By Professor A.S. Chandrabose &  Dr. R. Ramesh –

Higher Wages and Labour Cost

As far as the estate workers are concerned the wage is their major income source and initially, wages were decided based on the Wage Board Ordinance of No 27 of 1941. Accordingly, the determination of wage rates for estate workers was decided at the wage board which was embodied by the representatives from the employer, employee and the government. Nevertheless, this was reformed at the time of privatization by introducing the CA in 1992 which was embodied only by the representatives from the employer and employee. The representatives of the CA were supposed to meet on alternative years to make decisions mainly on wages revisions. The members of the CA had met on around ten occasions since its inception and decided the wage for the workers. As such, the daily wage rates agreed during the CA meetings from 1996 to 2021 are as follows:

Table 2. Daily Wage Decided at the CA -1994 to 2021

As shown in Table 2, the daily wage has increased from Rs. 83 in 1994 to Rs. 1000 in 2021. This is an increase of slightly over 12 times during the 27 years since 1994. Of course, it is an increase from a two digit figure to a four digit figure in 2021. The estate management used to provoke workers by talking about these trends in their estate’s public forums. However, the impact from the upward trend on the worker’s purchasing power and how it has reduced the income disparities between the rural and estate sector in the country is questionable. The reports of the Consumer Finance and Social Economic Survey -2003/04 (CFS) and the House Hold Income and Expenditure Survey (HIE) constantly provide figures on the income distribution of the Urban, Rural and Estate sector  in the country. As reported in the CFS 2003/04, the monthly income in the Urban sector was Rs.17,368 while the corresponding figures for the rural and estate sectors were  Rs.10,060  and Rs.4,899 respectively. The figures in the HIE 2016 report indicate that the mean income in the Urban sector was Rs.22,297 while  in the rural sector it was Rs.15,508. However, the estate sector income was Rs. 8, 666; almost half of the rural sector income. Thus, it is clear from this fact that though the estate management has been benevolent in wage increases to the workers in the estate sector, worker income is not on par with their counter parts in the rural sector of the country. Moreover, income is the primary tool to measure the incidence of poverty in the country. Henceforth, it is also imperative to perceive the level of poverty among estate workers by taking their income in to consideration. According to the survey carried out by the Census Department in 2016, the percentage of people living in poverty was 1.3 percent in the Urban sector while in the Rural sector it was 3.3 percent. Yet, in the Estate sector it was as high as 6.8 percent. Apparently, the above facts indicate that the wage increase for estate workers during the last 27 years did not uplift their level of income or reduce the prevalence of poverty of these workers. 

It is interesting to note the statement that was made towards the end of the wage negotiation in 2009. Accordingly, the  RPCs  and  their  representatives had repeatedly stressed  that  there  was  no  requirement to further revise  wages  since  workers earned around Rs.10,000 per month and they went on to state that the poverty level in the estate sector had declined on par with the national average. Ostensibly, the RPC constantly made contradictory statements during the wage negotiations and went on to state that ‘higher wages lead to higher labour cost ultimately making the estate a loss making businesses’. This allegation that has been constantly reported by the RPC is challengeable.  A well know scholar Dr. Janaka Ratnasiri in his recent publication on the tea sector provided substantial evidence about the profit margin of the RPC. According to him, there are about 325 tea exporters and originally, only the designated companies exported tea but later, the factories as well as RPCs have engaged in tea exports considering the high profit margin. According to the Central Bank’s Annual Report (2019), the average auction price of tea was Rs./kg 546.67, while the average export price was LKR/kg 822.25, leaving a margin of Rs./kg 275.58. The total tea (made tea) production in 2019 was 300.13 Mkg, while the quantity exported was 292.65 Mkg. Thus, the exporters had made a gross profit of Rs. 80.65 Billion in 2019. His complete article can be accessed here (4.9.2021). Apart from this, the tea workers also come out with some calculation of the production. As such, 4 kilogram of made tea could be made out of 17 kilogram of green leafs (existing norm for daily wage) and the market price of one kilogram of tea is around Rs.600. Thus, a worker contribution (4 x Rs.600) is around Rs.2,400 per day and insisting that demanding only Rs.1000 which is only 41 percent of the production per day is not unreasonable.

