Tea strike ends but crisis far from over

The majority of the plantation union workers returned to work this week following the agreement that was reached between the unions and the plantation companies. However issues arising from the wage hike are still unsolved with further union action a possibility.

Trade unions say about 80% of the workers have returned to work even though they are not satisfied with the wage hike they have received. “We have requested our members to return to work but they are not happy with the wage offered which they feel is not enough. They have not totally accepted the proposal but for the time being they have returned to work,” said P. Radhakrishnan, Secretary of the Upcountry Worker’s Union.

Radhakrishnan said that they are hopeful that the presidential committee, as promised, will be appointed soon to look into the welfare of the plantation workers. “The plantation workers are landless people, and there are many issues with health care sanitation and education.”

Plantation companies are also hoping that work would return to normal by next week. However matters are far from over. The Lanka Jathika Estate Workers Union (LJEWU) which is not a part of the collective agreement is planning on staging further union action. This JVP-led union is forming a united front with six other estate workers unions and is planning to launch a protest. “We strongly oppose the collective agreement. We want this agreement scrapped as it is not at all favourable for the estate worker,” said Ranjith Premarathne, LJEWU Secretary.

On the other hand the plantation companies say that they are finding it hard to break even with the current costs involved. “The wage hike has generated a cost increase of 3 billion rupees for the companies. A one rupee increase means an additional cost of 50 million for the companies as there are 50 million man days for the industry,” said Gotabaya Dasanayake, Director General of The Employer’s Federation of Ceylon (EFC).

According to Lalith Obeysekara, chairman of the Plantation Services Group of the EFC and CEO of Balangoda Plantations, tea prices have increased in the past year only in rupee terms. “The increase in the tea price in terms of dollars was very marginal. The sharp increase that is seen in rupee terms is not because the price has increased but because the rupee has depreciated heavily,” he said.

It is difficult for plantation companies to sustain their business as costs have increased substantially. The plantation companies incur costs not only in terms of labour but in terms of fuel and power, transportation and fertilizer. “When the price of fuel increases, the prices of all other raw material increase. Further the transportation costs increase substantially. Fertiliser is imported so even though we buy it locally, local prices reflect dollar values,” he said.

When asked what steps the industry plans to implement to overcome the present situation, Obeysekara said that they have made a request to the government to give VAT concessions to the industry. “The apparel sector is given a 0% rate on VAT and even the related industries are given this rate. We are requesting the same concession as we are a 99% direct exporter,” he said adding that the increase in cess tax and the removal of the subsidy has also made things very difficult for the plantation companies.

The strike has put tea smallholders in difficulty as well. Even though they are not part of the agreement between the EFC and the unions, the smallholders claim that they would have to match the wages paid by the regional plantation companies.

“We would incur a revenue loss of about seven to eight rupees as a result. Tea plantation will cease to be a lucrative business in the future, some smallholders might give up tea planting,” said Padma Nanayakkara, Chairman of the Tea Smallholders Association.

Nanayakkara said that if it is not possible to cut down on cost where labour is becoming very costly, the foreign market and the prices fetched for Ceylon Tea should increase if the industry is to remain profitable.

Tea brokers expect the sales average to decline as the low quality tea come to the market. Further it would take time for the industry to recover and produce quality tea that Ceylon Tea is popular for.

“The tea quantities coming into the auction will be really low. The first week of sales in January will be really low and the second week will be negligible. It will pick up only with the third week,” Lalith Ramanayake, John Keells Tea Director explained.