By Shabiya Ali Ahlam
Plantation sector employers are likely to enter the New Year with a dark cloud hovering over them, as they are likely to crack under the repeated pressure of having to increase wages, which is well above their affordable limits.
Although it was proposed to incorporate a productivity-based model into the collective wage agreement, government authorities and trade unions are observed to be less keen on the same.
Planters’ Association of Ceylon (PA) Deputy Chairman Sunil Poholiyadde told Mirror Business that even in the recent meeting, that was held early last week, the Ministry of Labour and Trade Union Relations had urged employers to come into a settlement and agree on an increase.
“We categorically stated what we have been stating in the past. We cannot afford to give an increase right now on the previous model. If at all an increase is to be implemented, it should be on productivity basis. We are firm on our stand and we will continue to be,” asserted Poholiyadde.
He shared that the government and the trade unions in every meeting have been pressing for an increase, even though they are aware of the dampened situation the tea and rubber industries is faced with.
“The argument is that the increase has to be on the same basis, which we cannot agree upon. The current wage model cannot change is what the union and the government has been saying in all the meetings. We are asking to revise the agreement.
“The plantations don’t have funds to be paying additional wages. We have laid down our facts, we have established that we cannot enter into any agreement which we know we cannot honour. If it is collective bargaining both party have to agree,” charged Poholiyadde.
Pointing out the challenges faced, he stated that banks too are reluctant to lend to plantation companies as they don’t see prices improving in the near future.
He said that due to the gap between the sale price and the cost of production, every company loses Rs.75 per kilo in the current scenario.
Commenting on a statement made in Parliament to extend the private sector wage increase of Rs.2, 500 to the plantation sector, Poholiyadde warned if such a move takes place it would be catastrophic.
It was pointed out that for every rupee increased to the daily wage, the total outflow for the 20 plantations collectively, for a whole year will be Rs.50 million, whereas an Rs.100 rupee raise will result in an outflow of Rs.5 billion.
“That is a substantial amount for us to take on considering the situation we are already in,” he charged.
Currently a worker earns a take home wage of Rs.620, and a gross of Rs.687.50 with the EPF and ETF component.
Furthermore, Poholiyadde highlighted that even without a wage increase the plantation is faced with higher costs due to some of the Budget proposals.
With the government having removed the fertilizer subsidy, he said each plantation will have to incur an additional cost of Rs.300 million.
With the banning of weed control chemical glyphosate, for which there is no alternative or substitute, companies are compelled to use manual labour which will tax each plantation about Rs.200 million per annum.