Political Wages

Nov 29, 2007 (LBO) – Sri Lanka’s large tea plantations have slammed state interference in wages that saw unions effectively egged onto breaking a legal wage deal and plantations firms forced into a new agreement. The Planters Association (PA), an industry body representing tea farms said the companies “were literally forced to accept the government directive” and the industry has been “put into jeopardy by the knee-jerk decision thrust on them.”

Economic analysts have pointed out that the government printed 38.5 billion rupees to bridge the budget deficit in 2006 driving inflation up to 19.3 percent by December.

In 2007 inflation has so far risen to 19.6 percent by October with 45.2 billion rupees being printed in the five months to September. Plantations workers, already identified as a poorest segment of the population, were hit hard by inflation.

In both years state-workers awarded themselves fat salary increments, contributing to the pressure for money printing.

However, most private firms have been unable to give salary increments in line with inflation as costs rose and higher interest costs generated from a rising budget deficit ate into their profits.

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