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Sri Lanka plantations could cover wage hike with economic relief package: Minister

ECONOMYNEXT – Sri Lanka’s plantations firms will be given benefits in the form of free fertilizer, tax cuts and credit support, which would give space for them to give salary hike decreed by President Gotabaya Rajapaksa workers, co-cabinet spokesman Romesh Pathirana said.

“We are hopeful that they should be able to pay these wages because we have provided a economic relief package,” Minister Pathirana said.

“There is also a revival program for tea sector – the tea sector modernization program- that is why we said we need an efficient workforce for which we need to satisfy them.

“This is a long standing request from the estate sector worker the politicians and trade unions to increase the wages to 1000 rupees.

“And this was a promise given by Excellency the President Gotabaya Rajapaksa, so we have fulfilled that pledge.”

The cabinet of minister had approved the decree to raise the daily wage to 1000 rupees from the current 700 rupees from March 01.

When the salary was hiked last February from 500 rupees to 700 a day regional plantations companies said the cost would be around 350 million rupees a year, based on the workforce. Firms have between 7,000 to 8,000 workers and are committed to giving 20 days of work.

The government in 2019 said a 50 rupee a month supplement would be given for a year from tax payer money.

Minister Pathirana said the tea estates should be makings savings on fertilizer and tax cuts which could be channeled to the workers.

“We have spoken to them (plantations companies) and given the financial relief package also considering that we are providing fertilizer free they should be able to manage it,” he said.

“They should be able to manage it because we have given reduction in VAT, Economic Service Charge. So there is a moratorium in relation to loan, we are going to cut down interest, so considering all that they should be able to fall in line and provide relief to the estate workers.”

It is not clear whether any savings from fertilizer and taxes will fully cover the wage costs.

A senior official of the Planter’s Association which represents plantations companies said they were still working out the impact and were not able to comment on Wednesday, a religious holiday in Sri Lanka.

Though there expectations that tea prices will pick up in line with other global commodities which have already gone up, any sanctions on Iran may affect demand for tea.

“Many tea companies are already making losses,” Atchuthan Srirangan Assistant Manager Research at First Capital Holdings, an investment banks said.

“The profitability of plantations companies will be affected.”

Last year stock prices dropped after a the wage hike, which however was expected as it was a negotiated collective agreement. (Colombo/Jan15/2020)