Sri Lanka’s Tea Industry & Labour Unrest
Team Leader: Thurka Brabaharan
Primary Contributor: Maren Flemming
Sri Lankan tea has traditionally been a major export for the country, and the industry is an important source of employment for many citizens who live there. However, the industry has been on decline in recent years due to workers facing comparatively low wages and a decline in the productivity of the industry. Tea remains a significant contributor in the Sri Lankan economy, making up 14.6 percent of their total exports.[1] Possible reasons for the decrease in productivity are due to the reluctance by executives in the private sector to change worker practices until the government takes charge and implements the changes first through policy.[2] The slow productivity and low wages have caused significant labour unrest in the country, resulting in strikes and protests.
The plantation workers and their families, who make up 4.4 percent of the country’s population, live in what is known as the “estate sector” and are largely isolated.[3] As of July 2017, the estimated living wage for workers was 23,314 rupees, or 132 USD.[4] However, the prevalent wage remained at 19,086 rupees or 108 USD.[5] Real wages in the tea industry are found to be the lowest when compared to other major sectors of the Sri Lankan economy, such as the rubber and coconut industries. The wage rate is not the only factor contributing to the low quality of life for Sri Lankan workers, poor management of employees and an emphasis on “manpower workers” has resulted in corporations putting the risks of business practices on to the workers themselves.[6] These workers lack job security and safety protection, and receive low wages as a result of the precarious nature of their employment. In a panel hosted by the Institute of Policy Studies of Sri Lanka, it was found that Sri Lankan citizens, particularly young people, value a job with substantial social protections over a high salary, neither of which the tea industry offers.[7]
One proposed solution to mitigate both the problem of worker unrest and unlivable wages is the use of monetary incentives to workers by the Sri Lankan government. If the government attempts to motivate workers through offers of monetary gains and other benefits, the private sector would likely follow suit in order to remain competitive. Implementing monetary incentives would likely decrease labour unrest, as workers would be compensated for their efforts. Additionally, this solution would likely make the industry more profitable, as reduced worker unrest would contribute to a substantially more productive workforce. Therefore, benefitting the workers, the government, and private businesses. The risks of this solution are that it is based on government action and involvement in the economy, however, politics in Sri Lanka have recently been extremely unstable as the country’s changing government has created intense turmoil. Therefore, a more realistic solution is for businesses in the private sector of the tea industry to emerge as leaders in making changes to worker practices and compensation.[8] In order to remain competitive in an increasingly global market, Sri Lankan businesses should focus on improving the quality of the product and strengthening the brand reputation of the teas they sell. For many consumers who purchase tea from entrepreneurial Sri Lankan businesses, fair treatment of workers may also be a priority. Therefore, if businesses in the private sector adjust their focus towards product quality and worker satisfaction, the issue of worker unrest would be mitigated. Additionally, if these changes are correctly communicated to consumers through marketing messages, they could have a positive effect on the profitability of businesses in the industry. By doing so, the private sector would have a competitive advantage over the public sector and other tea industries globally, and would be incentivized economically to improve worker’s quality of life through providing them with monetary incentives and benefits such as safety protection or employment security.
[1] Institute of Policy Studies of Sri Lanka, “Sri Lankan Living Wage: Estate Sector (Tea),” Global Living Wage Coalition, Accessed November 20, 2018. http://www.ips.lk/wp-content/uploads/2017/08/GLWC-Validation-Sri-Lanka_pj.pdf.
[2] Saman Kelegama, Dileni Gunewardena, eds. Economic and Social Development under a Market Economy in Sri Lanka: Buddhadasa Hewavitharana Felicitation. Vol. 2, Institute of Policy Studies of Sri Lanka, June 2010, 12. Accessed November 22, 2018. http://www.ips.lk/wp-content/uploads/2017/01/Economic-Social-Development-Vol.II_.pdf.
[3] “Living Wage for the Estate Sector of Sri Lanka: Is it Sufficient?” Institute of Policy Studies of Sri Lanka, August 24, 2017. Accessed November 20, 2018. http://www.ips.lk/living-wage-estate-sector-sri-lanka-sufficient/.
[4] Ibid.
[5] Ibid.
[6] Priyanka Jayawardena, “Transforming “Manpower Employment” to Decent Work of Greater Quality,” Talking Economics (blog), February 19, 2016, Accessed November 22, 2018. http://www.ips.lk/talkingeconomics/2016/02/19/transforming-manpower-employment-to-decent-work-of-greater-quality/.
[7] “Living Wage for the Estate Sector of Sri Lanka: Is it Sufficient?” Institute of Policy Studies of Sri Lanka, August 24, 2017. Accessed November 20, 2018. http://www.ips.lk/living-wage-estate-sector-sri-lanka-sufficient/.
[8] “Sri Lanka: Political Turmoil Puts Rights At Risk,” Human Rights Watch, October 27, 2018, Accessed November 22, 2018. https://www.hrw.org/news/2018/10/27/sri-lanka-political-turmoil-puts-rights-risk.
