After wage hike, Assam tea workers face retrenchment

The 1.1 million permanent tea workers in Assam and an equal number of casual workers in this state’s tea estates might face job losses in the coming months.

Tea companies are resorting to more mechanisation of their estates, to cut on production costs. Estimates from producers suggest that on account of the recent interim daily wage increase of ~30 in the state, production cost has risen to ~160180 a kilo a day, while tea auction prices have been stagnant.

“Mechanisation of the gardens is definitely going to increase, as tea companies will strive to maintain costs in the face of stagnant prices,” says Atul Asthana, managing director at Camellia Plc-controlled Goodricke Group.

Azam Monem, director at McLeod Russel, the world’s largest in the segment, says in the coming months, up to a third of the casual workforce in the gardens might be trimmed. For McLeod Russel, employee benefit expenses account for a little over 45 per cent at nearly ~8.4 billion of the total annual expenses of ~18.4 billion.

“If that doesn’t help, the gardens might be forced to consider rationalising the permanent workforce,” he added.

Goodricke Group’s outgo on employee benefits and wages were 34 per cent or nearly ~2.4 billion of a total yearly expense of ~7 billion. For Dhunseri Tea and Industries, it is 36 per cent of the total company expenditure of ~1.7 billion.

Usually in April-November, the estates employ non-permanent workers to pluck leaves from the bushes, with the intensity rising just after the monsoon, when production volume peaks. Around a million labourers are involved in this, apart from the gardens’ own permanent workers.

Last month, after a series of negotiations, the government of Assam ordered a rise in tea workers’ wages by ~30 a day, to a total of ~351 a day. Of this, ~167 is the cash component; the rest are the benefits such as housing, electricity, rations, fuel and others.

According to Asthana, tea companies will be able to curtail their production cost of ~160-180 a kilo by 40 per cent if they resort to mechanisation. “That is how they will still be able to post profit,” he asserted.

Monem, also chairman of Indian Tea Association, representing the companies operating in Assam and North Bengal, said: “There wouldn’t have been any problem had tea prices also increased, which would have mitigated the rising costs.”

Industry officials say prices in Assam are flat as compared to last year. However, data from the Tea Board of India shows the average auction prices at Guwahati and Kolkata had risen by a little over seven per cent to ~164.4 and ~174.9 per kg, respectively, as on end-July.