21 June, 2021

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Rupees 1000 – Is It Such An Insurmountable Barrier ?

By Vijaya Kumar

Professor Vijaya Kumar

Politicians on both sides of the aisle, the print and electronic media and most of our population are sympathetic to the demand of plantation workers for a reasonable wage. It is only the Planters Association and the Regional Plantation Companies that have turned a deaf ear to these demands.

Workers are today paid Rs. 750 per day which is less than what they were paid ten years ago when adjusted for inflation as the cost of living has increased by over 50% since then. It has been shown that an estate household has an average of 4.4 persons of whom an average of 1.7 are employed in the estate. At Rs. 750 per day, an estate household would earn Rs. 1,275, the equivalent of Rs. 290 per member of the household. A per-capita income of less than US Dollars 2 per day is identified by the United Nations as extreme poverty. Our big companies should be holding their heads in shame since the wages they pay ensure estate households get much less, the equivalent of US $ 1.57 per person per day, so that their workers and families are well below the extreme poverty level.

The employers themselves realise their vulnerability on wages as they consistently add statutory employer contribution to EPF and ETF in a bizarre attempt to inflate plantation worker wages, go to extraordinary lengths to claim benefits provided by the government as part of their total package to improve worker standards and relying on statistics for the whole Nuwara Eliya district to counter charges of increased poverty levels in the estates on the basis that the district is mainly populated by plantation workers.

Plantation Management while taking pains to flaunt their degrees in management appear to believe in only two principles of management – minimizing workers’ wages as the easiest route to bigger profits and keeping worker pay at subsistence levels to prevent prolonged strike action. This strategy has been helped by the fact they are dealing with a minority group with a long history of being oppressed.

As Lakshman Kiriella pointed out, the companies earn inordinate profits although they always claim to be making losses especially when wage negotiations are due. Their Annual reports show how closely holding companies are involved with the accounts and internal dealings of their plantation companies. As most of the transactions of plantation companies involve related companies within the group where market rates do not come into play, profits can easily be shown elsewhere. The lack of credibility of plantation management became exposed when soon after maintaining during the 2016 wage negotiations that they would hand back the estates if forced to raise wages, they fought tooth and nail against a budget proposal of Finance Minister Ravi Karunanayake’s that would restrict holdings of regional plantation companies to 5000 hectares.

The plantation companies are trying go back to something like bonded labour through their so-called outgrower’s system, promoted with outlandish claims of providing high incomes, which so far appears to be a means of handing over their less productive lands to workers, who are deprived of their employee status and retirement benefits and paid on a green leaf basis. A proper outgrower’s system should provide the outgrower with security of tenure through ownership or lease and give him or her a choice in deciding on the parcel of land to be taken over.  

The employers in their negotiations with trade unions will true to form make every effort to undermine the Rajapaksa budget proposal by demanding in return their pound of flesh by way of contrived allowances and aggressive conditions which leave the worker with less than the promised Rs 1000 and worse working conditions. The government should insist on a flat Rs 1000 wage or as promised change the management companies which are unable to make the payment. 

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Latest comments

  • 8
    1

    In some parts of India, the wages of tea workers are close to LKR 1500 per day.
    “Under the new (Kerala) wage agreement, the wages of tea workers has been enhanced to Rs 380.38 per day from the current level of Rs 328.38. The increase in basic salary, coupled with other statutory benefits, will be around Rs 600 per day.”
    Sri Lanka is much touted as a mid-income country. India isn’t. So why can’t we pay the workers Rs.1000?

    • 1
      13

      old codger,
      If the wages are higher in India why not send all the ‘Indian Tamils’ back to India.

    • 2
      0

      OC,

      I think it is high time, those ministers/representing plantation tamils (they are also srilankens) should wake up from their long slumber.
      .
      IF BPs COULD SETTLE ALMOST EVERYTHING FOR THEIR OWN BENEFIT WHY NOT THE POOR PEOPLE BE GIVEN repeatedly promised WAGE increase ?

