A new pension scheme is set to be introduced for workers engaged in the tea industry, jointly by the Agricultural and Farmers’ Insurance Board and the Ministry of Plantation and Rural Infrastructure.

According to the Government, the initiative will cover individuals employed on tea estates and in tea factories, with contributions adjusted according to each worker’s financial capacity.

Under the scheme, a person joining at age 18 can contribute Rs. 600 per quarter, and upon reaching 60 years of age, will be entitled to a pension of Rs. 5,000. 

Depending on the level of contributions, monthly pensions of Rs. 15,000, Rs. 20,000, Rs. 25,000 and upwards can be secured, with flexibility for participants to increase their benefits at any time.

The government further states that the program also includes life insurance coverage. 

If a contributor suffers a sudden accident leading to full or partial disability, or dies before retirement, compensation will be paid.

In the event of death while receiving a pension, the spouse will continue to receive the benefits.

The government added that the primary aim of the scheme is to safeguard the lives of tea industry workers, ensuring financial security when they no longer have the strength to work. (Newswire)

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The Cabinet has granted approval for the relief mechanism proposed in the 2026 Budget to uplift the living standards of estate workers, with implementation set to begin on January 1, 2026.

Under the proposal, the minimum daily wage of estate workers will be increased to Rs. 1,550, while an attendance incentive allowance of Rs. 200 per day will also be paid. 

The Government has allocated Rs. 5,000 million in the 2026 Budget to fund the initiative.

For the first six months, the incentive allowance will be paid through plantation companies, after which it will be directly credited to the personal bank accounts of estate workers. 

The Ministry of Plantations and Community Infrastructure has been tasked with making arrangements in consultation with all stakeholders.

The joint proposal, presented by the Minister of Labour together with the Minister of Plantations and Community Infrastructure, was approved by the Cabinet to ensure the effective delivery of the incentive payments to estate workers. (Newswire)

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Minister Bimal Rathnayake says the increase in wages for estate workers has become a challenge for the government.

He revealed that both the Ministry of Plantation Industries and the Ministry of Finance are continuously intervening in this matter.

“Wages for estate workers are low. This is an industry. We saw in the recent past that taxed businesses had obtained profits. The Ministries of Plantation Industries and Finance are working to increase the wages of estate workers. We regret that we have been unable to do so yet,” he said. 

Minister Rathnayake assured that the government will not abandon the task, adding that the government will fulfil its responsibility. 

He further expressed hope that the matter will be resolved in the next few months. 

Minister Rathnayake made these remarks while speaking to the media following a site visit to the Nanu Oya railway station yesterday. (Newswire)

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A Gazette notification has been issued by the Wages Board on providing Rs. 1700 as daily minimum wage for an estate worker from the tea and rubber industries of Sri Lanka.

As per the Gazette notification, Rs. 1350 will be provided as a daily wage and Rs. 350 will be given as a productivity incentive.

Dated 13 August 2024, the Gazette states objections to the aforesaid proposal will be received by the Chairman of the Board until 12.00 pm on 28 August 2024. 

It further states every objection should be submitted in writing with a statement indicating the reasons for such objection.

Gazette : http://documents.gov.lk/files/egz/2024/8/2397-27_E.pdf 

The government initially proposed to increase the daily minimum wage of an estate worker to Rs. 1700, but the move was opposed by several plantation companies, claiming they were unable to provide such pay.

The government’s decision to issue a Gazette notification on the increased minimum daily wage was also challenged in the Supreme Court.

The court ordered the Gazette to be cancelled and for the minimum daily wage to be paid by the Wages Board.

Accordingly, the Wages Board during a meeting held this week agreed to increase the daily minimum wage for an estate worker to Rs. 1700 and has issued a Gazette notification accordingly. (Newswire)

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The Wages Board has decided to provide the Rs. 1700 daily minimum wage for an estate worker from the tea and rubber industries of Sri Lanka. 

According to former minister of Labour Manusha Nanayakkara, the Wages Board took the decision today to increase the daily minimum wage for an estate worker.

Former minister Nanayakkara said in a post on social media that the decision was taken during a discussion of the Wages Board in charge of the Estate Sector held at the Labour Department. 

The previous decision by the government to increase the daily minimum wage of an estate worker to Rs. 1700 was opposed by several plantation companies, claiming they were unable to provide such pay.

The move by the government to issue a Gazette notification on the increased minimum daily wage was challenged in the Supreme Court.

The court ordered the Gazette to be cancelled and for the minimum daily wage to be paid by the Wages Board.

Accordingly, the Wages Board during a meeting held today has agreed to increase the daily minimum wage for an estate worker to Rs. 1700. (Newswire)

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A Gazette notification has been issued cancelling the Gazette that was previously issued increasing the daily minimum wage of an estate worker from the tea and rubber industries to Rs. 1700. 

The new Gazette notification, issued by the Ministry of Labour, directs the payments to be made through the Wages Board.

As per the previous Gazette issued in May this year, the minimum daily wage of a plantation worker was set at Rs. 1,350, together with an allowance of Rs. 300 and another allowance of Rs. 80.

However, in July, the move was challenged in court by 21 plantation companies, including Agarapatana Plantations Ltd., seeking a writ order invalidating the Gazette notification.

Following this, the Supreme Court of Sri Lanka had also issued an interim injunction preventing the implementation of the Gazette on increasing the daily minimum wage of Estate Sector workers. (Newswire)

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The Supreme Court of Sri Lanka today issued an interim injunction preventing the implementation of the Gazette on increasing the daily minimum wage of Estate Sector workers.

The Supreme Court today issued the interim injunction after granting leave to proceed with a petition that had been filed challenging the minimum wage hike. 

