Business

Bitter Aftertaste: How a Wage Hike Could Brew Disaster for the Ceylon Tea Industry

Published

2 years ago

2024/06/9

The Ceylon tea industry, a vital component of the national economy, is under immense pressure from the proposed 700 Rupee wage increase for tea estate workers. While it is said that the intention behind the wage hike is to improve worker livelihoods, industry experts refer this as a pure political move aimed at gaining the estate worker’s vote and does next to nothing to address the real issues at hand. The potential repercussions could be catastrophic for the industry and its workforce, resulting in severe unemployment and economic instability.

Currently, the tea industry employs over one million people and significantly contributes to Sri Lanka’s GDP. However, many tea plantations already operate on razor-thin or negative margins due to fluctuating global market prices and rising production costs. Imposing a mandatory wage hike could push these plantations over the edge, leading to widespread financial distress and potential closures. Profits of a handful of companies from non-tea sources have been highlighted whereas the majority of companies are loss making. Furthermore, there was a one-time exchange gain from the dramatic currency devaluation last year. Ceylon tea already has the highest costs and the lowest productivity in the tea growing world.

The immediate concern is the financial strain this wage increase would place on the 21+ plantation companies. These businesses, particularly small to medium-sized ones, may struggle to absorb the additional costs. Faced with higher labour expenses, companies might be forced to cut costs elsewhere, potentially reducing worker benefits, delaying essential maintenance, or scaling back investments in sustainable farming practices. This could result in a decline in the quality of tea, making Ceylon tea less competitive internationally and leading to decreased sales and revenue.

The fear of industry collapse is not unfounded. If the tea industry crumbles, the ripple effects would be felt nationwide. Thousands of workers could lose their jobs, and the economic fallout could extend to other sectors, creating a significant national crisis. The proposed wage increase, while well-intentioned, risks becoming the catalyst for widespread economic hardship.

More alarmingly, the proposed wage hike could trigger a wave of unemployment. Smaller plantations that cannot afford the increased wages may be forced to downsize or shut down entirely, resulting in thousands of job losses. The very workers the wage increase aims to help could find themselves without any income, worsening poverty and economic instability in rural communities dependent on tea production.

Rather than focusing on a short-term wage increase, a more sustainable approach is needed. Comprehensive strategies should be implemented to improve worker livelihoods without jeopardizing the industry’s stability. This includes investing in worker training and development, enhancing healthcare and housing facilities and promoting sustainable agricultural practices.

While the proposed 700 Rupee wage hike is aimed at uplifting tea estate workers, the potential for industry collapse and mass unemployment cannot be ignored. It is crucial to consider the broader implications and adopt a balanced approach that ensures the long-term sustainability of the Ceylon tea industry. Without careful consideration and strategic planning, the wage increase could lead to greater economic problems, leaving workers worse off than before. After all, decisions made for one’s political gains could end up destroying one of Sri Lanka’s largest forex earners.

**This article is written by an industry analyst who prefers to remain anonymous

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Business

ADB approves $100 million loan to boost skills development and jobs for youth in Sri Lanka

Published

23 hours ago

2026/10/2

Thilina Walpola

The Asian Development Bank (ADB) has approved a $100 million results-based loan to help Sri Lanka transform its technical and vocational education and training (TVET) system, equip more young people with industry-relevant skills, and strengthen the country’s competitiveness and inclusive growth.

The Skills Development System Transformation Program will support the Government of Sri Lanka’s efforts in improving the quality and relevance of skills training, strengthening links between training providers and industries, and expanding employment opportunities for youth. The program will increase women’s employment opportunities in nontraditional jobs in fields including automotive technology, engineering, information and communications technology, construction, and renewable energy.

“A skilled workforce is essential to Sri Lanka’s long-term economic transformation and competitiveness,” said ADB Country Director for Sri Lanka Shannon Cowlin. “This program will help create stronger pathways from education to employment by making training more responsive to industry needs, expanding opportunities for young people and women, and ensuring that graduates have the skills required by a modern and evolving economy.”

