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Gratuity woes for RPCs

15 May 2013 02:51 am - 0     - {{hitsCtrl.values.hits}}

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The annual gratuity provision of Regional Plantation Companies (RPCs) will increase by an average of between Rs.175-225 million per company as a result of recent wage hike, according to the Planters Association of Sri Lanka.

“Wage hike has substantially increased gratuity provisions in the Profit & Loss account. The cost of these increases however is absorbed into the cost of production”.

“Sri Lanka’s cost of production is already the highest in the world and this is a very challenging position to sustain without the support of all stakeholders,” Planters Association Deputy Chairman and Managing Director, Kelani Valley Plantations PLC and Talawakelle Tea Estates PLC Roshan Rajadurai said.

He went on to highlight further issues in RPC gratuity provisions caused by tight labour regulations.

“Our industry is set up unlike any other. An individual will stay with one company for many years yet there is no attendance requirement for gratuity payments, so even if they show up for one day a month they are still entitled to gratuity”.

“Further, that individual would be entitled to the same payment that as a worker with better attendance. These implications must also be taken into account when considering the wage increase”.

Rajadurai went on to highlight the issue of declining labour supply in the plantations, with approximately 22 percent of the 970,000 estate population being registered as estate workers.

In this regard, Planters Association Chairman, Lalith Obeysekere stated that the cooperation of trade unions was being sought in order to seek alternative methods of improving the commercial viability of RPCs.

At US$ 4.90 (Rs.450), Sri Lanka’s daily labour wage currently has since surpassed the average auction price of tea of US$ 3.39 per kilogram.

Wages are revised every two years subsequent to discussions between trade unions and the Planters Association. Last April’s wage hike amounted to an 18 percent increase.

“We believe that the trade unions also have an understanding now that measures have to be taken to improve this situation and they will not oppose productivity increases provided that it has the support of the workers,” Obeysekere said.

He added that the PA was hoping for productivity increases of at least 2 kilograms per worker in order to compensate for higher wages.

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