Bottom Up

How work done at the bottom-level might have answers to the survival of Sri Lanka’s tea industry

By Echelon.

Published on February 16, 2014 with No Comments


The island’s key agricultural export is running out of labour. Unless the industry responds and remains flexible during times of changing labour dynamics and socio-political realities, survival over the next few decades – in the face of the evolving market – is going to be tough. Some changes, however, are taking place which might give it a fighting chance: and along with it change how employees are viewed in an extremely labour-intensive industry. The tea sector accounts for 15% of the nation’s foreign earnings and provides direct employment to over 310,000 people, the majority of them women. The industry has come a long way since the first commercial tea venture – Loolecondera estate in Kandy – was started in 1867. Some things, like the hand-picking of the tea leaves – remain the same. The market however, hasn’t.
There were many factors fuelling the industry, but one stood out more than any others: the cheap labour that was imported to Sri Lanka from India’s south. The labour force has been dwindling since the turn of the century.
Until 1927 minimum-wage laws didn’t cover the sector’s employees. They were underpaid and overworked. By 1963, more than a million people were living – and working – in the tea estates in Sri Lanka.
By 1981, a third of them had left for India.
Labour issues and mediating labour issues is a frequent problem for an industry like tea, which is heavily dependent on manual labour. The largely Tamil workforce, which is among the poorest in the country, is increasingly choosing to escape plantation life for opportunities in growing urban areas, resulting in a sector-wide labour shortage.

When land reform laws were introduced in 1972, most of the private-sector estates were nationalised. Suddenly there was interest in making healthcare and education accessible to the – still stateless – population of the tea sector labourers. Children learnt how to read and write. Then they left the line rooms.
On the flipside, increasing cost of production, changing dynamics of trade and consumption of tea and tea products, and the external threats of economic crises and climate change have had serious effects on the industry, which stood at Rs28 billion in 2012. The market is also being eaten into by rivals, although the brand of “Ceylon Tea” is still holding up strong.
tea8Globally, India and China are two of the biggest rivals. Both countries are also heavy consumers. China’s exports – around 150 million kg each year – are only half of what Sri Lanka exports. However, there are also a few new countries dipping their toes into the market: Uganda, Argentina and Indonesia. A few central African countries too are trying their luck.
Whilst most efforts at raising the competitive advantage are traditionally geared towards responding to the market, and to grow the market by increasing demand, research shows that changes done back home, at the plantation worker level, would yield effective results in improving business. In Sri Lanka, these changes are working, albeit at a smaller scale.
In the case of tea, improved relations and standards come through an initiative called the Community Development Forum (CDF), implemented by CARE, a major humanitarian relief agency whose work in Sri Lanka predates the United Nations. CARE-Sri Lanka’s plantation program established Community Development Forums (CDFs) as mechanisms enabling different actors within the estates (such as management, women, youth, trade unions, government officials and existing Community-Based Organisations) to engage each other and advocate for benefits, while transforming their traditionally hostile relationship into a more positive one.
The CDF acts as a mini-parliament, enabling dialogue between all concerned stakeholders. It confers a double advantage: it makes obtaining certifications easier through improved fulfilment of the labour, occupational health and safety and other base criteria, and it streamlines the administrative process once the certification is obtained.
Research also shows that non-wage issues, such as employee-employer relationships, mental and physical well-being, and housing conditions also play a key role in worker satisfaction in the plantation sector. A research conducted by the World University Services Canada (WUSC) with the Center for Poverty Analysis (CEPA), showed that whenever employee-employer relationships were improved, it was acknowledged widely by plantation sector workers, which resulted in the more tangible effects of workers staying on in the estate, reducing absenteeism and as a result impacting productivity.
The study, headed by CEPA’s Karin Fernando, recommends choosing social welfare programmes to have more spread, and to scale up some activities such as improving the relationship between employers and employees. Fernando’s research showed that wages (along with formal statutory benefits) and individual health were directly linked to productivity.
Wages do matter. In a study conducted in West Java, Malawi and Assam by the Ethical Tea Partnership, researchers found a need for more constructive and effective dialogue on wages between different stakeholder groups. More trust needs to be built between companies, civil society and trade unions at both the national and international level – trust which then translates into better worker satisfaction and smoother workflow, the research showed.
CARE’s research shows a 10-20% increase in the volume of tea plucked by the workforce. Members of the CDFs also had reduced the incidences of labour disputes: this meant the reduction of 16 management hours per week spent mediating disputes. The real-life returns of innovative systems of management and worker relations seems to be paying off. Overall, an assessment on social return on investment by CARE showed that for every dollar invested in CDFs, tea estates gained an additional US$26. Even if the social-welfare aspect is set aside temporarily, this still makes a case for empowering workers.
Middle management, which in the tea industry has the most direct interactions with the pluckers, also feel the impact of worker empowerment. “When I came to this estate, I was used to the conventional way of management where we dealt with the workers very formally and kept them at arm’s length,” says Prasanna Premachandra, a Manager for Watawala Plantations. When he entered the company, the CDF had already been established.
tea9Because of his conventional training, Premachandra was initially sceptical and reluctant to participate. “But soon I was struck by the way people were solving their problems.” Premachandra, who has now moved onto a different estate in the same company, wants to replicate the model again.
Research recommends that businesses should stop treating worker empowerment as a matter of philanthropy and treat it as it really is: a core element of sustainable business. This means investing in systems, such as CDFs, that can promote empowerment. International brands should also encourage suppliers to adopt these models, both as a means of their own supply chain assurance and as one facet of implementing international standards such as the United Nations Global Compact or the Guiding Principles on Business and Human Rights.

Non-governmental organisations (NGOs) like CARE International are rooted in the communities that serve tea plantations. Despite the islandwide distrust of NGOs which work on peace and governance issues, NGOs are widely trusted by the community and can act as facilitators in designing the most appropriate strategies to engage workers in different contexts. However, they should also work towards building models which can be incorporated into a company’s operating systems in the long-term, to ensure that the innovations are accepted by the industry, sustained, and subsequently expanded.
Governments and donors will continue to play a crucial role in seeding innovative models and transforming thinking on empowerment, but they should also increase calls to businesses themselves to adapt and especially to fund models that are proven, sustainable and ultimately to their own benefit. For some markets, social and environmental good-practices are a necessity. By empowering workers, estates benefit from access to new markets. Social and environmental certifications require social audits to prove that international labour standards are met.
Whilst the production can be improved, parallel to improving the working conditions of the sector’s workers, more work has also to be done in responding to the changing market dynamics, especially in Europe.
The tea industry also sees new competition from non-tea beverages, says Dilhan Fernando from Dilmah. Fernando’s Dilmah has shaken up the traditional market and is available in over 90 countries worldwide. Non-tea beverages and coffee are slowly eating into the market previously dominated by tea, and Fernando says that in markets like Germany, non-tea herbal infusions dominate about 70% of the market.
Parallel to the work that can be carried out at the local, producer level, the industry has to also innovate in order to stay competitive. For Janaki Kuruppu, the Chairperson of the Sri Lanka Tea Board, this means value addition. “We’re still with tea bags and tea packets,” Kuruppu said at a recent forum in Colombo on tea and community empowerment. “Tea has expanded into food and non-food areas, and we need to expand into those areas as well.” “Innovation is not merely sticking tea into a paper bag.”


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