      To answer your question
      “Sri Lanka is much touted as a mid-income country. India isn’t. So why can’t we pay the workers Rs.1000?”
      Alone maintenance of RAJAPAKSHE family would COST millions a day, so how can the state run by criminal family ever think of paying wages to destitute plantation famlies ?
      .
      Paradoxically, Rajapakshes are adulated as ” so called sinhala buddhists”. What kind of buddhistic values the bunch of criminals display is the million dollar question.

      Housing ministers went on building houses but tamil srilankens to be forgotten is beyond my comprehension. That Wimal Buruwanse distributed houses to his kith and kin, though tangible number of houses were built under Sajith Premadasa.

      :

  • 3
    0

    If Rs. 1000.00 per day is not accepted for the moment why not get the Plantation companies to pay the employee portion of deduction to “EPF” and the “ETF” and if “PAYE” is applicable. Isn’t this happening at “Petroleum Corporation” and a few other Government institutions?

  • 5
    1

    Setting the minimum wage to 1000 will not result in the workers making 1000. Rather it will make them lose their jobs as employers won’t be able to afford to pay them. Ultimately all the minimum wage does is MAKE ILLEGAL the employee ability to ask less for a job. The employee only works the job at 750 because no other option presents itself to them.

    Raising the wage is a destruction of employee liberties and is harmful to them. It affects the employer only in the sense that, the business just becomes unviable. The employer will then simply close business and move on to other endeavors where profit is possible.

    • 4
      0

      RM
      “Lakshman Kiriella pointed out, the companies earn inordinate profits although they always claim to be making losses especially when wage negotiations are due.”
      *
      It will be a blessing if the “employer will simply close business and move on to other endeavors where profit is possible” and let a state supervised workers’ cooperative run the business.

      • 0
        0

        State supervised companies are simply only to say: let the enterprise only ever make a loss and let the people pay for it. It is impossible for any state enterprise to make a profit in the long run due to the inability of it to fail. Ultimately it just adds to the woes of the Sri Lankan people by causing the currency to cheapen further or go more into debt.

        I also find it hard to believe any industry can have such massive profits as to not invite competition and drive those profits down by price conpetition. That’s what happens in the free market anyway.

        So of course it is not true. The profits are always razer thin, as usual, and forced salary increases will either cause unemployment and business closure, or increase prices of the goods thereby increasing cost of living for everybody. Either way it is bad news.

        • 3
          0

          If the companies claim to be running at a loss why should we let the poor owners and shareholders suffer losses?
          Let us relieve them of the pain.
          State run plantations since nationalization in 1972 had teething troubles, but did pretty well afterwards, and never complained of loses. It was this obsession with privatization that led to the present plight of neglect of essential maintenance etc.
          *
          The false claim that”The profits are always razer thin, as usual,” has been ripped apart by none other than former UNP minister Lakshman Kiriella.

          • 0
            0

            @SJ
            This is a three part reply and for that I apologize:

            With SOEs the losses always exist even though on paper it may not be apparent. The state subsidizes their own enterprises by either buying from them directly at whatever quoted price, or reducing costs by providing raw materials or land. The losses to the economy may not be in the SOE itself, but rather in the entities feeding and supporting it using prices detached from reality.

            Touching the theory: the great economist Mises explained in his paper “Economic calculation of the socialist commonwealth”, that the reason why Socialism fails (and this is Socialism btw), is that there are no prices. In classical Socialism the state owns all resources. The prices allocated to resources are not based on real market demand, but rather political whim. Prices are how anything real associates itself with the world. A high price could imply high demand or rarity, and a low price the opposite. When the state controls resources it detaches those resources from real world prices, and when it uses those resources for any enterprise it does so inefficiently. The continuous misallocation of resources is why Socialist economies go bankrupt in the long run and collapse.

