Plantation wages up for discussion again

Faced with a situation of uneconomic and uncertain prices, the plantation industry claim that they are unable to pay a higher wage as the companies can only pay from what it earns.

The Planters Association (PA) in a release supports this argument with a study on the financial performance of the plantation companies since the process of privatisation got under way. (See table)

Financial Performance of Plantation Companies

Profits/Losses

(Rs. Mn)

Tea Rubber

1993 - 1503 - 44

1994 - 1329 511

1995 - 504 1078

1996 1082 632

1997 2750 434

1998 2110 - 214

1999 - 113 - 400

This comes in the midst of another request for a wage hike for the plantation workers. A negotiation meeting is scheduled for Thursday where both parties hope to come to a favourable conclusion. However, if a both parties fail to agree upon a favourable formula, officials fear an upheaval in the plantation industry.

The PA release said that a substantial wage increase was granted when the plantations were privatised five years ago. In addition, they claim that the management also introduced modern agricultural practices, improving the quality of the product and investing in long term development.

Officials claim that the plantations were committed to improving the standards of the sector and hence had borrowed in excess of Rs. 3,000 million in the last three years. Therefore, the PA feels that it is only appropriate that the plantation companies be given adequate time and opportunity to gain a firm footing.

The PA said that in the light of these considerations, a wage demand of Rs. 131 for tea workers and Rs. 115 for rubber workers sought for by the negotiating trade unions will spell disaster on an industry that is struggling to keep its head above water. They claim that such an increase would catapult production costs by Rs. 4,000 million a year due to the industries labour intensity, causing severe damage to the industry.

The PA release said that this situation was compounded by lower yields compared to other large manufacturing countries. Yet, they claim that wages and incentive payments (over kilo rate) in Sri Lanka was the highest in the world.

A wage package linked to productivity is therefore important, the PA said. The International Labour organisation has repeatedly stressed the point that "productivity in plantations depends to a great extent on how remuneration is linked to output". They also say that there is good reason to believe that plantation workers in Sri Lanka too accept this position.

Therefore the PA hopes that the long term interests and objectives of the plantation industry be reflected with the social partners jointly striving towards a wage policy that will stimulate productivity improvements, incentivise estate operations and enable a fair sharing of the gains from improved market conditions.

Due to the holiday season, officials from the unions were not available for comment.

Market update

Trading only on two days

Trading on the Colombo Stock Exchange (CSE) was restricted to two days. The exchange was closed on Wednesday, Thursday and Friday due to the Sinhala and Tamil new year and a special holiday being declared by the CSE on the 14th.

Foreign selling continued to dominate trading. The All Share Price Index gained .05 per cent to close at 495.09 while the Milanka Price Index slid .02 per cent to register 801.58. The MBSL Midcap Index lost .09 per cent to close at 879.49. Average turnover during the week was Rs. 21.5 mn.

Five stars fare better

Despite an increase in tourist arrivals in 1999 over 1998, Colombo hotels failed to record any significant profits up to the third quarter of 2000. But, reports show that five star hotels recorded increases in room occupancy rates while all other hotels recorded declines.

Officials say that tourists are flocking back in small droves to city hotels. This is a reversal of the situation that prevailed till the end of last year when tourists avoided the city due to its volatile security situation. However, this has failed to prop up profits in most city hotels. Listed hotels third quarter statements too show a bleak picture. Asian Hotels reported a net profit of Rs. 6.4 million in the third quarter 2000, an 83 per cent drop over 1998. However, this modest profit helped cut cumulative losses for the 3 quarters marginally.

The negative performance of Asian Hotels was however, the result its subsidiary Crescat Developments not being able to sell any more of its apartment in addition to low occupancy rates at the Oberoi. Moreover, food and beverage income of the Oberoi also dropped as a result of visitors to the hotel patronising the Crescat Boulevard food court.

The groups associate and the other listed hotel, Trans Asia also contributed to the losses. Officials claim that other city hotels did no better, but added that it was likely that they would have made moderate cumulative profits as a result of the increase in occupancy rates in the city.

