Sri Lanka’s low productivity seen eroding tea competitiveness

July 13, 2011 (LBO) – Labour productivity on Sri Lankan tea estates has to be improved if regional plantations companies are to survive and afford wage hikes in future, industry officials said. Lalith Obeysekere, chairman of the Planters’ Association which represents regional tea plantations companies, said the island’s tea estates had higher production costs and lower yields than those of competitors.

The recent wage increase given in a new two-year collective agreement between the RPCs and estate labour unions will raise costs even further, he told a news conference.

“Our labour wages are very high and if we do not increase productivity we do not have a bright future,” said Roshan Rajadurai, deputy chairman of the PA.

Obeyskere said a bigger wage hike demanded by unions at recent negotiations would have been affordable to the RPCs if worker productivity was increased.

“That’s where the unions must take responsibility. If the industry collapses, the unions must also realise they are equally vulnerable.”

A link to productivity in part of the daily wage that had been in the previous agreement was dropped in the new one because of union opposition.

“We had a produc