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Inaugural address by the Minister of Plantation Industries, Lakshman Kirella at the ILO Regional Meeting on industrial relations issues and promotion of social dialogue in the plantation sector, held at Hotel Galadari on May 15, 2002.

A cordial industrial relationship is one of the crucial factors for economic success in the present highly competitive business environment. It is essential not only for increasing profits of business enterprises and also the revenue of government, but also for creating a better quality of life for workers employed. Efforts are therefore required to make employers, plantation workers and trade union leaders and the public officials realize that our future competitiveness depends on sound industrial relationships.

The globalisation of trade under World Trade Organisation could have some serious repercussions on plantations products and markets. If we remain in commodity markets by producing the same old product in the same old way, our revenue will be further reduced as prices for commodities are declining the world over while the costs are moving up.

We have to move down the value chain, integrate forward and undertake more value addition to our planation crops to generate a higher income.

For this purpose, we have to modernise our production processes and adopt best and innovative practices. When we undertake modernisation programs in the plantation sector, new industrial relation issues will come up.

We cannot address those issues unilaterally and the issues may be complex. An effective social dialogue of a higher order has to be promoted to develop new policy measures to address these new industrial relationship issues.

I am aware that during the technical sessions, you will discuss in detail, the impact of improvement of labour relations on productivity and share the experiences of member countries of the South Asian Region. This is very beneficial as we have social and cultural similarities. Our labour force comes from the larger society and we cannot afford to alienate them as happened during the past.

They are our partners and the development is for them as they form the majority of our populations. They should engage in productivity improvements with true commitment and our duty is to motivate them using modern enlightened methods while sharing the benefits of such improvements with them in a fair and an equitable manner. I believe that the development is for people.

Among the plantation products, tea, rubber, oil palm and coconut have a prominent place in the South East Asian economy.

About 2.6 million workers in South Asia are employed in the large plantations sector of which 59 percent are in the tea sector. Bangladesh, India and Sri Lanka produce 53 percent of the world black tea, 46percent of world tea exports and 35 percent of consumption. If we include the smallholdings, those percentages would be much higher.

In Sri Lanka, for example, 60 percent of tea is being produced by the smallholders. If we take the Sri Lanka plantation sector, it has about 240,000 resident workers with an average of just over five people in each family.

Therefore the future of a sizeable fraction of the total population of Sri Lanka depends on the viability of this sector.

However, with workers seeking for more remunerative jobs and better living conditions, a higher degree of labour mobility is seen in the plantation sector. Some of the estates are facing increasing labour shortages. If this trend continues, the sustainability of the plantation sector is at risk.

Besides employment, the plantation sector, including the smallholdings contributes a significant proportion to GDP and generates a large sum of foreign exchange from exports of its products. Thus, plantation crops are very important to the economy of Sri Lanka.

The importance of plantation economy is equally applicable to the other Asian countries.

Plantations in South Asia are now mostly owned and managed by the private sector, enabling wider equity participation and easy access to technical support across national boundaries.

This opportunity, however, is not available to the millions of smallholders. Can we include, the smallholders in the social dialogue, we try to promote, so that they develop the strengths required to make informed decisions that benefit them?

The privatisation process is almost complete in Sri Lanka and the government has created the necessary enabling business environment. Plantation companies can borrow investment capital required for the development of plantations from local and international sources and to introduce new technologies to stimulate growth and increase efficiency and thereby enhance profitability to sustain competitiveness in the global market.

Better return for investments made in the plantations and provision of productive employment can be ensured only through sustaining our global competitiveness. However, despite infusing capital from low cost funding sources such as, ADB/JBIC and modernizing the production processes, the cost of production still remains high in our plantations.

Capital productivity gains alone would not be sufficient to reduce the cost of production. Labour productivity is the most crucial one in the plantations in view of high labour intensiveness in the industry. Labour productivity can only be increased through effective communication between the social partners.

In the case of Sri Lanka, for along period of time estate labour were isolated from the villages and the rest of the society. I believe it is same as in the other South Asian countries. Labour requirements and

proximity to the work place were a primary consideration in the plantations. This isolation and division is not advisable in the long run and have to be changed by adopting programs or promotion of estate village integration wherever possible.

In Sri Lanka, the government has taken steps to improve the plantation sector, by privatizing the management of the plantation companies and also taking steps to effect deregulation.

Also improvements were affected using donor funds to improve the infrastructure facilities and living conditions of the estate employees.

Privatized plantation companies have taken measures to improve the productivity and profitability of the plantation sector by adopting various methods such as new planting of high yielding varieties, systematic application of fertilizer, replanting, linking wage increases to worker productivity and injection of capital at reduced rates. Although these measures are necessary, they are not sufficient.

I consider the issue of managing change and transition within the plantations sector is the biggest challenge before us.

In transforming our plantation industry to a globally competitive industry, we have to sustain our productivity gains. Productivity gains can be sustained through advocating sound industrial relationships and adopting best practices such as, Labour Management, and Joint Consultation systems.

We have to address the interests of the other stake holders of the plantation industry besides the employer and employee to ensure social integration, as plantations cannot survive as isolated economic entities as in the past.

Plantations, in my view, are dynamic living systems that should be totally integrated to the main social systems of our countries. I earnestly hope that the dialogue we anticipate would allow the millions of workers and smallholders to become equal partners in all relevant decision making processes that impact their incomes and quality of life.

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Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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