            • 0
              0

              An example: A businessman wants to setup a factory. How does he know where to place it? He could, for instance, rent a building within the city nearest to his customer base. But he finds the rental is expensive and he will be unable to profit. The price society is willing to pay for his goods just does not cover the cost of rental. Alternatively he could place his factory 20km away and use a truck to transport goods to the city. Overall the cost of this is less than the city. How does he make this decision? It is via prices.

              The price society is willing to pay directly features in his decision. Had the goods been more urgently needed perhaps he could have chosen the city, but since the demand is less he chooses to go rural. It is in this way, through accurate pricing based on the market, that he makes decisions not only on rental, but raw materials, labour and all things that feature in the production process. And if he were to profit then that is society’s way of saying that he has done well, that he has used the resources of the land in a benefits society.

              • 0
                0

                In Sri lanka there are no means for the SOEs to relate to the real world of markets. Sri Lankans are poor for this reason, and will forever be poor for this reason. In NZ and AUS (not sure which country you stay in) they are lapsing ever more into Socialism. Socialism begets more Socialism btw, for it is politically disadvantageous to reverse the trend. Both these economies grew their wealth using the only growth mechanism possible – private enterprise and markets. Private enterprise is the horse and Socialism the cart. Ultimately the cart becomes too heavy and then the whole thing falls apart.

                • 1
                  0

                  RM
                  Do you expect any intelligent being to bite that bait about companies making a loss?
                  Be serious.

    • 0
      0

      Setting the minimum wage to 1000 will not result in the workers making 1000.

      Rizmoh,
      Please don’t apply the demand & supply theory one side. The plantation workers have a history of lower wages because of their indentured nature of work. They did not have the real freedom to move to new industries. Their education is poor. So they cannot easily go to companies and the governments. This is being abused by the companies to their advantage. Remember if the companies were not making profits to pay adequately to management too, they might have closed the industry long ago. Companies are making well and beyond to pay satisfactory to management, that is why they are hanging in there. Please don’t come to tell me that management too only getting $1.5 a day.

  • 4
    0

    Rs. 1000 per day salary for planation workers was promised by the government was promised for election purposes. It is wrong to blame the planation companies alone for this crisis. Plantation sector in Sri lanka was neglected for many years and productivity has gone and Srilanka do not have any competitive advantage compared to other countries. Why cannot the government take over all planation sector and pay that salary to the workers? Once the ministerial post awarded the unions became slave of political leadership.

  • 7
    0

    Thanks to Prof. Vijaya Kumar for a carefully written article on a subject that does not receive the attention that it deserves in spaces like CT.
    *
    It is 2 years since the demand was made. The rupee has depreciated and the CoL has risen, so that by the time the demand for Rs 1000 is won with any luck, the money will be worth the equivalent of 800 rupees at the time of the call for wage increase.
    *
    I think that the collective agreement between the employers and trade unions is not a good idea and should be scrapped. It allows a handful of corrupt trade union leaders to sell out the workers after bitter struggles demanding a fair wage. the very leaders who demand a fair wage fast become the voices of the plantation management to justify the settlement which shortchanges the workers. Many a shady deal between the owners and TU leaders does not come to light although there is strong suspicion of something fishy.
    It will be best for the plantation industry if wages are determined by the Wages Board based the wage structure in other industries. All private sector wages including the plantation sector would then correlate to each other so that they reflect adjustment for inflation, CoL etc.

  • 1
    2

    If it’s make decent wages there is no need to send our laddies to ME to clean the toilet of Arabs and put them in difficult conditions and leave their siblings and love ones behind.
    But our big belly Thadious …….

  • 2
    1

    The reason why the RPC are finding it difficult to pay Rs 1000 is that the production capacity of plantation companies has been declining rapidly in an environment where small tea estates are achieving higher production. 10 out of the 20 major plantation companies are on a declining trend since around 2007 and some are financially inoperable and the financial decline accelerated after 2011.

