Features

Proposed wage-increase for tea plantation workers:

Published

5 years ago

2021/02/16

Sahan Weerasooriya

How it affects the small holders

by Dr Janaka Ratnasiri

The Cabinet of Ministers, at its meeting held on 26.01.2021, has decided to amend the Wages Board Regulations (WBR) by making it mandatory for tea plantation workers be paid a minimum of Rs. 1,000.00 a day. This is a follow up to the proposal made by the Finance Minister in his Budget Speech that “I also propose to increase the daily wage of plantation workers to Rs. 1,000 from January 2021”.

DEMAND BY THE PLANTATION WORKERS FOR A WAGE INCREASE

Since about 2016, tea plantation trade unions have been demanding that a daily wage of Rs. 1,000 be paid to their workers. However, the regional plantation companies (RPC) were resisting their demands, despite intervention by ministers from time to time. In order to ensure votes from the plantation workers, prior to the election, a pledge was given by those who are in office now, that the plantation worker salaries will be increased. The proposal in the budget speech, as well as the recent amendment to the WBR, were outcomes of this pledge.

Tea is grown in Sri Lanka by two groups, the large plantations managed by the Regional Plantation Companies including other public sector institutes, and the small holders of extent below 10 Acres each. According to the 2015 Annual Report of the Tea Small Holdings Development Authority (TSHDA), the small holders produced about 240 million kg of made tea in 2015, while the large estates produced 87 million kg, which are 73% and 27% of the total production, respectively. According to the TSHDA Report, the number of small holdings below 0.5 ha extent comprise 88% which are mostly managed by family members. The rest up to 10 Acres or 4 ha employ paid workers and they are subject to WBR.

The demand for wage increase came from plantation company workers where salaries paid to workers are decided by the collective agreement between the RPCs and worker trade unions negotiated once in two years. During the last agreement, RPCs have offered an increase of the basic to Rs. 600 a day and increases in some allowances making the total daily wage to Rs. 940.00 subject to good attendance (Daily FT, 26.10.2018). But this was not acceptable to the worker unions.

The RPCs have called for a new wage structure focusing on a revenue share model that could have sweeping productivity-focused reforms in the entire industry. An option favoured by the trade unions is the out-grower model where the workers are allocated small plots of land to grow their own tea to sell to the factories (Daily FT of 19.02.2019). In view of this deadlock, the COM decided to incorporate the LKR 1000 as minimum daily wage payable to tea industry workers which is applicable to both estate and small holding workers.

Despite this Cabinet decision, tea plantation workers across the up-country have launched a token strike demanding immediate payment of the agreed pay hike to them, as some RPCs were hesitant to implement the Government decision. With an annual export earning of LKR 240 billion in 2019, a single day production outage means a loss of over LKR 600 million a day to the country.

PRESENT EARNINGS OF PLANTATION WORKERS

Currently, WBR specifies that the tea plantation workers should be paid a minimum of LKR 680.00 a day, subject to satisfactory attendance during the month. In addition, they are paid EPF at 12% of basic salary of Rs. 545.00 and 3% for ETF, making the total wages Rs. 761.75. It should be remembered that plantation workers generally work only for about 6 hours from 0730 h to 1330 h including 30 min for a tea break. They have to stop plucking early so that the day’s collection could be handed over after weighing to the lorry which comes around 1400 h. A plucker works for a maximum of 22 days a month because it takes about a week for a new shoot to develop to be plucked again.

But, on an average, a plucker may work only for about 16-18 days and after deducting his own EFP contribution, may have a take-home pay of about Rs. 12,200 – 13,700 a month. If they pluck above the minimum quota, they may be paid extra at rates varying from employer to employer from Rs./kg 25 to 30, they can earn extra, provided the bushes in the worker’s lot have shoots. Both during dry months (no moisture) and wet months (no radiation), the shoot growth declines and the average yield drops and much extra revenue cannot be expected during these months.

