals, 320 dispensaries and 1,500 child development centres with their plantations, and boast that all children born to mothers within their custody are a healthy 2.5kgs on average. Workers are being moved from line houses to individual housing units, and 48,000 new houses have been built whilst another 111,000 have been upgraded. A further 134,000 individual toilets have been built despite only 124,000 families living in these plantations. 

Rajadurai added: “the plantation sector is 4.4% of the population and we are on par with the best in the country. The estate sector gets very good nutrition; 2,254 kilo calories per person in the Nuwara Eliya district, which is predominantly the plantation sector. We care for over a million in population, but our workforce is declining steadily. 

We have come down to about 130,000 workers, but we care for a much larger population. The Association is consistently looking to change the model to make the industry sustainable and attractive. But we are not getting the support we should be getting from other stakeholders.”