    Tea exports would have plunged drastically to lower levels, if not for the growth and expansion of smallholder tea production which now account for the bulk of the tea produced in the country. The country’s Tea production from the large plantation estates (SLSPC and JEDB) was around 79%, in 1980 and under RPC management has fallen to 25% in 2019.

    The main reason has been the neglect of the large plantations over the last few decades with unsuitable people at different levels of Management. RPCs who took over the management of estates found worker cadres excessive and had a surplus of labour in 1993. With their intention to reduce costs, work was curtailed (including replanting, infilling and other basic agricultural practices such as Fertilising, Draining, Forking, etc.), and the curtailment of work to reduce cost, led to the outmigration of youth on estate to the cities and towns where they found employment.

  • 0
    0

    the production capacity of plantation companies has been declining rapidly in an environment where small tea estates are achieving higher production. 10 out of the 20 major plantation companies are on a declining trend since around 2007 and some are financially inoperable and the financial decline has accelerated after 2011.

    The losses in plantation companies should be thoroughly investigated in a context of where infrastructure facilities including roads, hospitals, schools and sanitation have been provided funds by the Government and the accusations made that the profits have been siphoned off by the RPC’s to other ventures.

    The RPCs have also received financial assistance when they were unable to pay salary advances to their workforce and most plantations companies have obtained loans from Banks, with the estates used as collateral, from the Brokers and from the Tea Board Promotion Fund (Rs.1 Bn) in 2017, and which loans, some RPC’s have defaulted in settling.
    Siv

    • 0
      0

      James Taylor
      The entire talk is baloney. I see no reason why, when small estates are increasing production, larger estates are deceasing in production. Is there some hidden racism you fear to talk frankly? The entire globalization theories are stemming from the opposite sides’ truth. The failure is only internal robberies. From Sri Lankan Air Lines to every corporation is going on loss, not because they are biggest in the world, but management’s theft. Honestly fix the management problem and pay for the workers working hard. Beyond any legal duty, that is a business ethic on the part of management. No lame duck excuses. Otherwise sell the estates back to British managers. They created it; they know to operate it.

  • 7
    0

    Isn’t it shameful when you realize the boast about standard of living in post-WW2 Sri Lanka being higher than that of Japan, Singapore and Korea was possible because of the exploitation of plantation workers. The continuation of the ‘welfare state’ provisions such as free education and free health care for all even today under adverse economic conditions relies heavily on the labour of this marginalized segment of our working class. But when it comes to paying a fair wage to these producers of wealth, their miserable bosses act like they’re paying out of their own pockets. The colonial masters departed 72 years ago. The BMW driving brown sahibs of today in government, plantation companies and management houses are wrangling in their cozy offices over increasing the wages of these poor men and women toiling in the predawn chill on leech-infested steep mountain slopes – because the amount involved is a colossal Rs. 250/-

    • 3
      0

      Ajay,
      Well put.
      “the boast about standard of living in post-WW2 Sri Lanka being higher than that of Japan, Singapore and Korea”
      We are very good at boasting. But the truth is that our post-WW2 standards were higher than any of those countries only because all three were flattened by war. We weren’t, so in comparison we were better off. I can remember when “Koriyawa” in Sinhala meant a slum.

  • 0
    0

    The issue we have in SL in obtaining this Rs1,000- per day is the fault of CWC, a trade union that is owned and operated by Thondaman family as their own ancestral property on the backs of low paid estate workers.

    For personal benefit, for three generations now CWC becomes an arm of the SL Govt to keep the estate workers as slaves. Todate they only make noise for public consumption but behind the scene they get their own share of the bribe and stab on the backs of the low paid workers on whose forced contributions they maintain their drama.

    Its time for the estate workers to kick CWC out of politics. Only then they will see the light at the end of the tunnel, until then they will have to live in darkness.

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