Wage hikes to dent tea gardens' profits

Euphoria around a rebound in the stock prices of tea companies could be short lived because the industry is staring at increased production costs. 

Wages of 1.11 million tea workers in Assam and West Bengal are due for revision. Besides, the industry feels threatened by likely amendments in the Plantations Labour Act, 1951.

Labour costs account for 60 per cent of tea production costs and usually increase every year in accordance with pre-concluded agreements between the gardens and trade unions. 

“For every Rs 10 increase in wages, production costs go up by Rs 6 and this component directly affects the bottom line,” said