Regional Plantation Companies (RPCs) have come under scrutiny for not complying with President Ranil Wickremesinghe’s proposed wage hike for estate sector workers. Amidst these issues, the Government is currently in the process of reviewing the leasing agreements entered into with RPCs, according to Minister of Estate Infrastructure Development Jeevan Thondaman.

Thondaman, who has been critical of the RPCs for resisting the latest daily wage increase to Rs. 1,700 per tea plucker, recently emphasised on the need for action against these companies for the destruction of Government assets.

“We are reviewing the agreement as we speak. There is a committee that is going through it. In my view, we cannot regard this matter as being solely about tea. Tea plantations are assets of the Government,” the Minister said.

The lease review comes in the wake of RPCs strongly rejecting President Wickremesinghe’s 1 May announcement of a 70% increase in the daily wage of estate workers to Rs. 1,700. Industry experts point out that tea producers are struggling to meet the increased daily wage due to the appreciation of the rupee since early this year.

Thondaman is calling for decisive action against RPCs for failing to properly maintain the tea estates. Many plantation workers have already left the estate sector due to poor wages. Activists highlight the fact that tea pluckers work under very difficult conditions because most RPCs do not replant tea as required by the agreement.

When The Sunday Morning spoke to Planters’ Association of Ceylon Spokesperson Dr. Roshan Rajadurai, he asserted they could not pay the proposed wage. 

“There has been a profit of around Rs. 50-60 per kilogramme after many years. If we give the wage they are proposing, our production cost will reach nearly Rs. 1,500. We can pay the wage when the Colombo Tea Auction pays us the price. We cannot decide on the prices,” Dr. Rajadurai said.

All research revealed that producers received less than 1% of the profit if there was a profit, he further noted, while questioning why the Government was not asking retailers or vendors to provide a share of their profits. 

“There is a lot of pressure on the RPCs. We are providing livelihoods and employment. RPCs can’t pay more than what they earn. It applies to any business. They can’t spend Rs. 150 and earn Rs. 100 in business. The companies will go bankrupt if they do it continuously. That is the reality,” he said.

The need for a wage increase

The RPCs were formed in 1992, primarily to bring in the private sector to improve the efficiency of the country’s large-scale estates in cultivating tea, rubber, and other plantation crops.

Following the privatisation of the plantation industry in 1992, the daily wage of an estate worker was determined through an agreement signed between representatives of the RPCs and the estate workers every two years beginning in 1998. 

According to research by the Institute of Social Development (ISD), as of September 2022, a tea estate worker’s daily wage rate has usually been determined according to the terms of such a collective agreement between the Employers’ Federation of Ceylon (EFC) and plantation Trade Unions (TUs) biennially. 

However, the last wage determination was made by the Wages Boards with the intervention of the Government. 

Accordingly, a tea estate worker’s prevailing daily wage rate is Rs. 1,000 per day, including a Basic Wage (BW) of Rs. 900 and a Cost of Living Allowance (COLA) of Rs. 100 per day. A tea estate worker’s prevailing gross cash wage is equal to Rs. 24,150 for a month, which is less than 97.44% of the estimated gross living wage of the general population. The research concludes that an increase by 124% of the prevailing gross living wage is necessary to reach the estimated monthly Living Wage (LW) of Rs. 54,136 for a tea estate worker in Sri Lanka.

Recently, a gazette notification was issued by the Commissioner General of Labour to increase the minimum daily wage for tea and rubber estate workers to Rs. 1,700, which represents a 70% increase. According to the gazette notice, plantation workers will have to be paid Rs. 1,350 a day, receive a ‘daily special allowance’ of Rs. 350, and an over-kilogramme rate of Rs. 80 a day.

While the RPCs have long-standing allegations on various issues, including imposing inhumane working conditions on plantation sector workers, the companies are yet to respond to the proposed wage hike.

Lack of Government support

Dr. Rajadurai highlighted that RPCs had been managed without any assistance from the Government. The RPCs had sustained, provided employment, and made payments without Government support when the Government could not even pay the EPF and ETF for the last 10 years, he further said.

“After 20 years, no one will be interested because of how the plantation business is progressing. The businesses are losing markets, lack competitiveness, and are no longer viable. The plantation business may have been feasible 20-30 years back but not any longer,” he said.

Rajadurai added that the Government had undertaken financial evaluations and audits when the actual conditions had to be reflected in the finances and that it was up to the Government to decide the wages. 

RPCs’ concerns

Dr. Rajadurai said that the industry should not be based on political considerations and those within the industry must be permitted to manage it as an economic unit. 

He emphasised on the importance of separating the plantation industry from political considerations, advocating for a model where industry professionals were granted the autonomy to manage it solely as an economic unit. This approach, he argued, would allow for more efficient and effective decision-making processes, unhampered by the fluctuating priorities of political agendas. 

“We, as plantation managers, are more conscious and more aware of the needs of our workers and other inputs. So we know how to attract them, but we can only pay a certain amount,” he said. 

Even the Government paid a Rs. 24,000 minimum wage, he pointed out. “In our case, the plantation business pays far more than that at Rs. 1,000 a day in addition to housing, care, sanitation, family employment, childcare, and massive amounts of non-cash benefits that they don’t have to pay for,” he further said.

Attempts to increase wages 

Minister Thondaman has consistently advocated for an alternative wage model for plantation workers. He has stated that such a model must have the capacity to compensate workers based on productivity and attendance, noting that workers must not be held back by inadequate wages that fail to reflect today’s cost of living during this transition.

He has also stated that there was a consideration to restructure the entire RPC model, adding that the present leases that were entered into many years ago made RPCs mini kingdoms with almost absolute power over swathes of Sri Lankan land and everyone living on them. That system needed to end, he emphasised.

The Sunday Morning spoke to All-Ceylon Estate Workers’ Union President Kithnan Selvaraj, who said that the proposition to increase the daily wage of plantation workers and reviewing scenarios for RPC leasing agreements amounted to just dramas in order to delay the process as well as actual implementation. 

“There are many possibilities for the Government to simply increase wages and provide a fair daily wage to plantation workers. But they will not undertake any impactful action. I understand the patterns because I work at the ground level with plantation workers. These dramas are merely to get votes from the workers at the election,” Selvaraj explained.