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.
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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.