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FAIR TRADE PRACTICES ON TEA ESTATES IN SRI LANKA
by Lalith Guy Paranavitana – President and Founder of Empire Tea Services LLC, USA. www.empiretea.com

The tea industry in Sri Lanka was started by the British Planters nearly 150 years ago. The first commercial tea estate (Loolcandura) was planted by James Taylor in 1867. The British pioneer planters were a law unto themselves, but were also benevolent owner/operators because their success depended on the work force. During these times there were no organized unions to protect the rights of workers, but the planters had a fairly satisfactory system in place, governed by the Planters Association. Workers lived on the estate and were provided housing, water service, medical facilities, child care and even an elementary school for their children. The cost of these social programs was built into the cost of production. Dry rations were distributed through a store on the estate and the cost deducted from the wages. The workers were pretty much dependent on the estate
management and vice versa. In about the early '50s trade unions started recruiting estate workers and formed several estate worker's trade unions. Initially the British owned tea companies opposed them, but the laws in the country were such that they were compelled to recognize them. The unions grew very strong and there was much agitation and clashes with management over several major issues like wages, living conditions, work norms, social issues, etc. 

After the British government gave independence in 1949 to Sri Lanka or Ceylon, as it was then called, organized labor became more powerful and clashed with management frequently. The estates were at this time managed by agency houses looking after the interests of the owning companies. The agency houses were located in the city of Colombo and they appointed Superintendents (Managers) to live on the estate and manage it for them. Like all organized labor unions, they fought for worker rights and minimum wages etc and the labor laws were becoming more and more favorable towards the workers. Over a period of time worker benefits, wages and work norms were regulated in favor of the workers under the auspices of the labor department. 

Today, some of these union leaders are elected members of parliament in the Democratic Government of Sri Lanka and continue to be Presidents of the Workers Union also. One might even consider this a conflict of interest, but that is how it is! Wages (daily, not hourly) are set by the government and workers have to be guaranteed 5 days work per week and have to be given 8 hours work a day. Unlike in the US where hourly paid workers can be sent home if there is insufficient work, in Sri Lanka any person who reports for work in the morning has to be given a full days work or paid full wages in lieu!!! Disciplinary action and termination of services of estate workers is contested by the unions at Labor Tribunals which come under the purview of the Department of Labor. A worker who is dismissed from employment cannot be evicted from the house that he/she has been living in on the estate!!! This is the law!!! In a sense, estate management is crippled as a result of such stringent labor regulations. Unlike here in the US where the laws are pro management, in Sri Lanka they are pro labor and stifles management. Perhaps this is one of the reasons why it is still a third world country whereas countries like Singapore which were economically behind Sri Lanka in the '50 and '60s are well
ahead today and on par with any western country. Tea estate worker’s rights are upheld in Sri Lanka more than a comparable worker in the USA!!! As such when people talk about fair trade, they should put everything in perspective and not merely go by a label. According to the facts described above, every commercial tea estate in Sri Lanka (about 650) qualifies for fair trade certification by default!!!

To illustrate my point, I would like to document some of the benefits that tea estate workers are entitled to by law, and in some instances by practice (valame) or tradition.

