Productivity challenge

Thursday, 9 June 2011 00:01 - - {{hitsCtrl.values.hits}}

THE plantation industry is facing the challenge of productivity more than ever before. On Monday it increased the wage of a labourer to Rs. 515 – a move that will cost companies more than Rs. 6 billion each year.

The basic wage brewed by the estate sector trade unions and the Employers Federation of Ceylon, which are signatories to the collective agreement, was Rs. 380 per day, up from Rs. 285 under the previous deal. Added to this basic wage will be an attendance incentive of Rs. 105, which was earlier Rs. 90, and a price share supplement of Rs. 30, totalling Rs. 515 per day for a worker.

A tea plantation worker who collects over and above the normal weight of tea leaves will receive Rs. 17 for every extra kilo of tea plucked. A rubber plantation employer will receive Rs. 25 for every extra kilo of rubber collected over and above the normal stipulated weight.

The cost was described as “phenomenal” by the industry since there are 55 to 60 million man hour days in the plantation sector and every Re. 1 will cost Rs. 55-60 million by way of cost. Supporting this new basic wage, which is about a 17.5% per cent increase and more than what the industry expected to give will surely be a challenge.

After three months of prolonged dispute the numbers have been hammered out but how they will affect the future of the industry remains to be seen. Meanwhile, on a macro level Sri Lanka is looking to expand its green tea market as the world moves increasingly to healthy beverages.

This is best showcased by the fact that a tea factory in Dubai bids to become the world’s largest. Unilever’s Jebel Ali tea-blending and packing plant is in the middle of a major tea-consuming market – the oil-rich Middle East and records the changing habits of tea drinkers. The plant, producing 1.1 million tea bags an hour every day all year round, begins expanding later this year aiming to double its output within four years to become the world’s biggest tea factory.

It is clear that exotic and organic teas are wooing the international tea drinkers promoting the Sri Lankan industry to change accordingly. The age old practice of producing black tea is becoming increasingly unpopular and Sri Lanka will have to come up with new products for niche markets as well as promoting the collective brand of Ceylon tea to the rest of the world.

Using labour and technology in a smart and sustainable way is essential, particularly as the tea industry is also beset with disadvantages from the weather. Drought conditions hamper tea production regularly and even though action has been taken to produce drought resistant types of plants it has not been adopted widely.

Burdened under high production costs, fuelled mostly by high labour costs the plantation sector is also facing the prospect of a worker shortage in the long term. Growing aspirations of people have motivated workers to move out of the industry leaving the labour intensive industry in a tight spot. Managing these multi-faceted challenges will be largely based on increased productivity – a fact that the industry already understands and needs to be supported on.