Tea sector can't take further labour wage hikes- PA
Sri Lanka's tea plantation sector will not be able to withstand any further increases in labour or lease expenses, according to Chairman of the Planters' Association of Ceylon (PA), Lalith Obeysekere.
Citing recent media reports which stated that the government was considering increasing the lease rentals on tea plantation land, Obeysekere said that increasing rent at a time when many plantation companies are struggling to remain solvent, completely disregards the reasons behind the privatization of regional plantations, of what was at the time a loss-making industry.
“Under the terms and obliga- tions put forward by the government, the full risk and benefits of managing plantations were to be passed to the private sector. We prevail upon policymakers to make sure that the terms and conditions of the leases aren't changed half way through as some of the regional plantation companies simply cannot afford to take on more liabilities,” Obeysekere noted.
Obeysekere made the comments during his address to the 158th Annual General Meeting of the Planters' Association, recent- ly.
A looming renegotiation of wages through the next collective agreement between the PA and employees' trade unions was also highlighted by Obeysekere as being another area of extreme concern for the industry.
“With the last wage increase we weren’t forced into granting higher wages but between the government and the trade unions, we didn’t really have a choice in the matter. The next collective agreement is to be negotiated in March 2013. However, the industry simply cannot afford to take another hit from wage increases,” he stated.
Sri Lanka currently holds the dubious honour of incurring some of the highest costs of production witnessed amongst tea producing countries. Currently, stakeholders meet once every two years to renegotiate the terms of a collective agreement, which will determine, amongst others, periodic increases in wages for estate workers. However, in the backdrop of financial instability in many of Sri Lanka’s key export markets, the industry has had to deal with weaker demand, lower production and increased costs, leading many to question the sustainability and commercial viability of the industry going forward.
Voicing a possible solution to the dilemma of productivity versus labour costs, the Chief Guest at the event, former Commercial Bank Chairman, Mahinda Amarasuriya floated the concept of a stakeholder model which would hand the management of plantations and associated risks, over to estate workers, thereby providing them with the incentive to improve on productivity.
“This may not be a popular idea but you should consider leasing the land over to the workers and become facilitators to them. Kenya has very successfully developed a strong out-grower network and this is something we can learn from.”
“Politically no government would want to do it and the trade unions won’t like it either but mark my words, one day you will have to do it,” Amarasuriya said.