The petition had been filed by several plantation companies against the wage hike for estate sector workers. 

In May this year, a Gazette notification was issued stipulating the daily minimum wage for estate sector workers to be Rs. 1,700.

The Extraordinary Gazette No. 2381/35 of April 25, 2024, was approved by the Minister of Labour and Foreign Employment Manusha Nanayakkara, with the new regulation coming into effect from May 21, 2024.

At the time, Minister Nanayakkara also warned that plantations that do not pay their workers the newly stipulated minimum wage will be reacquired by the government.

However, the Planters’ Association of Ceylon strongly opposed the government’s wage hike of Rs. 1700 for plantation sector workers, stating it objects to the Government’s arbitrary, reckless, unilateral decision to drastically hike minimum wages for tea and rubber sector workers by an unprecedented 70%. (Newswire)

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The Planters’ Association of Ceylon has strongly opposed the government’s wage hike of Rs. 1700 for plantation sector workers.

Issuing a statement, the Association said the plantation industry has raised its strongest possible objections to the Government’s arbitrary, reckless, unilateral decision to drastically hike minimum wages for tea and rubber sector workers by an unprecedented 70%. 

All producer stakeholders issued a unified warning against the devastating impact the latest increase will have on the plantation sector, leading crippling operational challenges, and ultimately leading to severe economic instability for the nation.

“This decision was made without proper consultation or consideration of the needs of all industry stakeholders. In particular, it fails to provide any consideration and threatens to cripple every segment of the Sri Lankan tea and rubber industry. This current effort to force such a clearly unsustainable mandatory minimum wage on tea and rubber smallholders and the Regional Plantation Companies (RPCS) is impossible for the industry to absorb, even with radical cuts to basic operational necessities. The continuity of the entire plantation sector is now at risk, and most critically the livelihoods of the very workers and communities who are connected to the industry across Sri Lanka,” The Planters’ Association of Ceylon stated.  

The Association points out that as a result of the decision, the cost of production for tea and rubber is set to rise dramatically, with estimates indicating a minimum 45% increase in the cost per kilogram of tea. This surge in operational costs will render Sri Lanka’s tea and rubber industries uncompetitive in the global market, further exacerbating the financial strain on these sectors.

Additionally, the wage hike will place an enormous burden on Regional Plantation Companies (RPCs), which will face an annual increase in excess of Rs. 35 billion inclusive of EPF/ETF and gratuity payments. This financial strain is unsustainable and threatens the livelihoods of thousands of workers in the plantation sector.

The Planters’ Association of Ceylon also noted that the current approach of the Government in attempting to coercively set wages for the private sector, and interfere in the management of the sector from key Government figures represents a stark violation of the terms of the IMF agreement, which is crucial for Sri Lanka’s economic recovery. This decision is very clearly driven by short-term populist politics aimed at securing electoral victories rather than fostering the long-term economic health of the industry, and securing the interests of workers. 

The IMF’s $3 billion Extended Fund Facility (EFF) for Sri Lanka is contingent on several stringent conditions aimed at ensuring fiscal consolidation including reduced intervention in state-owned enterprises (SOE). Historically, state control over enterprises has led to inefficiencies and financial burdens, as evidenced by the failures of numerous state-run businesses in Sri Lanka.

Historically, the state has consistently failed to manage State-Owned Enterprises (SOEs) effectively, leading to steep losses and in many instances, near-total collapse. By the time of privatization in 1992, state-owned plantations made continuous losses that had to be heavily subsidized by the Government up to Rs. 5 billion per year which was borne by the Treasury. 

A further Rs. 8 billion was owed by the JEDB and SLSPC to the Bank of Ceylon and Peoples’ Bank as a result of a US$ 300 million lending facility which was extended to the state plantations by the World Bank. While these funds were intended for the improvement of the plantation industry, there were no significant improvements and the plantations did not have the ability to repay the debts, and the Government was eventually compelled to absorb this debt.  

Following privatization, worker wages appreciated sharply, and with a significantly larger workforce of 327,123 within the RPC sector, the industry was able to operate more effectively, investing substantially towards the development of the industry, including all of the key certifications and standards that have allowed Pure Ceylon Tea and rubber to maintain a reputation for unmatched quality relative to global competitors.  

These efforts have led to improvements in efficiency and productivity, which are now at risk due to the proposed wage hike. It is also important to note that all these companies are publicly traded companies listed on the Colombo Stock Exchange. Any attempt at a second and immediate expropriation by the Government will therefore contravene Securities and Exchange Commission and SEC rules, the Companies Act and other related statutory provisions. 

Stating that such an arbitrary and impractical decision also risks severe damage to local and foreign investor confidence alike, The Planters’ Association of Ceylon warned that this would have negative consequences beyond the plantation industry, especially at a time when Sri Lanka desperately requires foreign direct investment to help boost strategically important sectors in manufacturing and services, as well as the agriculture sector. 

The Planters’ Association of Ceylon has long advocated for a shift to a productivity-linked wage model or a revenue share model, which aligns worker compensation with productivity and revenue earned at auction. This approach not only incentivizes productivity but also ensures a fair and sustainable wage system for workers. Already workers under revenue share under the previous wage structure recorded earnings in excess of the minimum wage that was recently gazette. 

The current daily attendance-based minimum wage model is outdated and does not reflect the realities of the modern plantation industry. Any disruption to production or quality standards could send shockwaves through export markets, diminishing export revenues and competitiveness. 

“We urge policymakers to prioritize long-term economic stability over short-sighted decisions and to consider the industry’s proposals for a productivity-linked wage model,” The Planters’ Association of Ceylon said. (Newswire)

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