New plantation sector wage hike plan lacks economic logic: PA

• Tea sector braces for turbulence as wage politics return

• New proposal comes less than a year after the previous govt.under President Wickremesinghe set the daily wage at Rs. 1,350
• “If we give an increase of a further Rs. 350 within one year, we would be giving a 70% wage increase for a commodity that is not competitive” - PA Spokesperson 
• Asserts smallholders are already struggling to pay the existing wage of Rs. 1,350, as production costs hover around Rs .1,400 per kilo of tea
• Industry asked to present a practical proposal to govt. in this regard

By Shannine Daniel

Plantation companies yesterday pushed back against President Anura Kumara Dissanayake’s bid to raise estate worker wages, warning the move has no firm economic logic and would saddle the sector with an additional Rs. 13 billion burden per year.
President Dissanayake said the government would ensure plantation workers receive a minimum daily wage of Rs. 1,750 within this year. He made these remarks on Sunday (12) while participating in the event held at the Bandarawela Public Grounds to distribute house ownership deeds to the Malayagam community.
“At the moment, the price for a kilo of tea is Rs. 1,083 at the auction, which is less than previous prices. In 2022, when the daily wage was Rs. 1,000, a kilo of tea was sold at Rs. 1,093. Now the daily wage is Rs. 1,350 and we are getting Rs.1,083,” a Planters’ Association of Ceylon (PA) Spokesperson told Mirror Business on condition of anonymity.
His remarks followed a meeting held yesterday between the President and RPC representatives at the Presidential Secretariat. The discussion centered on the proposed wage hike in line with salary increases granted to public and private sector employees in the last budget.
The new proposal comes less than a year after the previous government under President Wickremesinghe set the daily wage at Rs. 1,350 through a three-year agreement endorsed by the Supreme Court.
“If we give an increase of a further Rs. 350 within one year, we would be giving a 70 percent wage increase for a commodity that is not competitive,” the Spokesperson said, adding that the current daily wage already accounts for 60 percent of production costs.
He noted that the National Minimum Wage of Rs. 27,000 per month was introduced only in April this year, while the tea industry has been paying its workers Rs. 34,750 since October 2024.
He said smallholders are already struggling to pay the existing wage of Rs. 1,350, as production costs hover around Rs 1,400 per kilo of tea, and a further wage hike would push it beyond Rs. 1,500.
While RPCs account for about 25 percent of the tea industry and employ around 100,000 estate workers, smallholders dominate with over 70 percent of production and a workforce of about 500,000.
“It is not that we are unwilling to increase the daily wage. We are incapable of meeting this requirement. Smallholders will move away from tea towards other crops. This will have a long-term impact on the industry and its employees,” he said.
The Association said it is hopeful the President understood the gravity of the situation, as the industry has been asked to present a practical proposal.
“Now we have to go back to the drawing board and come up with a new proposal based on productivity and attendance, and include some concessions,” the PA Spokesperson said.