Business
RPCs put the ball in trade unions’court
Rs. 1,000 minimum daily wage demand
During a meeting last Friday between Minster of Labour Nimal Siripala de Silva and Chairmen of all Sri Lankan Regional Plantation Companies (RPCs), a final proposal was submitted towards ensuring a ‘sustainable’ earnings model for tea estate workers, making it the trade unions’ responsibility to take the next action on the long-standing pain point of the industry.
This proposal takes into consideration the sustainability of both the industry and livelihoods of plantation workers, RPCs said.
“After a very productive meeting with the minister, RPCs have arrived at a final consensus on what we can sustainably offer, while providing the highest possible earnings potential for our workers. Our final offer amounts to a 30% increase in earnings on the fixed model, and there is no upper limit to what workers can earn under the productivity-linked components. This is the first step to modernising our entire industry, and moving beyond a basic daily wage system which is a relic of the colonial era and long overdue for an update,” they said.
“We have gone well beyond the Rs. 1,000 daily wage demand of Trade Unions, and this follows a 40% increase from just two years ago. At a time when others in the apparel and leisure sector are slashing wages and retrenching workers, ours is one of the precious few export industries which has shielded our employees from the negative impacts of the pandemic, and is actively pursuing a wage increase. This is no easy feat, and without improvements in productivity, it will still be extremely difficult for any RPC to remain financially sustainable. There is clear understanding from the government on our position, and it is now up to Trade Unions to make the right decision,” Chairman, Plantation Services Group, Employers’ Federation of Ceylon said.
Under the final proposal, RPCs are offering a fixed daily wage of Rs. 1,105, with the re-introduction of attendance and productivity incentives – a feature which Trade Unions had strongly and consistently opposed in the past, but have since reversed their position in the most recent negotiations.
The breakdown is as follows: Basic Wage – Rs. 700, EPF/ETF – Rs. 105, Attendance Incentive – Rs. 150 and Productivity Incentive – Rs. 150. Under the new proposal, workers will receive a substantial Rs. 6,250 increase to their monthly earnings.
Further to the revised daily wage model, RPCs also propose the implementation of productivity-linked earning components to ensure that workers are finally provided effective incentives and are rewarded for increasing their productivity.
The proposed fixed daily wage model will be implemented 3 days a week, and on the remaining days, RPCs have called for one of two productivity-based models to be implemented based on how suitable they would be to each RPC’s unique capacity – enabling workers to earn far more than the fixed Rs. 1,105.
Under the productivity-linked component, employees can earn Rs. 50 (inclusive of EPF/ETF) for every kilo of tea leaf plucked. In the case of Rubber, this would amount to Rs. 125 (inclusive of EPF/ETF) for every kilo of rubber latex.
Alternatively, employees will be remunerated based on a revenue share model, offering greater earnings, similar to what has long been practiced with success in the smallholder sector in Sri Lanka. Companies who do not wish to continue with either of these models, will reserve the right (at their sole discretion), to continue with the standard daily wage system.
Currently, the Cost of Production (COP) of tea amounts to Rs. 615 a day, higher than any other tea producing nation in the world. Out of this, cost of labour accounts for 63% of the total cost of production. With the proposed increase in daily earnings to Rs. 1,105, the COP will increase up to Rs. 730 a day. Unfortunately, increasing cost of production is expected to be met with stagnant prices in local and international markets, further annihilating the economic viability of the industry.
Previously, the auction price of RPC tea reached an all-time high of Rs. 601 per kg on average (USD 3.99) in 2017 and has since plunged to Rs. 581/kg (USD 3.16). However, Sri Lanka’s global market price for tea has become increasingly uncompetitive, especially in comparison to USD 1.94 for tea at the Mombasa auction in Kenya. Competitors like Kenya have seen a significant increase – as much as 50% – in crop output which has resulted in an oversupply in the global tea market, forcing the market price of tea to reduce further.
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by Sanath Nanayakkare
Anyone conversant with the elements of a political economy would know that Sri Lanka is using its ‘sovereign power’ to manage the different dynamics of the economy in a sustainable manner, Professor W. D Lakshman Governor of the Central Bank said on Wednesday.
“Some critics are saying that we adopt a so-called modern monetary theory. That’s not the case. In fact, Sri Lanka is using its sovereign power in a number of economic aspects to honour its external debt repayment commitments as well as to reduce its debt burden in the medium term as well as achieve resilient growth in the medium to long term, he said.