Being daily paid workers, they are not entitled for any paid casual or sick leave unlike monthly paid workers elsewhere. No work means no pay. Unlike other workers in the mercantile sector, tea workers are not entitled for mercantile holidays, neither they have any annual leave. Whereas, in the case of all public sector and mercantile sector workers, the EPF contribution is computed based on the total salary received, in the case of plantation workers, it is computed based on the basic salary only.

The writer believes that this is a violation of the EPF Act. Though workers employed by RPCs may get free housing and free medical facilities, such benefits are not available to the large number of workers employed in the small-holder sector. Hence, there is a need to increase the wages paid to these workers to compensate for the loss of all these benefits.

In announcing the proposed wage hike for plantation workers, both the Government and the RPCs are deceiving them by adding the employers’ contribution to EPF and ETF as a part of the daily wage of Rs. 1,000. This is not done anywhere else either in the public or in the mercantile sector. When they announce a salary scale, only the basic salary along with allowances are shown, but not the EPF and ETF contributions. The workers themselves may not have understood the difference, but their unions should have seen the unfairness of this computation.

IMPACT OF THE WAGE INCREASE ON THE SMALL HOLDER SECTOR

Small holders get paid for the green leaf supplied to factories at a rate determined by the auction price paid to factories the previous month. Currently, the rate is about Rs. 90 per kilo after deducting for transport and sack weight. In the writer’s experience, a small holding of four acres with an average yield of 1,500 kg of green leaf a month, brings a monthly revenue of Rs. 135,000. The salary bill for four pluckers and a Kankanama will come to an average of Rs. 80,000 a month. This comprises Rs. 30,000 paid to the Kankanama and LKR 12,500 paid to each plucker on an average, including their EPF and ETF contributions. This works out to Rs. 781 a month per plucker, a little over Rs. 762, the minimum specified in the WBR.

The cost of weeding which is done manually, maintenance of drains and retaining walls on an average comes to about Rs. 25,000 a month. The cost of fertilizers and dolomite and their application costs another Rs. 6,000 a month on an average. In addition, there are other costs of infilling, pruning and replanting of unproductive sections which works out to about Rs. 14,000 a month. This leaves only Rs. 10,000 a month as income from the small holding, which is even less than what a worker earnes a month.

Once the WBR is amended to increase the daily wages to Rs. 1000, the Labour Officers will spare no time in visiting the small holdings and insisting the new wages be implemented. If this is done, it will be an added financial burden of Rs. 15,360 a month. This exceeds the amount left in hand after attending to its management properly. Since the small holdings depend entirely on the money paid by the factories, the obvious solution is to increase this amount at least by Rs. 20 a kilo which leaves behind a decent balance in hand. It is obvious that the COM was not concerned about the small holdings when it decided to amend the WBR, but had only the concerns about the RPC workers in mind.

INCREASING THE PAYMENT TO SMALL HOLDINGS BY FACTORIES

Tea samples offered at the auctions are purchased mostly by exporters for supplying to overseas buyers. About 3% is purchased for sale locally. According to the Tea Board Directory, there are about 325 exporters. Originally, only the dedicated companies exported tea but lately the factories as well as RPCs have got involved in export of tea considering the high profit margin. According to the Central Bank 2019 Annual Report, the average auction price of tea was Rs./kg 546.67, while the average export price was LKR/kg 822.25, leaving a margin of Rs./kg 275.58. The total tea (made tea) production in 2019 was 300.13 Mkg, while the quantity exported was 292.65 Mkg. Thus, the exporters had made a gross profit of Rs. 80.65 Billion in 2019.

Export of tea is subject to a CESS levied at Rs./kg 10, which works out to LKR. 2.9 Billion. Further, Rs.one billion is collected as Tea Promotion Levy by SLTB from the exporters. Another 1% or Rs. 2.4 Billion has to be paid to Brokers for conducting the auctions and carrying out quality control checks and certifying on samples received. These brokers comprising 8 companies deserve it because they ensure that quality tea is exported. After paying these taxes, the exporters are still left with a profit margin of about Rs. 65 Billion annually after paying Rs. 10 billion as income tax (assumed).

