wages below poverty line
Once again we have experienced labour
troubles on the tea estates. The demand for higher wages, refusal
of the management on the grounds that they can't afford an increase
in wages, a strike, political efforts to resolve the differences,
a compromise increase in wages and then back to normal.
This is the
familiar scenario every year or two. Meanwhile there is a loss in
tea production that the country cannot afford at this juncture.
At the time of writing this there is an expectation that the issue
would be resolved. The Minister of Estate Infrastructure has promised
a wage higher than that asked by the trade unions. There can be
little doubt that tea plantation workers are poorly paid. In fact
their current wage, the wage they asked for and the wage they have
been promised, are less than the wage rate in other sectors. What
is surprising is that the wage rate for estate workers is well below
that of the wage rate for unskilled labour in informal employment.
It is ironical
that the industry that was the mainstay of the economy and still
contributes about 2.3 per cent to GDP directly must pay such poor
wages. But the industry claims that any increase in wages would
make the industry non- viable. If this is so there is a need for
an in-depth search into the reasons for this condition. If the productivity
of estate labour in tea is less than Rs. 151 that the workers have
demanded, then how do we remedy this?
discuss the productivity of labour theoretically, but the exact
calculation is a difficult one prone to various interpretations.
This is particularly so as in practice it is not possible to separate
the productivity of labour from that of capital and management.
Besides the efficiency of capital employed and management has a
bearing on the productivity of labour? So precise estimates of what
labour produces and should receive as wages are difficult to determine.
appears to matter is the bargaining strength of labour unions. This
in turn has also a political dimension as the labour unions are
tied with political parties allied to the government. Trade unions
therefore choo se the most opportune time to threaten strike action.
Invariably they gain. What this means is that the process could
be and has been detrimental to the economy.
About one fourth
of the population in the estate sector is estimated to be below
the poverty line. This compares with 27 percent in rural areas and
14 percent in urban areas. In the case of the estate sector the
wage level, cost of basic items of living, particularly food, and
the number of dependents in an estate family have an important bearing
on their poverty.
wage of plantation workers is just above what the World Bank uses
as the criterion for acute poverty. This means that households with
dependents are below the internationally accepted level of acute
poverty. The number of dependents is however small owing to several
members in a household being employed. Yet the current wage is likely
to place a large proportion of households below the acute poverty
line. The proposed wage by the Minister of Infrastructure is likely
to make a significant dent in poverty. With this wage it is likely
that only families with a large number of dependents would fall
below the acute poverty line.
wage hike will still mean that a high proportion of estate households
would remain below the international poverty line (not acute poverty
line) of US$ 2. The World Bank definition of poverty is a per capita
daily income of US$ 2 or about Rs. 190, while the World Bank defines
acute poverty as below US$ 1 or about Rs. 95 at the current exchange
What is needed
is a method for determining a just wage for the tea estate workers
and a means for wage revisions that do not disrupt tea production.
It is also important to ensure that wages are related to proper
production norms and that workers are given an incentive to be efficient
by gearing wages to productivity. It may also be time for a bonus
system for workers based on the profits of the estate. May be it
could be a percentage of the large management fees enjoyed by the