Sri Lanka tea firms brace for new wage demand

Sept 19 (LBO) – Sri Lanka’s plantations companies face another crippling wage hike less than a year after giving one as politically powerful labour unions pressurize the government which needs their support to pass the forthcoming budget in parliament. Stock market analysts said another wage increase would increase pressure on listed regional plantations companies (RPCs), especially those plagued with low margins.

Industry officials said plantations company revenues were affected by the production disruption caused by last year’s wage hike and a drought that followed soon after.

Although rubber prices remain high and most companies are also fetching good prices for tea, another wage hike so soon after giving one would squeeze margins in the industry.

“Although tea and rubber prices are attractive, these sorts of continuous wage increases would definitely put pressure on most plantations companies, especially those suffering from low margins,” said Geeth Balasuriya, research analyst at HNB Stockbrokers.

The powerful Ceylon Workers Congress (CWC) labour union, which is represented in parliament, along with other big unions, are threatening to withdraw from a wage deal they clinched only last December.

Labour unions say they are