Wages Board meets to iron out Rs. 1,000 daily wage objections

• Delay in Labour Ministry gazette until objections heard
• RPCs, smallholders and factories file protests against earlier decision 
• Meeting today to clear up opposition and pave way for gazette issuance 

By Uditha Jayasinghe 

Regional Plantation Companies (RPCs), trade unions and Labour Ministry officials will meet today to iron out objections filed against the granting of Rs. 1,000 as daily wage by the Wages Board earlier this month and clear the way for a gazette to be issued. 

Labour Minister Nimal Siripala de Silva announced on 8 February that the Wages Board had backed union appeals for the Rs. 1,000 daily wage. However, since it was a hung vote of 11 for and nine against, stipulations in the Wages Board Ordinance allows for objections to be filed against the decision. 

The Wages Board members will therefore convene this afternoon to dissect the objections, Labour Ministry sources said. The meeting will be presided over by Labour Commissioner General Prabath Chandrakeerthi. 

“Once the Wages Board has heard the objections then it can put the salary issue to a second vote and if that carries, then the Commissioner General can inform the Minister so a gazette can be issued,” Labour Ministry sources told Daily FT. Plantation sector stakeholders have been awaiting the gazette, which was initially expected to be released on Monday.          

Former Planters Association Chairman and Hayleys Plantations Managing Director Dr. Roshan Rajadurai confirmed that several dozen objections had been filed regarding the Wages Board decision. He reiterated that increasing the daily wage to Rs. 1,000 per day was “unsustainable” as the industry did not have the capacity to earn the additional Rs. 12.5 billion needed to meet the cost companies would have to pay.

“Nearly 200 objections were filed by RPCs, small holders, factory owners and others,” he said.  

RPCs have routinely pointed out Sri Lanka was already contending with high costs of production and low global prices, which would result in companies having to engage in serious cost cutting measures to meet the increased wage expenditure. 

The RPCs favoured a basic wage of Rs. 725, a price share supplement of Rs. 50 and EPF/ETF of Rs. 108 and an Attendance and Productivity Incentive of Rs. 225, which has been reintroduced. This, they argued, would take the daily wage beyond Rs. 1,000.

Under the RPCs proposals, a fixed daily wage model would have been applicable for three days a week. On the rest, employees were to be remunerated based on one of two productivity-linked earning models – one where employees will earn Rs. 50 for every kilo of tea leaves plucked, the other being the revenue share model where employees can become entrepreneurs.

However, the trade unions were adamant of a Rs. 1,000 all-inclusive wage, which has been backed by the Government and included as a proposal in Budget 2021.

Sri Lanka Federation of Smallholder Societies Chairman K.L. Gunaratne told Daily FT that while smallholders are unlikely to be seriously affected by the daily wage, the impact it could potentially have on RPCs was concerning. The Federation, which has 1,500 smallholders employing about 500,000 people would see workers earning slightly above the current rate of Rs. 30 per kilo. Most smallholders already earn more than Rs. 1,000 per day.  

“Under the smallholder system the price per kilo will probably increase to Rs. 35 from Rs. 30. This is not an unbearable cost for us. However, the Ceylon Tea brand and the overall tea industry relies heavily on the performance of RPCs that mainly produce and export up country tea. Therefore we think that moving away from the productivity aspect of the collective agreement will be problematic,” Gunaratne said.