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Concerns mount over sustainability of Tea Industry following wage hike

May 27, Colombo (LNW): Sri Lanka’s tea smallholders, responsible for over 75 per cent of the country’s tea production, have voiced serious concerns about the government’s decision to raise the minimum daily wage without securing additional revenue streams or consulting the industry.

The wage increase disproportionately impacts small and medium estate owners, Ushan Samarasinghe, Founding General Secretary of the Medium Scale Tea Estate Owners Association, warned.

Samarasinghe told Daily Mirror that there is necessity for the government to identify new markets to generate the additional revenue needed to support the wage increase.

Without this, many tea estate owners might be compelled to switch to other crops, a trend already observed among numerous estate owners, he added.

Smallholders, still recovering from crises such as the agrochemical ban, are struggling to afford fertilisers.

Samarasinghe pointed out the bureaucratic hurdles in obtaining subsidised fertiliser, suggesting that the wage hike could exacerbate these challenges.

The proposed new living wage of Rs.1700, a 70 per cent increase from the current Rs.1000, comprises a Rs.1350 daily wage (inclusive of the daily budgetary relief allowance and applicable for EPF and ETF payments) and a Rs.350 daily special allowance. Additionally, Rs.80 is proposed for each kilogramme over a specified rate.

However, Samarasinghe argued that maintaining a minimum green leaf price of Rs.300 per kilo is necessary to support the wage hike.

He highlighted the difficulty of achieving this due to fluctuations in tea auction prices, suggesting the government should establish a floor rate at auctions.

He also expressed concerns about the timing of the wage hike announcement, coinciding with the election cycle.

Samarasinghe emphasised that while they do not oppose wage increases, they believe it should be linked to productivity, proposing that a percentage of green leaf prices be allocated to workers based on productivity.

Currently, the green leaf count in Sri Lanka is significantly lower than in other tea-growing nations like Kenya.

In a letter dated 14 May to President Ranil Wickremesinghe, the Estate Owners Association (TEOA), representing leading tea entrepreneurs from the Sri Lanka National Institute of Plantation Management, presented a comprehensive proposal to integrate and empower the tea industry and its workers.

The proposal includes initiatives for the Integration and Marketing of High Polyphenol Tea Products and a Tea Technologist Project for Worker Empowerment.

The TEOA suggested launching a specialised Tea Technologist Project to enhance the skills and expertise of tea workers, thereby improving their contribution to the production process.

This initiative aims to ensure fair wages, improve living standards, and offer career advancement opportunities, enhancing the socio-economic well-being of tea workers and fostering a culture of dignity and respect within the industry.

Additionally, the TEOA urged the government to ensure a US$5 floor price per kilogram for manufactured tea to facilitate the wage increase.

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