Sri Lanka’s tea companies warn of millions in losses due to trade union action

Nov 30, 2006 (LBO) – Sri Lanka’s plantation companies warned Thursday of millions of rupees in losses due to trade union action on estates, as wage talks reach breaking point. Sri Lanka has over 250,000 estate workers, with the island among the world’s top producers’ at over 300 million kilos of black tea produced a year.

Estate workers and the country’s 20 regional plantation companies are in talks to hike wages, which will be fixed for a three year period under a collective agreement.

Talks have turned volatile however,, with no agreement since October on the extent of the increase, with trade union action in protest already spreading on estates.

“Since the commencement of the “go slow” campaign in a large number of estates, the loss of revenue to each regional plantation company has averaged at 25 million rupees, totaling over half a billion Rupees in all,” Gotabaya Dassanayake, Director General of the Employers Federation, said in a statement.

Companies say that estate workers have been plucking as little as one to two kilos of tea a day over usual averages of about 15 to 20 kilos.

“The consequences of this “go slow” are even more serious as it leads to overgrown leaf which cannot be used, and the resultant waste is more than substantial.”

Bad weather has also affected crop intakes in recent weeks, with companies also saying that workers on many estates have obstructed transport of teas to the weekly Colombo auction.

“This will result in the auctions running short of teas and the volumes available in the auction reducing by 60  70 percent. The loss of revenue on this account per week per company would be approx 25 million rupees and to the industry, half a billion rupees.”

No Agreement

The Employers Federation representing the plantation companies say they have offered workers a wage package of 240 rupees a day, up from the current 180 rupees at a meeting held on November 24.

This included a basic wage of 160 rupees a day, a price share supplement of 30 rupees a day and an attendance incentive of 50 rupees a day.

The 23 percent increase would cost companies 2.5 billion rupees a year, Dassanayake said, with housing, medical, child care and other welfare measures adding up to 25 rupees per person per day, also provided.

Trade unions however are holding out for an increase of 280 rupees a day, factoring in a soaring cost of living and high commodity prices that companies enjoyed earlier this year.

Main union the Ceylon Workers Congress said earlier that any increase would have to factor in cost of living increases and a basic wage hike of ten percent (220 rupees) was ‘unacceptable’.

“The Trade Unions continue to insist on a wage package of 280 rupees per day with a basic wage of not less than 175 rupees. The regional plantation companies can ill afford this increase. The demand of the unions” amounts to a 43 percent increase on the existing wage package,” Dassanayake said.

“No RPC can cope with the additional financial commitments based on the demands of the unions and neither can we entertain any realistic expectation of our produce being sold at prices above the cost of production.”

Companies also say it would cost an additional 17 rupees to produce a kilo of tea, with eight companies posting losses in the last financial year, with combined profits of all firms at less than 50 million rupees.