Dhamitha Perera, chairman of the Planters' Association of Ceylon (PA), said the recent near 40 percent wage hike, raising a worker's daily wage to 405 rupees from 290, would have a sharp impact on company cash flows.

It would cost the 20 listed regional plantations corporations (RPCs) that run estates an extra six billion rupees a year.

But he said the agreement with unions that linked productivity to a wage hike was a "new milestone" as for the first time, a component linked to productivity was incorporated in the wage structure in keeping with government policy.

"Despite being financially stretched to meet the additional expenditure, the industry was pleased to note that the concept of productivity which is essential for profitability and development had been clearly recognised and that the regular and consistently productive worker will be duly rewarded."

The PA said in a statement that the net profits earned by the 20 RPCs for the last financial year was only 1.262 billion rupees.

" . . . it is essential that all stakeholders including the unions and the government extends their fullest support to the industry which has been the mainstay of the country's economy for well over a century to ensure its long term sustainability," it said.

"If the Sri Lankan plantations industry is to be competitive in the global market, its cost of production which is currently the highest in the world, should be judiciously controlled.

"In this context, the trade unions and employers may have to develop a new model for determining wage increases in the future bearing this aspect in mind."

The PA warned that if the plantations or producers become non-viable, the industry on which the livelihood of about 10 percent of the country's population depends, will be at risk leading to socio-econ problems.

The wage hike comes at a time when producers are confronted with serious cash flow problems after to the global economic slowdown that reduced prices last year followed by bad weather that reduced the crop earlier this year.

Sri Lanka tea production is down by over 41 million kilos in the first eight months of the current year compared with the same period last year.

"It is to their credit that not a single worker was laid off during this period and all statutory dues, festival advances etc were paid on time," the PA statement said.

It said the new wage package of 405 rupees a day affords the opportunity for each plantation worker to earn over 10,000 rupees a month in addition to several non-cash benefits provided by the RPCs

Perera said these are given not only to the employees but their entire family.

The benefits range from housing, pipe-borne water, medical and welfare services, maternity benefits including pre- and post-natal care, to pre-school education and crèche facilities.

Perera said these benefits are valued at 1,500 rupees a month and enjoyed by each of the 980,00 residents on RPC estates of whom only 25 percent or 247,000 are workers.

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