RPCs eye signing productivity-based Collective Agreement; Estate workers to receive interim allowance

Based on the undertaking that a productivity-based wage agreement will be signed by August 2016 for the remuneration of estate workers, the Regional Plantations Companies (RPCs) on Tuesday (26th July) signed a loan agreement with the Sri Lanka Tea Board to obtain the funds provided by the Government for the payment of an interim allowance to workers of the RPCs.

The funds were provided through State Banks to the Tea Board in order to facilitate the payment of Rs. 100/- per day interim allowance to estate workers for two months (June and July 2016).

Accordingly, the Tea Board will disburse the funds of Rs. 800 million required for the RPCs, which have been adversely financially affected due to the sharp fall in prices of their major crops (tea and rubber), to pay the interim allowance to their nearly 200,000 workforce. The disbursed funds were obtained from the People’s Bank and the Bank of Ceylon – which received a ‘letter of comfort’ in this regard from the Ministry of Finance as per a Cabinet decision.

The loans, with a grace period of one year and a repayment period of three years, carry an interest rate of 14.5% and will be paid back to the Tea Board by the RPCs.

The interim allowance will be paid by the RPCs based on the agreement reached with the government that a Collective Agreement incorporating a productivity-linked wage model will be signed by August 2016, to replace the outdated daily wage-based system prevailing in the country’s estates at present, which has led to the escalation of labour costs as workers do not have sufficient incentive to increase productivity.

“Remuneration based on output/productivity offers the only mutually beneficial solution which can put the country’s plantation industry on a more sustainable footing, in the present scenario amidst unprecedented fall in the prices of tea and rubber and volatility in key export markets,” Roshan Rajadurai the Chairman of the Planters’ Association of Ceylon – which represents the Regional Plantations Companies (RPCs) said. “We hope that all stakeholders, in the best interest of the industry, will offer their support to expedite the signing of a productivity-based Collective Agreement.”

The RPCs will expedite the payment of the interim allowance for June 2016, to make the payment soon after the funds are remitted and the interim allowance for July 2016 will be paid with the August wages (on August 10th, 2016).