Apart from wage increments, the arguments put forward by the RPC on the cost of production are illogical and to some certain extent misleading about the country’s the tea sector.  Apparently, the calculation of cost of production (COP) should be an independent study. If it is carried out by the producer, the end result definitely will be biased towards the interested parties in the business.  Hence, it was very difficult to trace an independent study that has been conducted thus far to calculate the COP of tea in the country. The latest figures on COP of tea were indicated in the Institute of Policy Studies’ (IPS) publication on the analysis of ‘Sri Lanka Living Wage: Estate Sector (TEA)’ published in 2017. As per this study, the labour cost during the 2014/15 period was 63 percent (per kilo of made tea) of the COP of tea. The IPS had used figures in relation to the cost of labour in the COP for this study from a publication of Census and Statistics Department, citing a website link. However, the link is undated and currently inactive so that the credibility of the analysis made from information in this undated and inactive link is questionable.  Furthermore, the study also made one more observation in relation to the labour cost of the COP of tea in comparison to other major tea producing countries; India, Kenya, Bangladesh and Vietnam, and went on to state that the relative labour cost of tea production is highest in Sri Lanka. Hence, the validity of the statements in this context is also problematic. In addition to this, the Statistical Information on Plantation Crops publish by the Ministry of Plantation Industry (SIPC) also provides figures on the total COP of tea, but it has not given a breakdown of labour cost, therefore, the information provided by these publications cannot be used for any analysis of labor cost in COP of tea in the country. According to the SIPC, the per kilogram cost of production of made tea has rapidly increased from 2005 to  2015 due to the cost of green leaf, transportation cost for green leaf, power, factory labour, packaging materials, machinery maintenance etc. The above factors had negatively affected the cost of production of the tea industry during that period. However, there was a decrease in COP by 3 percent in 2015 -since then, again COP had gradually increased until 2018. This indicates that there is no valid information available on public domain in relation to COP so that some of the arguments over COP are not valid and reliable and can also be challenged.

Low level of Labour Productivity

The low level of labour productivity is the dominant allegation by RPC management in Sri Lanka. The RPC frequently compares the level of tea productivity with that in other countries to show the inefficiency of tea workers in the country. In 2018, the average productivity of tea in Sri Lanka was 1500 kg/ha/year, however, it was considerably higher in India (2227 kg/ha/year) and Kenya (2104 kg/ha/year). However, we do not know if the tea bushes in these countries are similar to the tea bushes planted in Sri Lanka.  For an example, In addition, the maintenance of tea bushes, the soil condition, the technics used for plucking tea, the type of training undergone by the tea workers etc. also impact tea productivity.

It is a well-known fact that the labour productivity is typically measured as a ratio of output per labour-hour, and input. Labour productivity and human resources go hand in hand.  Motivation, training and development, industrial relation, appraisal of employees, safety and health, and employees’ welfare are some of the human resource factors relevant to labour productivity. We do not have sufficient evidence of such motivation programmes initiated by the RPCs for their workers –some of the welfare programs are persistently decreasing in the last few years. The Plantation Human Development Trust (PHDT) has reported about the motivation progarmmes conducted for selected estate workers. The duration of the programme is mostly, for one day or half a day and the content of the programme is not easily available. Therefore, it is very difficult to assess the impact of labour motivation carried out by the estate management in the context of labour productivity in the estates. 

