ECONOMY-SRI LANKA: Plantation Protest Threatens Main Export

By Feizal Samath Reprint | | Print |

Feizal Samath

COLOMBO, Mar 5 2001 (IPS) - A worsening wage dispute on Sri Lanka’s plantations, is threatening the country’s main export and is said to be slowing down the national economy.

Economic growth, which topped five percent last year, but is estimated to dip to four percent or less this year, could slip further if the labour crisis is not resolved soon, warn industry analysts and economists.

President Chandrika Kumaratunga is expected to intervene to settle the issue at a time when the nation’s foreign exchange reserves are running precariously low. The government, which once controlled the tea and rubber plantations, has acted as a mediator in similar disputes in the past.

A panel set up by the president to look into the demands of the estate unions, failed to reach any conclusions in its report submitted early March.

“We are facing a grave crisis in the plantations. We could lose the confidence of international buyers and prices would surely suffer. Restoring this confidence is not easy,” warned Dickie Juriansz, chairman of the Ceylon Tea Traders Association.

Since early February, the Ceylon Workers’ Congress (CWC) — Sri Lanka’s biggest plantation union representing more than 500,000 workers of Indian origin — is demanding a monthly pay rise of 400 rupees (about five U.S. dollars).

The union says this is necessary to meet a sharp rise in living costs in the past year, specially as a similar hike was awarded to public and private sector workers last year.

The CWC has threatened to step up what it calls a “mild protest”. The Employers Federation of Ceylon, representing employers across the country, says such action will create chaos on the estates and huge financial losses for firms.

Sri Lanka produced 284 million kg of tea in the year 1999, according to latest available published data by the Central Bank. Of this, 268 million kg was exported.

Tea estates on the Indian Ocean island nation were expected to produce 300 million kg this year. The tea industry employs close to 750,000 people in a country of some 19 million people.

Sri Lanka is the world’s largest tea exporter and the product is the country’s main export. The crisis comes at a time when the foreign exchange reserves have slumped from a comfortable 2.5 billion dollars two years ago, to 950 million dollars by the end of last year.

With just enough foreign exchange to meet one and a half months of imports, the Central Bank was forced to free the rupee on Jan. 23. The bank, which normally fixes the U.S. dollar exchange rate, said it would let this now be determined by market forces.

The Planters Association of Ceylon, which represents tea plantation owners, in a full-page newspaper advertisement Sunday, titled “The death of an industry”, said the industry was wilting and an additional wage demand could be disastrous.

“Given the losses we are already incurring, any further increase in labour costs would sound the death knell for the industry,” the association noted.

The agitating workers are staging sit-down protests, patterned on Mahatma Gandhi’s non-violent ‘satyagraha’ method.

Though the tea estate unions deny that the workers are on a go- slow protest, estate companies complain that work on the plantations has been badly hit.

According to the tea traders’ associations, tea purchased at the Colombo export auctions, is not reaching exporters from the plantations.

This, it noted, would lead to the cancellation of a number of contracts, tarnishing Sri Lanka’s image. Production has been cut down and the quality of the product has also suffered, the tea traders said.

Political observers say the plantation protest is a test of strength for Ceylon Workers’ Congress leader Arumugam Thondaman, who took over from his famous grandfather Saumiamoorthy who died some years ago.

Saumiamoorthy Thondaman, a Tamil of Indian origin himself, was the founder of the CWC and held in high esteem by the workers and their families.

“The younger Thondaman, who has been facing a bitter split in the party since he took over, wants to prove to his workers that he is capable of winning demands for them,” said a political analyst, who did not want to be identified.

The protest has drawn unusual support from some government politicians who are also labour leaders. Even anti-CWC unions are backing the agitation.

Higher Education Minister Indika Gunawardene, who is also chairman of the Red Flag Union, joined the sit-down protest late February at Hatton in Sri Lanka’s central hills region.

Chandrasiri Gajaweera, a junior minister of vocational training and also a trade unionist, too joined the workers’ protest for a few hours on Feb. 28.

“The demand for a 400-rupee wage rise per month is a reasonable one and the statement of the estate companies that this could not be done was not accepted,” he was quoted as saying.

Thondaman has rejected assertions by plantation companies that they would lose millions of rupees if forced to accept the wage increase.

“Plantation companies have gained substantially by the recent depreciation of the rupee. The extra payment won’t have any impact on their bottomline,” he told reporters.

Estate owners counter that Sri Lankan plantation workers are the highest paid in the world. The daily average earnings of a Sri Lankan worker is 121 rupees compared to 114 rupees for a worker in Kenya, 107 rupees in Tanzania, 107 rupees in southern India and 70 rupees in north India, according to the association.

The industry is seeking productivity-linked wages, arguing that commodities’ prices are subject to sharp fluctuations. But this has been rejected by the unions.

Sri Lanka’s ruling People’s Alliance (PA) and the main opposition United National Party (UNP) also support fixed wages for plantation workers.