Business Times

Trouble brewing on plantations

Ever before negotiations begin on the next round of the Collective Agreement (CA) between plantations workers via their representatives (trade unions) and plantations companies, trouble is brewing on the plantations.

As usual workers are demanding higher wages pointing out rising cost of living and good tea and rubber prices with the JVP also jumping on the bandwagon and joining the call for increased wages. The two-year CA ends on 31st March 2011. This agreement though initialled in September 2009 by three unions and the Employers Federation of Ceylon (EFC) on behalf of plantation-member companies, was given retrospective status from March 31 of that year. The negotations got bogged down and protracted over a new productivity incentive clause which, according to some unions, is not working perfectly.

Some workers complain that they are not getting this segment which is Rs 30 of the Rs 405 per day wage per worker due to a dispute in its computation. If that is anything to go by, negotiations due to begin between the two sides most probably after the March local council elections would be as fierce and confrontational as the previous one. The negotiations have been delayed by the polls as union officials are involved in electioneering for their respective party candidates. The companies and the government must be surely happy with the delay as any pre-election negotiation would have placed the unions at an advantage, leveraging on the elections and making better wages conditional to their backing to any government candidate.

However when the discussions begin, both sides are unlikely to give in to any pressure. Nevertheless the biggest problem the companies will face this time is being confronted by workers and their representatives that tea and rubber prices have been doing extremely well over the past year. Rubber has reached record levels over the past 12 to 18 months while tea prices are doing equally well.

Furthermore another realisation is the rising cost of living, an issue that would dominate the negotiations. On the other hand, companies say that while rubber is on a roll, high tea prices may not reflect the actual picture. Low growns are doing well but high and medium growns are not as profitable, officials of companies say adding that thereby the total tea picture could be misleading.
“We are not making huge profits as perceived,” one official claimed, adding that non-wage costs are also going rising.

Negotiations between the two sides have often led to bitter disputes and clashes at meetings and sometimes officials walking out in anger over the years. Negotiations have, in the past sometimes led to worker strikes, which thankfully hasn’t happened in recent years.

According to the results announced in the Colombo Stock Exchange, most listed plantation companies have reported significant profits in the last quarter and are hoping for a further improvement in the next few quarters which would figure at this year’s discussions too. At the last round, the unions who endorsed the deal and signed the agreement came under pressure from other unions who pulled out saying the workers needed more.

According to some reports, these disgruntled unions are said to backing worker demand for a Rs 700 daily wage which is far above what the companies can afford to pay. “These unions could create problems during the negotiations,” a union source from the signatories of the existing CA, said.
Whether the government will intervene or not if the discussions ‘turn dirty’ or if workers threaten to resort to stronger trade union like a strike for example remains to be seen. However the government acting tough if the economy is threatened has happened in the past and in this case too, given what some political analysts call ‘a militarisation of the economy’, this is most likely to happen. The government has shown in the past that it won’t tolerate any dissent of whatever form.

However given the losses that would accrue – wages of workers and profits/operational cashflows of companies -, both sides are unlikely to allow such a situation to happen. At the end of the day, both sides need to strike a balance in their negotiation stance and not stick to previously-held, rigid positions. Both sides must be prepared to give-and-take and arrive at a wage level that is equally comfortable to both sides.

That’s of course harder done than said.Unions will fight for more than the companies’ ability to pay while the latter will be reluctant to part with its profits or trim the fat off salaries and perks of directors and senior management. With negotiations likely to get ugly, maybe the time is opportune to bring an independent mediator to help arrive at a solution that would satisfy both sides.

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