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The Anura Kumara Dissanayake (AKD) government’s 2026 budget has generated debate across Sri Lanka’s political and economic spheres. However no proposal has attracted as much broad moral approval—as the decision to substantially increase the daily wage of plantation estate workers more recently increasingly referred to as Malaiyaha Tamils.

For decades, the plantation community has remained one of the most marginalised, economically deprived, and politically overlooked segments of Sri Lankan society. Against this backdrop, the wage hike stands out as both a long-overdue correction and a reflection of a commitment to social justice.

At the same time, several features of the proposal—especially the government’s decision to subsidise a portion of the wage increase instead of compelling plantation companies to shoulder the full cost—have raised difficult questions regarding economic logic, political incentives, and legality. Understanding these tensions requires revisiting the historical neglect endured by plantation workers, the current economic structure of the plantation sector, and the political legacy surrounding the community.  

The plantation workforce has long been trapped in a cycle of structural poverty. From colonial times until well after independence, estate workers were treated as a disposable labour reserve—underpaid, underrepresented, and denied basic citizenship rights. For years the Sri Lankan state not only neglected their welfare but actively excluded them from political belonging.

It was only through national political interventions that their status began to change. The Sirima–Shastri Pact of 1964, provided the basis through which a significant portion of the stateless plantation population eventually gained citizenship. With citizenship came the franchise, and with the franchise came parliamentary representation.

Even Saumyamoorthy Thondaman, who went on to become the face of plantation politics, could only secure an electoral mandate after the workers obtained their voting rights—prior to that, he served only as an appointed but unelected MP.

This context is essential: plantation political leaders have historically been powerful brokers, often holding ministerial portfolios, yet the living conditions of estate workers changed little. Their wages remained among the lowest in the country, living standards stagnated, and key social indicators—from nutrition to education—lagged far behind national averages. Despite decades of promises, a structural transformation of plantation livelihoods never materialised.

Against this backdrop, the NPP government’s wage proposal is not merely an economic intervention; it is an attempt to correct a deep historical injustice.

The 2026 budget proposes a significant increase in daily wages for estate workers, finally moving toward parity with national labour standards. The wage earned by a plantation worker has long failed to meet even basic living requirements. Real wages have eroded due to inflation, currency depreciation, and rising costs of housing, food, and essential goods.

Multiple reports—including those by the Central Bank and independent labour economists—note that plantation wages, when adjusted for inflation, are lower today than they were nearly a decade ago. At the same time, estate workers face some of the most demanding labour conditions in the country: long hours, harsh terrain, and monotonous physical work tied to strict daily targets.

Given these realities, the wage hike is more than justified. Social justice arguments alone warrant it. From an economic standpoint, raising wages is also likely to improve labour productivity, reduce worker turnover, and stabilise household consumption in plantation regions—benefits that extend well beyond the estates themselves.

This makes the proposal one of the most socially progressive elements of the AKD administration’s first national budget. Yet the design of the proposal has raised important concerns.

The most baffling aspect of the budget proposal is the government’s decision to subsidise part of the wage increase. The rationale offered by some is based on short-term macroeconomic pressures facing the plantation industry—declining global tea prices, rising production costs, and the impact of climate variability.

However, plantation companies, particularly the larger listed Regional Plantation Companies (RPCs), have reported substantial profits in recent years. While profitability varies across producers, several RPCs posted strong earnings due to export-driven performance, currency depreciation, and improved global demand for premium Ceylon tea.

In this context, it is difficult to justify why the state—already struggling with fiscal constraints during an IMF-supported economic recovery—should absorb a portion of private sector wage obligations. Doing so raises multiple concerns.

It contradicts the government’s stated commitment to fiscal discipline and targeted social spending.

Subsidising wages allows plantation companies to externalise labour costs, reducing their incentive to improve efficiency or adopt modern management practices. Public funds, collected from the entire population, would be used to support companies capable of meeting their own labour obligations.

This creates a scenario in which the poorest workers receive long-overdue relief, but at the collective expense of the taxpayer—while plantation companies effectively benefit from a transfer of public resources.

Beyond economic logic, the legality of the proposed arrangement has also been called into question. Labour law in Sri Lanka establishes clear employer obligations regarding wages, benefits, and conditions of employment. A central principle is that wages must be borne by the employer, not by the government on behalf of the employer.

If the state directly subsidises regular wages, it may blur or even violate statutory definitions of employer responsibility. This could trigger legal challenges from labour unions, opposition parties, or civil society groups.

Moreover, such subsidies may set an unsustainable precedent: other private industries could demand similar treatment, threatening the integrity of labour law and public finance.

The plantation wage debate is not just about numbers—it is about the future of the plantation economy itself. For decades, the sector has struggled with outdated management models, low replanting rates, underinvestment, and resistance to diversification.

Instead of subsidising wages, the government could have used this moment to introduce deeper structural reforms:

n mandating corporate reinvestment in worker housing, mechanisation, and replanting;

n restructuring ownership models to increase worker equity;

n encouraging diversification into high-value crops or agro-tourism;

n introducing productivity-linked wage systems designed collaboratively with unions, rather than unilaterally by RPCs.

A bold reform agenda would have moved the plantation sector from extractive labour practices toward a modern, sustainable, and equitable economic model.

The wage increase is a necessary first step. But the manner in which the burden is shared risks diluting its transformative potential.

The government’s decision to raise plantation wages is unquestionably a long-overdue measure that corrects decades of neglect. It reflects a moral and political commitment to uplifting a community that has been systematically marginalised since independence.

Yet the decision to subsidise the increase using public funds, despite the profitability of many plantation companies, is economically questionable and legally problematic. It risks entangling the state in private wage obligations, distorting market signals, and diverting scarce public revenue at a time of fiscal strain.

Ultimately, the success of this reform   will depend on whether the government can move beyond temporary subsidies and begin confronting the plantation sector’s deeper structural issues. As the country debates the 2026 budget, one truth stands above all: the Malaiyaha Tamils deserve better—not just higher wages, but a future built on dignity, fairness, and genuine economic empowerment. (javidyusuf@gmail.com)