On January 14, on the eve of Pongal that is widely celebrated by Sri Lanka’s Tamil community in the north-east and in the hill country, President Gotabaya Rajapaksa announced his decision to increase the minimum wage of tea estate workers to LKR 1,000 (about ₹400), from LKR 700 now, with effect from March 1.
It was one of his first and major policy decisions, and two months into the country’s highest office, he was following up on his election promise. “It was also decided to take swift measures to develop all areas of the plantation sector, including infrastructure facilities,” his office said in a statement, adding that the government had taken “several initiatives such as tax exemption and fertiliser subsidy” to help the workers’ employers. The earliest reactions came not from workers, but from the private plantation companies who run and control the estates and workers living there, after the government divestment in the 1990s. Media headlines said they were “rattled” and “shocked”.
Opposition from companies
The Employers’ Federation of Ceylon said it was “deeply perturbed” by the salary increase proposed by the government for estate workers. “Financially, it will have a disastrous impact not only on the RPCs [Regional Plantation Companies] but also on the smallholders and eventually lead to the collapse of the industry. Therefore, we urge the authorities to refrain from going ahead with such proposal,” it said in a statement. However, it would be hard for President Rajapaksa, who has promised to lead an action-oriented government, to go back on assurance. Therein lies the challenge for the companies.
Even in the wake of a massive strike action from workers, who were relentlessly agitating for a wage hike up to LKR 1,000, the RPCs did not budge.
Citing a variety of reasons from low productivity to falling prices in the international market and a threat of the industry “collapsing” if they were to increase higher costs by way of a wage hike, the companies stubbornly held on to their positions.
In the last collective agreement with the estate workers’ unions, the companies agreed to pay LKR 700, giving workers a rather marginal rise in their basic wage. The 1,000 rupee-mark — which academic studies have found to be lower than a fair living wage — has remained elusive.
But Anusha Sivarajah, general secretary of the Ceylon Workers’ Congress, is hopeful. “The President has made this election promise. We are sure he will ensure that it is implemented, because he is looking at a comprehensive strategy in stages, looking at export pricing, tax concessions and subsidies for companies,” she told The Hindu . Her optimism perhaps stems from her party-cum-union’s alignment with the government. The CWC’s president, Arumugam Thondaman, is a Cabinet Minister in the Rajapaksa government.
Other unions are likely to be sceptical. After all, the nearly 150,000 estate labourers, mostly women, have heard the same poll promise from politicians of all hues in the past as well, but have not seen anyone keep it. Acting upon the assurance would essentially mean getting the companies, or the employers, to pay the amount that workers consider fair remuneration for their strenuous work.
Following President Rajapaksa’s announcement, the government has been holding discussions with the planters on possible tax concessions, fertiliser subsidy and measures to improve pricing.
“Discussions are taking place, nothing is finalised,” said Lalith Obeysekera, secretary general of the Planters’ Association of Ceylon.
According to Ramesh Pathirana, Plantation Industries and Export Agriculture Minister, talks are still on and a consensus is yet to be reached. “We have taken a policy decision, and the Cabinet has approved it. We have decided to provide that much-needed economic relief to the estate workers. We are discussing different modalities with the companies — including an out-grower model and a productivity-based incentive scheme for workers,” he told The Hindu .
A senior planter, requesting anonymity, said a wage hike would not only impact cash flow, but companies would also incur an approximate cost of LKR 2 billion a year if the wage is increased to LKR 1,000. Moreover, as many as 21 private companies have to come on board for this.
With the March 1 deadline looming, the government has only a month left to translate President Rajapaksa’s promise of better wage into action.
(Meera Srinivasan is The Hindu’s Colombo correspondent)