However, replanting with High Yield Variety (HYV) carried out by RPCs could be considered as a factor impacting labour productivity in the estates.  According to the data presented in the SIPC published in 2018, the RPCs had replanted a total of 197 hectares in 2018.  This is only 0.2 percent of the total extent of tea coming under the RPCs.  It should be noted that the total extent of RPC tea estates is 69,222 hectares which is only 38.6 percent of the total extent of tea in the country. The balance 61.4 percent; 122,448 hectares of tea comes under the Tea Small Holding category.  However, that extent with bearing crops in the RPC estates is 66,897 hectares. Of this, the extent with HYV is 54.8 percent; 36,650 hectares. The rest; 45.2 percent or 30,248 hectares, consist of old tea bushes planted by the British known as ‘seedling tea bushes’. The productivity level of well maintain seedling tea is around 900 kg/ha/year.  Thus, the very slow rate of replanting together with 45.2 percent of old tea bushes undeniably contributes to low labour productivity in the RPCs.

The amount of green leaves plucked for the daily wage was fixed during the establishment of tea estates by the British. It is known as a ‘plucking norms’ in the estates. Plucking norms vary based on the tea bushes and the weather condition. In the current context, the agreed plucking norm from old tea bushes is between 15 to 16 kilograms of green leaves per day (33 lbs. to 35 lbs.) and it is 17 to 18 kilograms (37lbs to 39lbs) for HYV tea in RPC estates.   

However, the RPC constantly pressurizes workers to pluck more than the agreed plucking norms at each point of daily wage increase which agreed at the CA negotiations. Similarly, when wages were increased to Rs.1000 per day, estate managements had requested tea pluckers to pluck 20 kilograms per day in contrast to the existing plucking norm of 17 to 18 kilograms per day. The workers were confused and revealed the difficulty in plucking 20 Kilograms tea from the old and poorly maintained tea bushes in the estates. Presently this has become an unsolved struggle between the workers and the estate management –this has created a tense situation in the estates and impaired the industrial relations between workers and the management. This in turn is more likely to bring worse outcomes in the future which will affect the industry as well as livelihoods of this community, unless an amicable solution is sought in the months coming ahead.

There were issues also found with regard to weighing the green leaves in the Weighing Places which is called “Kolunthu Maduvam” (KM) in the estates. The weighing process taking place in the KM also confuses tea pluckers.  As agreed, workers bring the green leaves plucked in the field for weighing. The field Kangany and one or two male workers (who are responsible to transport the weighed tea from the KM to the tea factory) jointly weigh the green leaves brought by the workers. There is a deduction of two kilograms of tea during every round of weighing to balance off the ‘sack weight’. But, most of the time the sack weight is disregarded resulting in the deduction of 3 to 4 kilograms in a cycle.

A female worker expressed her bitter experience that was taking place in the KM. She is 42 years of age, a registered worker who has studied up to GCE A/L, having three schooling children and she has ten years experience in plucking tea. The estate is completely replanted with HYV and usually tea plucking takes place in three sessions: in the morning; during the second half of the day; and in the evening. On a particular day, she plucked around 10 kilos during the morning hours, but this accounted for only 7 kilos as 3 kilograms were deducted for sack weight in the KM. Likewise she brought in 8 kilograms in the second half of the day where 3 kilograms were deducted and in the evening too she brought in 8 kilos and once again 3 kilograms were deducted as sack weight. Thus, the total tea leaves plucked by her was (10+8+8) 26 kilograms while the deduction for sack weight for the three session was (3+3+3) 9 kilograms resulting in a balance of (26 – 9) 17 kilos. Though she managed to pluck 26 kilograms and targeted to obtain the Rs.1000 per day rate but she failed miserably due the deduction of 9 kilograms at substance level due to “sack weight” deduction practices in the estate – workers tend to look at this practice as unethical and a form of exploitation. Thus, her wage was not rated at the Rs.1,000 payment but was calculated based on the total green leaves she plucked. Accordingly, her payment was (Rs.50 x 17 kilos) Rs.850.00 for that particular day.  This atrocity has become a common phenomenon in many estates which suppresses issues of female workers in the estates and violates their rights guaranteed in CA and various labour conventions, to which the government of Sri Lanka is a state party. Evidence collected for this article demonstrates the untold hardships that are being experienced by women workers in the tea plantation over the last few months – due to the absence of CV, trade unions are unlikely to play a proactive role, and even they are unable to get their subscription in many estates.

