While the RPCs are finding even the present daily wage to be significantly above production costs and are experiencing negative cash flows, nevertheless, being conscious of the needs of workers, they have made the following proposal.
RPCs have proposed an 11% increase in the basic wage to Rs. 500 (from Rs. 450 at present) for a minimum daily plucking average of 15kg of tea leaves. Each additional kilogramme plucked will be paid for at Rs. 40 (an increase from the Rs. 23 paid at present), thus enabling a worker who plucks 25kg of tea leaves to earn Rs. 1,000 a day (including EPF and ETF), thereby enabling productive workers to significantly increase their incomes.
The productivity based proposal of the RPCs have been presented to and discussed with the estate sector trade unions and offers a more sustainable solution to the workers’ needs for an increase in income.
An unconditional increase of the daily wage to Rs. 1,000 is impossible at present, as it would require the average revenue from a kilogramme of tea at the Colombo Tea Auction to be Rs. 660, for a plantation company to merely breakeven. In contrast, in June 2015, the average price of a kilogramme of tea at the Colombo Tea Auction was only Rs. 400 (according to broking firms) while the production cost of a kilogramme of tea at present exceeds Rs. 450.
The Planters’ Association of Ceylon, which represents the interests of the 22 Regional Plantation Companies, urges Trade Unions to seriously consider the proposal of the RPCs as it offers the only viable alternative to mitigate the present crisis in both tea and rubber industries, which even the government has recognized in providing certified prices to smallholders.
While rubber prices have slumped to historic lows, key export markets to which more than 70% of Ceylon Tea is exported – Russia, Middle East and Ukraine – is in crisis due to military conflict, economic sanctions and depreciation of the Russian Rouble, etc.
Further, there is significant room for improvement of productivity, particularly through increase in ‘effective plucking time,’ (time actually spent on the plucking of tea) as both the labour productivity and effective plucking time is among the world’s lowest in the tea industry in Sri Lanka – despite wages and other benefits including housing being among the best among tea producing economies. While the daily plucking average of a tea plucker in Sri Lanka is approximately 18kg, in Kenya and Assam (in India) the figures are 48kg and 28kg respectively.