The plantation sector in Sri Lanka is “in turmoil” as a result of the recent hike in workers’ salaries, tea traders say.
Jayantha Keragala, the chairman of Ceylon Tea Traders Association (CTTA) has told BBC Sandeshaya that the industry is not faced with an immediate crisis due to developments in the Middle East.
However, the continuation of declining consumer buying power in the Middle East as well as US and Europe will affect the industry in future, the CTTA chairman said. “With the wage hike, private plantations are at the moment in troubled waters,” he added.
The regional plantation companies are in discussion with the government to “tag the productivity” to wage increase, according to Keragala.
He admitted that there was a setback in February when the conflict in Libya began but the effect was minimal as other places such as Tunisia and Egypt re-opened.
Sri Lanka’s largest agricultural export, tea earned nearly 1.3 billion dollars in 2010. The ME buys over half the product.
The sanctions on Iran, he said, did not have any impact on the decline in tea exports as tea as a food item is not in the sanctions list.
Although there is an overall impact as a result of the crisis in Libya, Syria and Iran, he stressed the major issue for the industry is the recent increase in wages for the plantation workers.
In June this year, the Joint Trade Union Federation for the estate sector has been able to negotiate a pay hike for the plantation sector workers.
According to the collective agreement signed with the Employers’ Federation, the daily wage of an estate employee has been increased from Rs. 405 to Rs. 515.
“If prices do not reach the desired level we have to renegotiate to lower wages until the prices pick up. At least part of the pay rise has to be suspended,” he added.
Otherwise, the tea industry wouldn’t be sustainable, according to Keragala.