A senior representative of the plantation sector has warned that the government’s latest decision to raise plantation workers’ wages, made without consulting industry personnel, could negatively impact production.
Speaking on condition of anonymity to Mirror Business, he said the proposed wage increase should have been tied to productivity.
“Over the years, we have observed that every time a wage hike is granted, around 10,000 estate workers stop working regularly,” he noted.
During the second hearing of the 2026 National Budget proposals, President Anura Kumara Dissanayake suggested raising the minimum daily wage for estate workers from Rs. 1,350 to Rs. 1,550, effective January 2026. He also proposed a daily attendance incentive of Rs. 200, supported by a Rs. 5,000 million allocation.
The industry veteran added that past attendance incentives, which required 85 percent attendance, had successfully encouraged workers to report consistently.
“Like any agricultural sector, the tea industry cannot operate efficiently without adequate labor. For example, if we apply fertilizers to 100 hectares of land expecting 100 workers but only 50 show up, we will face significant losses,” he explained.
Sri Lanka’s annual tea output is around 250 million kilos, with local tea selling at roughly US $4 per kilo. By comparison, Indian tea averages about US $2 per kilo, with Assam alone producing approximately 750 million kilos annually.
He highlighted that 65–75 percent of industry revenue is spent on wages, leaving only 25–30 percent for essential inputs such as fertilizers.
“If wages rise, we will have to cut costs elsewhere, which will inevitably affect production,” he cautioned.
He further noted that while expanding cultivated land could offset higher labor costs, it may compromise tea quality, as buyers are unlikely to pay US $4 for lower-grade tea.
The industry figure also emphasized that many state-owned estates remain financially distressed, with some unable to pay EPF, ETF, and gratuity dues for 10 to 12 years.
“This industry survives because of the private sector, even though it is often accused of exploiting workers. Government estates received subsidized inputs and still operate at a loss,” he stressed, noting that the private sector has invested nearly Rs. 120 billion into the industry.
