Sri Lanka Tata tea unit warns of tough wage talks

June 23, 2009 (LBO) – Sri Lanka’s Watawala Plantations, whose profits fell sharply last year, has warned talks on a new wage deal with labour could be tough as most firms in the tea industry face cash flow problems. Sathasivam said that it is only to be expected that wages and input prices will increase over time.

“The extent to which these increases can be neutralized by corresponding improvements in productivity, particularly in a situation of uncertain market conditions and global economic melt down is a major challenge.”

Watawala Plantations net profit in the year to March 31, 2009 fell 81 percent to 76 million rupees from 404 million the year before while revenue fell to just over four billion rupees from 4.3 billion over the same period.

Sathasivam said that it has been estimated that a one rupee increase in plantation worker wages amounts to a 68 million rupee increase in plantation sector cost a year and a 0.52 cents increase in the cost of production of a kilo of tea. “Low labour productivity and labour out-turn have often been the worry of the industry,” G Sathasivam. Chairman of Watawala, a unit of India’s Tata Tea, said.

“The conventional approach of giving wage incentives has had not