Planters Association of Ceylon spokesman Roshan Rajadurai, Managing Director of Kelani Valley Plantations, Talawakelle Tea Estates.
The Planters Association of Ceylon, representing 396 estates and 330 factories, warned in late June that a government-imposed 70% wage increase for tea workers would make black tea exports uncompetitive. The association writes that any wage increase should instead incentivize productivity.
A press release shared with the media states, “The industry is already under significant pressure due to the highest production costs globally, making it challenging to compete in the international market. Implementing 70% wage increase overnight would exacerbate this issue, given that Sri Lanka is already the most expensive tea producer worldwide. Additionally, tea productivity has been on the decline over recent years, compounding the industry’s struggles.”
The group called for a summit of tea stakeholders.
Sri Lanka exports about 95% of the 250 million kilos of mainly black tea annually. In May, the government ordered wages increased from 1000 to 1,700 rupees ($5.66) per day, which producers say will add 45% to production costs. The $1.3 billion industry employs about 615,000 workers.
The government proposed the increase to quell political unrest caused by high inflation and unemployment. Sri Lanka is deeply in debt to foreign creditors, and raising taxes is problematic for meeting financial obligations but crucial to keeping funding flowing from the International Monetary Fund.
On June 26, Sri Lanka reached final restructuring agreements worth $10 billion, including agreements with an official creditors committee of bilateral lenders and China’s Exim Bank, which provided much-needed relief to the beleaguered island nation.
Bloomberg reports that Sri Lankan officials in Paris agreed to restructure $5.8 billion of debt, finalizing an initial agreement struck late last year with the group of official creditors led by France, India, and Japan. Local authorities also reached a final agreement on debt treatment between Sri Lanka and China’s Exim Bank worth $4.2 billion.
The president’s office said the debt overhaul will allow Sri Lanka to allocate funds to essential public services and secure concessional financing for development needs.
The tea growers association writes that enhancing workers’ livelihoods is commendable; spokesman Roshan Rajadurai, Managing Director of Kelani Valley Plantations, Talawakelle Tea Estates, explains that “a productivity-based pay system is a more viable solution, balancing fair compensation for workers with the economic realities of the industry, thereby safeguarding both their welfare and the industry’s future.”
Rajadurai explains that the model is designed to safeguard the industry’s viability and enhance the welfare of estate workers. Based on current industry standards, employees could earn a minimum of Rs. 1820 or more. He told The Island online that this approach strives to achieve balance by ensuring fair compensation for workers and acknowledging the economic constraints that impact the tea sector.
According to the release, “‘The Planters Association of Ceylon is calling for a meeting with all concerned stakeholders to discuss this matter further. Such a dialogue is crucial for reaching a solution that ensures the tea industry's prosperity and its workers' well-being. The association is ready to collaborate with the government for a sustainable and mutually beneficial resolution.