RPCs get tough with estate worker demands
View(s):Warning that any ad-hoc increase of estate sector wages with no link to productivity would have dire consequences, the Planters’ Association (PA) of Ceylon – which represents the Regional Plantation Companies (RPCs) – has called for reasoned approach to the wage issue which does not endanger the sustainability of the sector.The association, in a media release on Thursday, pointed out that a Rs. 1 increase in labour wages increases production cost of tea by approximately Rs. 0.52 per kg. If the demand of the unions for a daily wage of Rs 1,000 (which represents a Rs 312 increase from present) is met, production cost of tea per kg would skyrocket by Rs. 162.24, making the tea produced by the RPCs completely uncompetitive in the global market. The Colombo Auction price for High Grown Tea has dropped by Rs. 66 per kg since last year and currently most of the RPCs are incurring a loss of over Rs. 50 per kg of tea, which has been the situation since January 2014.
If so, the cost of production of the RPCs, which is in the region of Rs. 450 per kg at present, would exceed Rs. 610. Since the Total Sale Average of tea at the Colombo Tea Auction in the last week of November 2015 only amounted to Rs. 409, the loss from a single kg of tea produced by RPCs would increase from around Rs. 50 to Rs. 70 at present to over Rs. 200, making operations completely financially and economically unviable and impossible. Added to this, a high percentage of the tea remains unsold at the Colombo Auctions and the tea trade indicates that there is a serious drop in the orders for tea in the forthcoming quarter too, it was noted.
Therefore, if the demand of the trade unions for a daily wage of Rs. 1,000 is met, which represents an increase of Rs. 312 from the present daily wage – it would increase the annual expense incurred on labour wages alone by the RPCs by a staggering Rs. 20,800 million (Rs. 20.8 billion), the group explained.“It is indeed extremely difficult to understand the position of the unions in continuing to make unreasonable and impractical demands for an unconditional 45 per cent wage increase in the estate sector daily wage during a time when the industry is in its worst crisis where the companies are borrowing a colossal amount of money from the banks to pay the current labour wages,” PA Chairman Roshan Rajadurai said.
“In such a scenario, continuing to adamantly stick to impractical demands which cannot be fulfilled is a short-sighted policy akin to ‘killing the goose that lays the egg.’ An adverse impact on the Regional Plantation Companies and its eventual collapse would be totally detrimental to the workers themselves and the nearly one million resident population living in RPC estates, who enjoy many facilities provided by the RPCs despite not being part of our workforce,” he added.“We understand the demand of the workers for a higher wage and we have continuously provided significant wage increases – in some years even exceeding 35 per cent – whenever we’re able to. Since the privatisation of the estates in 1992, the labour wages have increased 13 fold, although tea prices have increased only by six fold in the same period,” Mr. Rajadurai said.