The export companies presently enjoy the benefit of this revenue shared among its staff. Assuming each company has 50 staff members, the total staff strength is about 16,250, and each of them could earn a salary of about Rs. 400,000 monthly. This is while a plucker earns below 1/25 th of this amount after trudging up and down the hills carrying kilos of leaf on their back in sun and rain. It would be in the interest of the exporters to share their profits among the plantation workers also, because if the industry collapses, there is nothing for them to export.

SHARING OF EXPORT PROFITS AMONG WORKERS

The number of workers employed in tea plantations are estimated to be about 174,000 in 2017 (ILO Publication on Tea Small Holdings, 2018). If each of them is to be paid an additional Rs. 238 monthly for raising the daily rate from Rs. 762 to LKR 1,000, the annual burden will be Rs. 414 Million. The total production in the small holdings in 2019 was 240 Mkg of made tea according to TSHDA, which is equivalent to 960 Mkg of Greenleaf. If the small holder is to be paid Rs./kg 20 more for Greenleaf, the added burden will be Rs. 19.2 Billion.

Thus, for increasing the daily wage to workers in both the estates and small holdings, the total added financial burden will be about Rs. 20 Billion annually. If the tea exporters could part this amount from their profits of Rs. 65 billion, the problem could be solved. The Government may do away with the CESS levy on tea exports to assist this process. Concurrently, an effort should be made by the tea industry to increase the revenue from tea exports.

INCREASING THE REVENUE FROM

TEA EXPORTS

The writer published an article in The Island of 11th and 13th of November, 2015 describing the strategies to be adopted to increase the export revenue, and also to increase the wage increase. Though it was written more than five years ago and the data little outdated, the reasonings are still valid. The article which appeared in two parts may be accessed via the following links:

http://archive.island.lk/index.php?page_cat=article-details&page=article-details&code_title=135105

http://archive.island.lk/index.php?page_cat=article-details&page=article-details&code_title=135203

One strategy is to move away from the manufacture of traditional orthodox tea to CTC (Crush-Tear-Curl) tea which is in high demand in the western countries like the USA and the UK. Both Kenya and India have overtaken Sri Lanka as major exporters because they supply CTC tea while Sri Lanka sticks to orthodox tea. According to Tea Exporters Association data, Sri Lanka has produced in 2019, out of a total of 300 kt of tea, 274 kt (91.3%) of orthodox tea, 23.6 kt (7.9%) of CTC tea and 2.6 kt (0.8%) of green tea. According to World Exporters Site http://www.worldstopexports.com/tea-imports-by-country/, Sri Lanka in 2019 has occupied only 10% of the tea market in the USA while only 4.1% in the UK. The major importers were Kenya, India and China. Today, most Western countries consume tea in the form of tea bags for which CTC tea is necessary. But to cater to these markets, Sri Lanka will have to increase the CTC output.

World’s highest tea importer is Pakistan, but most of the teas consumed in Pakistan are imported from Kenya, India, Uganda, Rwanda and Tanzania. Currently Sri Lanka’s market share in Pakistan is only 2-3% of total tea imports. A publication by Sri Lanka’s Consulate General of Sri Lanka in Karachi released in December, 2016 has recommended that “While capitalizing on the taste factor, Sri Lankan tea companies should produce quality strong black CTC teas comparable to East African countries focusing on leaf and liquor in large quantities and offer straight lines such as Garden Originals. Pakistan consumers are very particular about the appearance of tea and prefer to drink thick gold color tea”, if Sri Lanka wishes to increase its market share in Pakistan.

