Sri Lanka tea firms lose on wage hikes and strikes

July 10, 2007 (LBO) – A pay hike wrested by workers with a strike on Sri Lanka’s tea estates last year has taken its toll on two more plantations companies, Kahawatte Plantations and Madulsima Plantations, with both firms reporting losses. “For the industry, it is indeed a dilemma to reconcile social responsibilities with the realities of a free market economy.” The go-slow and strike by workers brought work on estates to a standstill in November and December, and plantations firms suffered even longer because tea bushes took time before they started yielding again.

Kahawatte Plantations, owned and managed by Forbes Plantations, said in its annual report that its loss rose to 129 million rupees in the financial year ended December 31, 2006 from a loss of 28 million rupees the year before.

Turnover was up marginally to 1.54 billion rupees from 1.46 billion.

Kahawatte Plantations Chairman Edgar Gunatunge described the bottom line as disappointing due largely to the strike and wage increase.

The main contributory factors were the additional provision for gratuity in the new wage structure amounting to 75 million rupees and loss of revenue caused by the strike of 110 million rupees.

“Unless and until plantation work