After wage hike, Assam tea workers may face retrenchment in coming months

About 1.1 million permanent tea workers in Assam and an equal number of casual workers in the state’s tea estates may face job losses in the coming months as tea companies are resorting to increasing mechanisation of their parklands to cut down production costs.

Estimates from tea producers suggest that on account of the recent interim wage increase of Rs 30 in the state, production cost has shot up to anywhere between Rs 160 and Rs 180 a kilo per day, while the auction prices have been stagnant. In effect, it is haemorrhaging the profitability of tea firms.

“Mechanisation of the gardens is definitely going to increase as tea companies will strive to maintain costs in face of stagnant tea prices," Atul Asthana, managing director and CEO at the Camellia Plc-controlled Goodricke Group, said.

Azam Monem, Director at McLeod Russel, the world’s largest tea producer, is of the view that in the coming months, as tea companies vie to control costs, nearly one-third of the casual workforce in the gardens may be trimmed. For McLeod Russel, employee benefit expenses account for a little over 45 per cent at Rs 8.37 billion of the total annual expenses of Rs 18.36 billion. 

“If that doesn’t help, then the gardens may be forced to consider rationalising the permanent workforce," he said.

On the other hand, for the Goodricke Group, the outgo on employee benefits and wages account for nearly 34 per cent at Rs 2.37 billion out of a total expense of Rs 7.03 billion. For Dhunseri Tea and Industries, its expenses on workers' account for 36 per cent of the total company expenditure of Rs 1.72 billion.

Usually, from April-November, tea estates employ non-permanent workers to pluck leaves from the bushes, and its intensity increases just after the monsoon when production volume peaks. Around 1 million labourers are involved in this effort apart from the garden’s own permanent workers.

Last month, after a series of negotiations on revising wages, the Assam government ordered an increase tea workers’ wages by Rs 30 per day which took to the total payout to these workers to Rs 351 a day. Of this, Rs 167 is paid as the cash component and the balance accounts for benefits, including housing, electricity, ration, fuel and others.

According to Asthana, tea companies will be able to curtail production cost of Rs 160-180 a kilo by 40 per cent if they resort to mechanisation. “That is how the tea firms will still be able to post a profit," he asserted.

Monem, who is also the Chairman of the Indian Tea Association (ITA), which is representing interests of tea companies operating in Assam and North Bengal, said, “There wouldn’t have been any problem had tea prices also increased which would have mitigated the rising costs."

Industry officials have claimed that tea prices in Assam have remained flat as compared to last year. However, data from the Tea Board of India has indicated that the average auction prices in Guwahati, as well as Kolkata, have risen by over seven per cent at Rs 164.44 and Rs 174.90 respectively as on end-July.