In a nutshell, the slow progress in extending the acreage of  HYV, deficiency in labour management etc. are  main reasons that had  contributed towards the low level of labour productivity in the RPC estates in the country.  The expectation of the RPCs is to obtain higher productivity from the existing tea bushes and undeniably, the climate and soil condition in the RPC estates mainly concentrated in the higher elevations have the potential for producing higher value tea in the country. Yet, there is no sufficient investment on the part of RPCs to maximize these potentials. Therefore, several RPC companies have come up with expanding the Revenue Sharing Model/ Productivity Based Model with the involvement of estate workers and management to bring about a win-win situation in the estates.   

Proposal for Productivity Based Wage Model

We all know that today there are only about 135,000 permanent workers on the plantations and the RPCs expect to employ around 175,000 workers on temporary basis to work in the estates.  Most of the RPC estates are prepared to provide work for 12 days per month and rest of the days, it expects workers to engage in maintaining tea plants on a contract basis.  This has not been implemented in many plantations, only few estates have implemented this practice.  The following proposals were put forward by the Planters’ Association under this revenue sharing system: 

1. Dividing the tea plants of the estates into 1500 tea plants per person.

2. Providing recommended fertilizer, pesticide, labour etc. for its maintenance and the      total cost should be reimbursed to the plantation management in three installments.

3. Harvested tea leaves should be given to the respective estate and 50% or 60% of the net sale average price of tea will be given to the workers under this system.

4. Workers are not allowed to work in alternative plots other than on the plots allocated to them. 

5. Rs.1000 per day will be paid for the 12 days of work in the estate which will also be considered for union subscription, EPF and ETF and other contributions such as temple development, laundry, corporative shops among others.

6. An agreement will be signed between the worker and the estate management to carry out this task system in the estates.

The above contract basis work or out-grower model was observed in some estates and the following shortcomings were found:

1. In most cases, workers are provided with plots of 100 – 150 year old low yielding tea plants and they are not allowed to get the benefit from high yielding tea plants.

2. The contract document (agreement) with the workers was not a legal document so that the estate management could withdraw this system with short notice. Workers cannot claims ownership for land and tenure of lease is also not clear in the agreement.

3. Although workers can earn extra income as they do on plantations, most of the time when they go to work on the given plot of land, there is no acceptable price for the green manure they harvest. There is a greater difference in the price offered for green leafs in small holding sector and the RPC estates.

Despite these shortcomings, such economic engagement is good for workers to continue to find employment in the upcountry and to continue their lives while preserving distinctive culture, identity, customs, and values etc. as “Hill country Tamils”. In the absence of such economic engagement, workers may leave the plantations permanently in search of work. Some trade unions and political parties tend to look at this as a positive move and they think that this could eventually become a sustainable profession and a new form of livelihood avenue that gives confidence to those engaged in this contract system. Yet, any form of contract farming or out-grower system should be implemented within sound and effective policy and institutional framework which must ensure livelihood, safety, welfare and human rights of the plantation community. Unless, it is more likely to cause tense situation on the estates as larger segment of this community continues to depend on tea and rubber industry for their livelihoods and survival. Further, ostensibly, there is a need for reforms and changes in the tea industry, given the global competition, expenditure, quality, sustainability, increasing demand for land rights, global and national economic crisis into account, but such reforms and changes should not harm the community who immensely contributes to the industry as well as to the national economy for centuries.

*The writers can be approached at the following address: Professor A.S. Chandrabose. Department of Social Studies, The Faculty of Humanities and Social Sciences, The Open University of Sri Lanka, Nawala, Nugegoda: ascha@ou.ac.lk/asboseou@yahoo.com  and Dr. R. Ramesh,  Senior Lecturer Department of Political Sciences, Faculty of Arts, University of Peradeniya: ramnaresh45@yahoo.com

Part I – Tea Plantations At Crossroads: Rs 1000 Wage Hike & Emerging Dilemmas