Though Sri Lanka’s economy is recovering, it faces skills shortages in priority sectors, high youth unemployment, and low female labor force participation. Many employers report difficulty finding workers with the skills needed in a changing economy.

Aligned with the Government of Sri Lanka’s Technical and Vocational Education and Training Sector Strategic Framework 2026–2035, the nationwide program will be implemented from 2027 to 2031 and is expected to directly benefit more than 100,000 young people through improved access to quality, employment-oriented training.

Business

USD 40.84m pipeline to secure aviation fuel supplies to BIA

Published

23 hours ago

2026/10/2

Thilina Walpola

By Ifham Nizam

The government has cleared a USD 40.84 million and Rs. 8,548.75 million contract to build a dedicated aviation fuel pipeline from Muthurajawela to Bandaranaike International Airport (BIA), alongside a massive new fuel storage facility with a capacity of 92,000 cubic metres.

Energy Minister Anura Karunatilaka said the project represented a major investment in strengthening the infrastructure underpinning Sri Lanka’s aviation fuel supply and ensuring more reliable fuel availability at the country’s main international airport.

‘This project will provide the infrastructure required to strengthen the reliability and continuity of aviation fuel supplies to Bandaranaike International Airport, Karunatilaka said.

The contract has been awarded to China Petroleum Pipeline Engineering Company Limited, following an international competitive procurement process in which three bids were received.

The project will see a new aviation fuel storage tank complex constructed at Muthurajawela, together with the associated infrastructure required for handling and transferring aviation fuel.

Business

CSE activity up, turnover weak at Rs. 1.4 billion

Published

23 hours ago

2026/10/2

Thilina Walpola

By Hiran H Senewiratne

Trading activity on the Colombo Stock Exchange (CSE) gathered pace yesterday as global fuel prices began to show signs of easing, according to market analysts.In this context, both indices moved upwards. All Share Price Index up by 67.97 points while S and P SL20 up by 8.30 points.

Turnover stood at Rs 1.4 billion with seven crossings. Those crossings were reported in Sampath Bank 1.7 million shares crossed to the tune of Rs 238 million and its share price traded at Rs 140, Access Engineering two million shares crossed to the tune of Rs 159 million and its share price traded at Rs 79.50, LOLC one million shares crossed to the tune of Rs 129 million and its share price traded at Rs 129, HNB 100,000 shares crossed to the tune of Rs 38.4 million and its share price traded at Rs 384, JKH 1.9 million shares crossed to the tune of Rs 35 million and its share price traded at Rs 18.60, Hayleys 100,000 shares crossed to the tune of Rs 22.50 million and its share price traded at Rs 225 and Richard Pieris 847,000 shares crossed to the tune of Rs 22 million and its share price traded at Rs 25.50.

In the retail market top seven companies that have mainly contributed to the turnover were Sampath Bank Rs 114 million (813,000 shares traded), JKH Rs 100 million (5.3 million shares traded) LB Finance Rs 49 million (325,000 shares traded), HNB Finance Rs 30 million (27 million shares traded), HNB Rs 27 million (70000 shares traded), NTB Rs 25 million (82000 shares traded ) and Lanka IOC Rs 21 million (666,000 shares traded). During the day 65 million shares volumes changed hands in 10433 transactions.

The Banking and manufacturing sector counters performed well. In the banking sector Sampath Bank let the market while manufacturing sector especially JKH also significantly performed well. With the fuel revision Land IOC also a significant stock at the floor.

Meanwhile, First Capital Treasuries said that Ramesh Schaffter resigned as a Non-Independent Non-Executive Director with effect from October 1, to facilitate the restructuring of the company’s board.

Yesterday the Central Bank announced the US Dollar rate as against rupee. The rupee was quoted flat at Rs 330.65/80 to the US dollar in the spot market , while bond yields dropped, dealers said.