However, officials say that the introduction of GST from April 1 might alter this situation. They said that the introduction of GST would especially affect Asian tourist arrivals. But, analysts say that the introduction of GST to the hotel sector would not adversely affect occupancy rates in the five star hotel category in Colombo as it would still be cheaper than five star room rates in other countries. Therefore, they believe this and the absence of any bomb attacks in the city would ensure a recovery in city hotel profits. Industry officials on the other hand said that it was only a matter of time before another attack.

Analysts forecast a moderate growth of 5 per cent to 7 per cent in tourist arrivals this year. This is in part attributed to the government's Rs. 500 allocation to promote tourism this year.

Tea report

No auctions next week

February production dropped to 21.5 million kilos from 23.1 million kilos recorded last year surprising the industry. Officials say that un-seasonal rain experienced in February should have contributed to a higher yield than vice-versa. All three elevations recorded declines, with high and mid growns leading the way.

This adds to the shortfall for the year's production, increasing the cumulative shortfall to seven percent over last year.

Average prices on the other hand have gained significantly over last year's levels, but show a declining trend.

A further drop in prices would be detrimental for the plantation companies, especially if the unions prevail in the present wage negotiations. (see detailed story)

Last week a single auction was held. Asia Siyaka Tea Brokers said that the absence of an auction next week saw traders set up purchases for certain grades of tea. Other exporters stayed away due to the holiday season.

Better leaf teas sold with gusto, as they were picked up for over Rs. 200.

Awards for Wayamba

To mark their tenth anniversary, The Industrial Services Bureau (ISB) will be awarding entreprenurship talent in the Western Province (WP).

The ISB with the Wayamba Chamber of Commerce (WCCI) and the Wayamba Export and Trading House Private Limited (WETH) said that the WP needed more recognition for their contribution to the nation. They said that this award programme would further motivate the business community. They also hope that the programme would encourage more businesses to join the WCCI.

The awards ceremony will be held next month and officials said that they hoped to make it an annual event. The programme will be similar to the annual entreprenurship awards presented by the Industrial Chamber of Commerce but would only recognise the work of the industries in the WP.

Entreprenurship would be awarded in the areas of Industry and manufacturing, light engineering, agriculture, livestock, aquaculture, tourism, trading and services in addition to the scale of the business (small, medium, large).

ISB officials said the programme was a necessity to motivate existing industrialists in the area and to attract many more to come and invest in the WP.

The ISB with the help of the WCCI and WETH have developed many schemes to assist industries to be set up. They also provide technical assistance to the businesses. In addition the three organisations have been involved in improving the standards and fine tune technology and manufacturing process of age old industries making them more productive.

Aitken Spence Travels receives ISO 9002 certification

Aitken Spence Travels Ltd., became the first destination management company in Sri Lanka to receive ISO 9002 certification.

At the presentation ceremany, Aitken Spence CEO Ratna Sivaratnam said that the company has been scoring a number of 'firsts'. Aitken Spence Shipping was the first shipping company in Sri Lanka to win ISO 9002 certification, followed by TNT, the courier company of Ace Cargo Ltd., who also won ISO 9002 certification.

Mind your business

By: Business Bug

Customer relations?

The cellular phone market has always been competitive not just among the networks but among those marketing phones as well.

One player in the market, anxious to get ahead in the field is planning a unique promotional strategy- getting customers to introduce other customers, in return for which they will receive a free phone.

Initial market survey have been promising and the offer will be launched soon, we hear.

Link Language

There is speculation that a reputed supermarket chain and a reputed bank will link operations, with each supermarket being a bank branch.

The idea is to lure customers of the bank to the supermarket and vice-versa. A link will be set up initially and depending on the response the joint-operation will be expanded.

But of course, it doesn't take long for the competitors to cotton on to the concept, so a rival market chain is exploring similar links with other banks, we hear.

Scheming Giants

We have heard of many tales of woe from Sri Lankan workers returning from the Middle East and at times, government-to-government representations have to be made to redress their grievances.

Yet, the workers rarely get adequate compensation and even then they have to go through a lot of red tape. Considering all this, the government is to introduce a mandatory insurance scheme for all job seekers in certain designated countries. The state insurance giants will be the most likely to handle the scheme.

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