“We make policy decisions to boost our gross foreign reserves, meet our external debt servicing, to facilitate monetary expansion, to boost our GDP growth, to strengthen our current account balance and manage our domestic and external economic variables in a sustainable manner. This is not a modern monetary theory. This is an age-old tool used by central banks around the world when the circumstances demand it, he said.
“Certain trade-offs will be necessary when dealing with an economy which has a big fiscal gap to bridge. There are efforts to push Sri Lanka towards the IMF again which would in turn have influence on our policymaking. We have taken policy measures to stabilize the economy and we have adequate reserve levels to meet our debt repayments. Meanwhile, we are in negotiations with overseas central banks and multilateral agencies to further boost our reserve level and it would materialise within a matter of weeks,” he noted.
“One of the tools the Central Bank has introduced is in respect of repatriation of export proceeds into Sri Lanka and conversion of such proceeds into Sri Lankan rupees in order to strengthen the foreign exchange situation of the country,” he said.
The Governor made these remarks while delivering the keynote speech at a webinar organised by the Veemansa Initiative led by its Managing Director Luxman Siriwardene – the former Executive Director of Pathfinder Foundation.
The webinar revolved round the topic ‘External debt situation in Sri Lanka: Are we heading for a resolution or crisis?’
Professor Sirimal Abeyratne, Prof. Sumanasiri Liyanage, Dr. Nishan de Mel and Dr. Ravi Liyanage were the other speakers on the panel.
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By Hiran H.Senewiratne
CSE produced signs of a rebound yesterday with both indices closing positive, though turnover remained low. Central Bank Governor W.D Lakshman’s recent statement on managing foreign reserves gave some boost to the market yesterday, stock market analysts said.
The index experienced a zigzag movement within the early hours of trading; thereafter, it recorded a slight up-trend as it reached its intraday high of 7,439. Later, the market witnessed a down-trend at mid-day, followed by a sideways movement and closed at 7,372, gaining 43 points during the month of February, market sources said.
It is said the banking sector dominated turnover with a contribution of considerable parcel trades in Sampath Bank, Commercial Bank and HNB.
Further, the Commercial Bank’s impressive quarterly results during the recent turbulent period also built investor confidence. Commercial Bank was able to register a18 percent net interest income when other banks were reporting a decline. Its share price increased by Rs. 3 or 3.5 percent. On the previous day, its shares started trading at Rs. 85 and at the end of the day they moved up to Rs. 88. Due to the positive growth results, the bank announced a Rs. 4.40 dividend per share, plus a Rs. 2 script divergent for every share.
Further, Sampath Bank shares also appreciated in both crossing and retail. In crossings its shares appreciated by Rs. 1.At the end of the day they moved up to Rs. 154.50. In the retail market, its shares moved up by Rs. 2 or 1.3 percent. Previously, its shares fetched Rs. 154 and at the end of yesterday they moved up to Rs. 156.
Amid those developments, both indices moved upwards. The All Share Price Index went up by 104.48 points and S and P SL20 rose by 67.78 points. Turnover stood at Rs. 3 billion with four crossings. Those crossings were reported in Sampath Bank, where 3.9 million shares crossed for Rs. 602.2 million, its share price being Rs. 154.50, HNB 375,000 shares crossed for Rs. 39.4 million, its shares traded at Rs. 105, Pan Asia Power 9.5 million shares crossed for Rs. 33.2 million, its shares traded at Rs. 3.50 and Access Engineering 1.2 million shares crossed for Rs. 28.2 million; its shares traded at Rs. 24.
In the retail market top five companies that mainly contributed to the turnover were, Expolanka Rs. 450 million (10 million shares traded), JKH Rs. 205 million (1.3 million shares traded), Browns Investments Rs. 199 million (34.9 million shares traded), Sampath Bank Rs. 191 million (1.2 million shares traded) and Dipped Products Rs. 137.7 million (2.8 million shares traded). During the day 101 million share volumes changed hands in 18046 transactions.
During the day, Expolanka, the biggest contributor to the turnover, saw its share price appreciating by Rs. 6.20 or 15 percent. Its share price quoted on the previous day was Rs. 41 and at the end of trading yesterday it moved up to Rs. 47.
Sri Lanka’s rupee quoted wider at 193.50/195.50 levels to the US dollar in the spot next market on Thursday while bond yields remained unchanged, dealers said. The rupee last closed in the spot market at 194.50/195.00 to the dollar on Wednesday.
