Govt. awaits Special Committee report to take action on RPCs’ minimum wage hike compliance 

• Cabinet Co-Spokesman and Minister Bandula Gunawardena reveals some plantation companies informed Govt. they cannot afford increased wages
• Says committee in process of studying genuineness of financial constraints, management issues to explore legal procedures in taking over companies if necessary
• Asserts committee will consider input from trade unions, workers, other stakeholders on wage hike
• Opines report will be presented to Cabinet after which Govt. will announce its final stance

By Charumini de Silva

Cabinet Co-Spokesman and Minister Bandula Gunawardena yesterday said the Government will soon announce its stance on Regional Plantation Companies (RPCs) that have failed to implement the minimum wage hike, following the completion of a report by a Cabinet-approved Special Committee. 

On 23 May, the Cabinet of Ministers approved a proposal by President Ranil Wickremesinghe, in his capacity as the Finance, Economic Stabilisation and National Policies Minister, to form a special committee. The committee, headed by the Secretary to the President and Treasury Secretary, has been tasked with studying various issues, including the potential introduction of laws to cancel lease agreements of State-owned estate companies with poor management that are unable to pay salaries.

“Some of the plantation companies have informed the Government that they cannot afford the increased wages,” Gunawardena noted.

Against this backdrop, he said the committee is now in the process of studying whether these companies are genuinely financially strained or if they have management issues. “If necessary, the committee will also explore the legal process of taking over these companies,” he added.

Gunawardena also noted that the committee will consider input from trade unions, workers and other stakeholders concerned about the wage hike.  “The final report is expected to be presented to the Cabinet of Ministers, after which the Government will be able to share its final stance on the issue,” Gunawardena said.

On Monday, the plantation industry stakeholders holding a collective media briefing claimed that even prior to the recent wage hike, the tea and rubber sector workers were already paid the single highest minimum wage across all 48 regulated by the Wages Board, including; tea smallholders, garments, tea export trade, manufacturing industry, nursing, pre-school teachers and security services. 

With the latest minimum wage hike being compelled from the industry, tea and rubber wages will now be 2.4 to four times greater than any of the other sectors regulated by the Wages Board, they pointed out.

They also stressed that the RPCs are listed companies on the Colombo Stock Exchange (CSE) and any attempt at expropriation by the Government would contravene Securities and Exchange Commission (SEC) rules, the Companies Act and other related statutory provisions.

The Planters’ Association of Ceylon also noted that the current approach of the Government in attempting to coercively set wages for the private sector, and interfere in management of the sector from key Government figures represent a stark violation of the terms of the International Monetary Fund (IMF) agreement, which is crucial for Sri Lanka’s economic recovery. 

“This decision is very clearly driven by short-term populist politics aimed at securing electoral victories rather than fostering long-term economic health of the industry, and securing the interests of workers,” they alleged.

The IMF’s $ 3 billion Extended Fund Facility (EFF) for Sri Lanka is contingent on several stringent conditions aimed at ensuring fiscal consolidation including reduced intervention in State-owned enterprises (SOE). Historically, State control over enterprises has led to inefficiencies and financial burdens, as evidenced by the failures of numerous Government-run businesses in Sri Lanka.