The other strategy is to move into producing more high value tea such as green tea and instant tea. According to Central Bank 2019 Annual Report, Sri Lanka has exported 285 Mkg of black tea at an average price of Rs./kg 797.00, 4.75 kt of green tea at an average price of Rs./kg 1,987.00 and 3.07 kt of instant tea at a price of Rs./kg 1.357.00. Hence, the logical step to increase the export revenue from tea is to offer high value tea instead of traditional black tea. But, instead of doing that the Sri Lanka Tea Board was spending billions of rupees on promoting black tea in existing markets. In 2014, the COM approved a budget of LKR 2.3 billion for promotional activities but the Tea Board could not finalize the project for several years because of disputes it ran into in selecting a suitable advertising company.

IMPLICATIONS OF WAGE INCREASE IN THE SMALL HOLDING SECTOR

If the proposed wage increase applies to the small tea holdings without any corresponding increase in the payments made for green leaf supplied to factories, the only option available to the small holder is to give up the tea plantation and consider other options. Among these are shifting to another crop such as cinnamon or pepper along with gliricidea or partition the land into several segments and hand over them to existing workers or others to manage them on their own with no liability to pay any wages to the workers by the land owner.

Gliricidea stems are in demand as a biofuel for use as a source of thermal energy in industries. With the Government giving high priority for renewable energy, industries will have to turn to biofuels as a substitute for oil or gas to generate thermal energy. One barrier they face is the lack of a proper supply chain ensuring continuous supply of biofuels. Already a project supported by UNDP and FAO is assisting the Government to set up fuelwood collecting centres across the country as part of the supply chain improvement. Hence, converting the tea plantation into a gliricidea plantation will help in this venture and provide a source of revenue possibly higher than what the tea plantation provides without any WBR controls.

CONCLUSION

In order to meet the demand made by tea plantation workers, the Government has decided to incorporate the proposed increase to the WBR rather than limiting it to the Collective Agreement between RPCs and Trade Unions. This affects the small holders as well who depend on payments made by factories for green leaf supplied to them. Unless there is a corresponding increase in this payment rate, the small holders have no option other than to give up planting tea.

It is also proposed that the Government should intervene to get the enormous profits earned by exporters to share their profits with the workers enabling the RPCs and small holders to implement the proposed wage rise. Concurrently, the factories should endeavour to produce high-value tea products to increase the export revenue.

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Features

US’ drastic aid cut to UN poses moral challenge to world

Published

9 hours ago

2026/01/1

Thilina Walpola

An UN humanitarian mission in the Gaza. [File: Ashraf Amra/Anadolu Agency]

‘Adapt, shrink or die’ – thus runs the warning issued by the Trump administration to UN humanitarian agencies with brute insensitivity in the wake of its recent decision to drastically reduce to $2bn its humanitarian aid to the UN system. This is a substantial climb down from the $17bn the US usually provided to the UN for its humanitarian operations.

Considering that the US has hitherto been the UN’s biggest aid provider, it need hardly be said that the US decision would pose a daunting challenge to the UN’s humanitarian operations around the world. This would indeed mean that, among other things, people living in poverty and stifling material hardships, in particularly the Southern hemisphere, could dramatically increase. Coming on top of the US decision to bring to an end USAID operations, the poor of the world could be said to have been left to their devices as a consequence of these morally insensitive policy rethinks of the Trump administration.

Earlier, the UN had warned that it would be compelled to reduce its aid programs in the face of ‘the deepest funding cuts ever.’ In fact the UN is on record as requesting the world for $23bn for its 2026 aid operations.

If this UN appeal happens to go unheeded, the possibilities are that the UN would not be in a position to uphold the status it has hitherto held as the world’s foremost humanitarian aid provider. It would not be incorrect to state that a substantial part of the rationale for the UN’s existence could come in for questioning if its humanitarian identity is thus eroded.

Inherent in these developments is a challenge for those sections of the international community that wish to stand up and be counted as humanists and the ‘Conscience of the World.’ A responsibility is cast on them to not only keep the UN system going but to also ensure its increased efficiency as a humanitarian aid provider to particularly the poorest of the poor.