1 Wages are set by the government of Sri Lanka. Usually this is done in conjunction with the Trade Unions and the Estate Employer’s Federation under a collective agreement renewable every 2 years. However, in certain instances (such as in 2006) trade unions resorted to strike action to force a wage increase of 25%.
2 Workers are Guaranteed 40 hour work week (5 days per week) and have to be paid the wages set by the government (as described above).
3 Workers have a right to join trade unions and for union subscriptions to be deducted from the payroll. Trade union leaders have to be given time off to represent urgent matters to the management.
4 Casual laborers have to be made permanent after 1 year of employment. The first day of casual employment is regarded as the date of first employment for purpose of computing retirement benefits.
5 Permanent workers must be paid the wages set by the government, plus contributions to a Provident Fund (retirement account) at 10% - worker and 15% - Employer.
6 Paid vacation of up to 42 days (holiday wages and attendance bonus) depending on the attendance in the previous year, have to be paid.
7 Housing must be provided along with water service and sanitation. Retired or dismissed workers cannot be evicted from their houses even though worker housing is owned by the management.
8 Around worker housing a small portion of land is allocated for a home garden for cultivation of vegetables etc., depending upon land availability. Permission is also granted for the construction of a cattle shed for the purpose of raring cattle. Ravines and grasslands are accessible free of charge to workers to cut fodder.
9 Disciplinary action must be preceded by a formal inquiry. Termination of a worker is always contested by the union and will most likely be followed by Labor department intervention. If not resolved, trade union action such as ‘go slow’ or ‘strike’ may be resorted to and finally, the union would appeal to the labor tribunal (labor courts), for unjust termination of the worker. These are
provisions under the labor laws of Sri Lanka.
10 Workers and their dependents have to be provided medical benefits. A health practitioner is employed by the management and a well stocked dispensary is available. Free transport to and from the nearest hospital is provided for those that need hospitalization. Workers are entitled to sick leave pay at the rate of ½ days wages per day of hospitalization, up to 14 days.
11 Pre-natal and post-natal clinics are available for women and there is a midwife employed by the management under the purview of the health practitioner. A welfare supervisor employed by the management liaises between management
and the social welfare of workers.
12 Incentives are provided for birth control.
13 Pregnant workers are given 90 days paid maternity leave for the first two children and 45 days for later pregnancies. After birth, mothers are given time off for feeding their infants, twice a day at 10 am and 2 pm.
14 Pre-schools and infant/toddler day care centers (crèches) are provided on the estate, and trained workers are employed by the management for this purpose. Mandatory immunization programs are strictly monitored. A free nutritional supplement (Thriposha) is given to children up to 1 year. This is a UNICEF sponsored program, under the auspices of the health department of Sri Lanka.
15 When there is a death of a worker of a retired worker, work on the estate is cut short by 2 hours so that workers can attend the funeral. There is no cut in wages. Funeral expenses are paid for workers and their dependents. The adage ‘womb to
the tomb’ could not be more appropriate than when it is used to describe the relationship between a worker and the estate.
16 Retirement benefits – Mandatory after 5 years of employment, and is computed at the rate of 1 month wages for each year of service. This is in addition to the Provident Fund described above. It should be very clearly understood that the cost of all these social welfare programs and benefits are the responsibility of the management and such expenditure is included in the cost of production of every pound of tea that is produced on the estate. No subsidies or grants are given by the government.

From the above facts it would be apparent to any reader, that the Tea estate workers in Sri Lanka are well looked after by the management and the Government of Sri Lanka and in no way are they victimized or exploited. To the contrary, their conditions of employment are superior to most workers in developed countries in relative socio-economic terms. Therefore ‘labels’ like Fair Trade Certification which are controlled by Western organizations in developed countries, causes a disservice by selling and profiting from their ‘certification’ on criteria set by them.

If the facts are not presented to the consumer in the manner that they should be, the labeling of 'Fair Trade' would merely permit unscrupulous companies in the tea importing countries to create yet another marketing niche, this time with dubious and misleading intentions.

Lalith Guy Paranavitana is the President and Founder of Empire Tea Services LLC, a specialty tea company in the USA involved with import and blending of high end teas from around the world. He was a Tea Planter (Tea estate manager) in Sri Lanka from
1970 - 1987 and then a Director of one of the largest tea corporations in Sri Lanka till 1989 when he immigrated to the US (please check out the 'about us' page on the web site www.empiretea.com ). He was trained by a British tea company called George Stuart & Co. which, like all other privately owned tea companies was nationalized in 1973. Thereafter he was absorbed into the Government owned State Plantations Corporation, became a Superintendent in 1977 and a Director in 1987. He travels to Sri Lanka every year to visit tea estates and meet with tea management executives. Tea estates were denationalized and sold back to the private sector in 1994. He conducts Tea Tours to Sri Lanka with the intention of showing tea entrepreneurs in the USA and worldwide, the fallacy of Fair Trade Certification in the Sri Lanka tea industry.