The plantation daily wage

Despite the trumpeting from the housetops, no doubt with a weather eye on the plantation bloc vote, most estate workers are still not getting the Rs. 1,700 daily wage imposed on the plantation industry by government fiat. The Planters Association (PA) is adamant that the wage increase will drive the industry bankrupt. A number of plantation companies led by Agrapatana Plantations Ltd., both listed and unlisted, have obtained an interim injunction from a three-judge bench of the Supreme Court challenging the legality of the wage hike that has been gazetted. Minister Jeevan Thondaman, a direct descendant of Ceylon Workers Congress leader, the late S. Thondaman, the plantation union thalaivar has said the injunction was issued due to a “minor legal error.”

However that be, the tantalizing question in the air is whether this matter can be satisfactorily resolved before the presidential election slated for later this year. It was obviously no accident that President Ranil Wickremesinghe announced the wage hike from the CWC’s May Day platform in Kotagala. The plantation unions have long commanded a bloc vote on the estates which he hopes the two Thondamans now serving his government – Estate Infrastructure and Water Supply Minister Jeevan Thondaman and his cousin, Eastern Province Governor Senthil Thondman – will deliver to his ticket. The case is next due to be heard at the end of August and hearings will continue until its conclusion. Whether this would be before or after the presidential election we do not know.

It is generally accepted that while Ceylon Tea continues to hold the reputation it earned during the colonial era for being the world’s finest, it is less well known that the productivity levels of our plantation workers is perhaps the world’s lowest and wages, not counting the most recent increase which has not yet been widely implemented, are among the highest. The cost of production of our competitors are substantially lower than ours. Employers freely concede that the wage hike is well intentioned, but argues that it threatens to cripple the tea industry. They urge a productivity based pay system as a more viable alternative and seeks what Mr. Roshan Rajadurai, the Managing Director of two Regional Plantation companies under the Hayleys group, called “balancing fair compensation for workers with economic realities of the industry.” This, he says will safeguard worker welfare and the industry’s future.

There has been considerable fist waving in the face of employers on the part of the government, including the threat of canceling the leases under which the Regional Plantation Companies (RPCs) are currently managing state-owned estates, unless the mandated wage increase is granted. This is being strongly resisted by the employers. The 1972 land reforms placing a 50-acre limit on land holding followed the JVP insurrection the previous year which was perceived as partly due to land hunger. However there was no effort to alienate plantation land coming into the hands of the state to the landless peasantry. These were largely vested in the already existing State Plantations Corporation (SPC) and the newly created Janatha Estates Development Board (JEDB). Some coconut estates belonging to local owners went into the hands of existing state ventures like the National Livestock Development Board and the Coconut Cultivation Board.

Both the JEDB and the SPC mounted enormous losses running into billions of rupees which eventually landed on the laps of the taxpayer. The RPCs were created by President Premadasa to lease mainly JEDB and SPC estates for private sector management to counter the impact of their losses on the state exchequer. Premadasa’s ‘people-ization’ policies, as he imaginatively called the scheme, resulted in 20 percent free employee shares most of which were subsequently sold in the Colombo stock market giving some windfall profits to workers in such undertakings. The government has now announced the appointment of a committee of officials to go into the books of individual RPCs to determine which of them can afford to bear the mandated daily wage and which of them cannot.

The majority of the RPCs are quoted on the Colombo Stock Exchange. Their share prices are not deeply depressed nor did they plunge when the wage increase was announced. Some of them have been paying reasonable dividends to shareholders. Whether the RPCs will agree to the mandated daily wage in the event their ongoing court action fails remains an open question. If the threatened cancellation of leases is implemented, whether new players can be found to run the estates will also be problematic. Also, it will hurt ongoing efforts to attract foreign investment and may affect the IMF program. Forcing a very large wage increase down the throats of the RPCs as well as smallholders who today produce 70 percent of the country’s tea is likely to have wide-ranging repercussions. While very small holdings may be operated with family labour, workers are hired in 50-acre proprietary estates and smaller properties.

As it is, most plantations are short of labour. Many members of estate worker families have migrated for work outside. While the line room kind of accommodation on estates remain, there has been forward movement for the better in recent years with workers getting cottage-type housing. Some estates have experimented with revenue sharing models which the PA claims has enabled workers to earn more than the mandated daily wage. With elections approaching, the question now is whether the government will be willing to take a hemin hemin (slowly, slowly) approach or will it want to deliver before polling day?