It is unfortunate that the US is increasingly opting for a position of international isolation. Such a policy position was adopted by it in the decades leading to World War Two and the consequences for the world as a result for this policy posture were most disquieting. For instance, it opened the door to the flourishing of dictatorial regimes in the West, such as that led by Adolph Hitler in Germany, which nearly paved the way for the subjugation of a good part of Europe by the Nazis.

If the US had not intervened militarily in the war on the side of the Allies, the West would have faced the distressing prospect of coming under the sway of the Nazis and as a result earned indefinite political and military repression. By entering World War Two the US helped to ward off these bleak outcomes and indeed helped the major democracies of Western Europe to hold their own and thrive against fascism and dictatorial rule.

Republican administrations in the US in particular have not proved the greatest defenders of democratic rule the world over, but by helping to keep the international power balance in favour of democracy and fundamental human rights they could keep under a tight leash fascism and linked anti-democratic forces even in contemporary times. Russia’s invasion and continued occupation of parts of Ukraine reminds us starkly that the democracy versus fascism battle is far from over.

Right now, the US needs to remain on the side of the rest of the West very firmly, lest fascism enjoys another unfettered lease of life through the absence of countervailing and substantial military and political power.

However, by reducing its financial support for the UN and backing away from sustaining its humanitarian programs the world over the US could be laying the ground work for an aggravation of poverty in the South in particular and its accompaniments, such as, political repression, runaway social discontent and anarchy.

What should not go unnoticed by the US is the fact that peace and social stability in the South and the flourishing of the same conditions in the global North are symbiotically linked, although not so apparent at first blush. For instance, if illegal migration from the South to the US is a major problem for the US today, it is because poor countries are not receiving development assistance from the UN system to the required degree. Such deprivation on the part of the South leads to aggravating social discontent in the latter and consequences such as illegal migratory movements from South to North.

Accordingly, it will be in the North’s best interests to ensure that the South is not deprived of sustained development assistance since the latter is an essential condition for social contentment and stable governance, which factors in turn would guard against the emergence of phenomena such as illegal migration.

Meanwhile, democratic sections of the rest of the world in particular need to consider it a matter of conscience to ensure the sustenance and flourishing of the UN system. To be sure, the UN system is considerably flawed but at present it could be called the most equitable and fair among international development organizations and the most far-flung one. Without it world poverty would have proved unmanageable along with the ills that come along with it.

Dehumanizing poverty is an indictment on humanity. It stands to reason that the world community should rally round the UN and ensure its survival lest the abomination which is poverty flourishes. In this undertaking the world needs to stand united. Ambiguities on this score could be self-defeating for the world community.

For example, all groupings of countries that could demonstrate economic muscle need to figure prominently in this initiative. One such grouping is BRICS. Inasmuch as the US and the West should shrug aside Realpolitik considerations in this enterprise, the same goes for organizations such as BRICS.

The arrival at the above international consensus would be greatly facilitated by stepped up dialogue among states on the continued importance of the UN system. Fresh efforts to speed-up UN reform would prove major catalysts in bringing about these positive changes as well. Also requiring to be shunned is the blind pursuit of narrow national interests.

Features

Egg white scene …

Published

9 hours ago

2026/01/1

Thilina Walpola

Hi! Great to be back after my Christmas break.

Thought of starting this week with egg white.

Yes, eggs are brimming with nutrients beneficial for your overall health and wellness, but did you know that eggs, especially the whites, are excellent for your complexion?

OK, if you have no idea about how to use egg whites for your face, read on.

Egg White, Lemon, Honey:

Separate the yolk from the egg white and add about a teaspoon of freshly squeezed lemon juice and about one and a half teaspoons of organic honey. Whisk all the ingredients together until they are mixed well.

Apply this mixture to your face and allow it to rest for about 15 minutes before cleansing your face with a gentle face wash.

Don’t forget to apply your favourite moisturiser, after using this face mask, to help seal in all the goodness.

Egg White, Avocado:

In a clean mixing bowl, start by mashing the avocado, until it turns into a soft, lump-free paste, and then add the whites of one egg, a teaspoon of yoghurt and mix everything together until it looks like a creamy paste.

Apply this mixture all over your face and neck area, and leave it on for about 20 to 30 minutes before washing it off with cold water and a gentle face wash.

Egg White, Cucumber, Yoghurt:

In a bowl, add one egg white, one teaspoon each of yoghurt, fresh cucumber juice and organic honey. Mix all the ingredients together until it forms a thick paste.

Apply this paste all over your face and neck area and leave it on for at least 20 minutes and then gently rinse off this face mask with lukewarm water and immediately follow it up with a gentle and nourishing moisturiser.

Egg White, Aloe Vera, Castor Oil:

To the egg white, add about a teaspoon each of aloe vera gel and castor oil and then mix all the ingredients together and apply it all over your face and neck area in a thin, even layer.

Leave it on for about 20 minutes and wash it off with a gentle face wash and some cold water. Follow it up with your favourite moisturiser.

Features

Confusion cropping up with Ne-Yo in the spotlight

Published

10 hours ago

2026/01/1

Thilina Walpola

Ne-Yo: His management should clarify the last-minute cancellation

Superlatives galore were used, especially on social media, to highlight R&B singer Ne-Yo’s trip to Sri Lanka: Global superstar Ne-Yo to perform live in Colombo this December; Ne-Yo concert puts Sri Lanka back on the global entertainment map; A global music sensation is coming to Sri Lanka … and there were lots more!

At an official press conference, held at a five-star venue, in Colombo, it was indicated that the gathering marked a defining moment for Sri Lanka’s entertainment industry as international R&B powerhouse and three-time Grammy Award winner Ne-Yo prepares to take the stage in Colombo this December.

What’s more, the occasion was graced by the presence of Sunil Kumara Gamage, Minister of Sports & Youth Affairs of Sri Lanka, and Professor Ruwan Ranasinghe, Deputy Minister of Tourism, alongside distinguished dignitaries, sponsors, and members of the media.

Shah Rukh Khan: Disappointed his fans in Sri Lanka

According to reports, the concert had received the official endorsement of the Sri Lanka Tourism Promotion Bureau, recognising it as a flagship initiative in developing the country’s concert economy by attracting fans, and media, from all over South Asia.

Nick Carter: His concert, too, was cancelled due to “Unforeseen circumstances

However, I had that strange feeling that this concert would not become a reality, keeping in mind what happened to Nick Carter’s Colombo concert – cancelled at the very last moment.

Carter issued a video message announcing he had to return to the USA due to “unforeseen circumstances” and a “family emergency”.

Though “unforeseen circumstances” was the official reason provided by Carter and the local organisers, there was speculation that low ticket sales may also have been a factor in the cancellation.

Well, “Unforeseen Circumstances” has cropped up again!

In a brief statement, via social media, the organisers of the Ne-Yo concert said the decision was taken due to “unforeseen circumstances and factors beyond their control.”

Ne-Yo, too, subsequently made an announcement, citing “Unforeseen circumstances.”

The public has a right to know what these “unforeseen circumstances” are, and who is to be blamed – the organisers or Ne-Yo!

Ne-Yo’s management certainly need to come out with the truth.

However, those who are aware of some of the happenings in the setup here put it down to poor ticket sales, mentioning that the tickets for the concert, and a meet-and-greet event, were exorbitantly high, considering that Ne-Yo is not a current mega star.

We also had a cancellation coming our way from Shah Rukh Khan, who was scheduled to visit Sri Lanka for the City of Dreams resort launch, and then this was received: “Unfortunately due to unforeseen personal reasons beyond his control, Mr. Khan is no longer able to attend.”

Referring to this kind of mess up, a leading showbiz personality said that it will only make people reluctant to buy their tickets, online.

“Tickets will go mostly at the gate and it will be very bad for the industry,” he added.