Sunday, December 08, 2013

Felling trees to pay workers dues - is this sustainable?

The proposal to fell the timber on estates to pay the statutory dues (EPF, ETF) of workers is again in the news, but no one seems to be posing the most fundamental of questions: can this be sustained?

If this proposal works out they may be able to settle the past dues, but once this is done, how do they plan to make payments in the future?

The plantations being (mis)managed by the state are almost all running at massive losses. Things have got so bad that these estates have not been able to pay the statutory dues of employees for decades. I looked at some of the numbers of these estates around ten years ago. At that time there was about ten years of unpaid statutory dues. I don't think anything of significance has been paid since then.

Until somethig is done or a miracle takes place, operationally they will continue to make losses. Therefore there is no possibility that they can meet dues in the future either.

Has anyone even thought about this? Stripping assets is something that can be done on a one-off basis, but how do they plan to stop the financial black hole where money vanishes in to thin air?

Its a bit like surgery; cutting off a limb or some organ is acceptable if the patient is cured. If it does not cure but only provides temporary relief, it will only be  a question of time before something else needs to be cut off, just to survive. Keep cutting and the patient will eventually be killed.

In my opinion, approval for this should not be given until and unless a comprehensive workable plan is in place to restructure the estates. There is also more to this than meets the eye.

For a start, how can a state enterprise not pay statutory dues for a period of a decade or more and not face a problem? How could something this sensitive go unnoticed for so long?

There are plenty of loss-making state enterprises around;  but to my knowledge none of them avoid paying their workers dues. Indeed the principal purpose of many state enterprises seem to be job-creation. If the Government had dared to delay workers payments in any of these the unions would have taken to the streets and there would have much hue and cry raised by the opposition.

Talking to some old planters, they believe that the reason the problem grew so large was because the workers affected belonged to a voiceless underclass: Plantation Tamils.

The Tamil plantation workers are a constituency no one is interested in and are therefore effectively voiceless. Please note that I am not saying that the union is not powerful: it is but it serves mainly as a vehicle to fatten the pockets of its leader, not to speak for its representatives.

The modus operandi of the plantation union leader is as follows: he delivers a block vote to the Government, in return for which he is allowed to extract whatever he can from the estates/ministry. If one recalls the history of this man (and his father); they have been in every single Government of whatever hue. He collects his votes, generally in coalition with the UNP and then joins whoever is in Government.

Once a year he goes and tells the Government that he needs to keep the vote base happy and that in order to do so he needs to extract a wage hike. The Government then muscles the private estates who cough up the money. Since it comes at no cost to the Government they are happy enough to oblige. However the Government estates and other problems where the Government is involved are ignored.

When travelling around tea estates I have spoken to some workers on the Government properties; they claim that not only are the EPF, ETF and gratuity not paid sometimes even the wages are not being paid.

On private estates the rule that the estates must provide 22 days of 'work' a month is rigidly enforced, on state estates it not. One employee on Hare Park told me that they get about three days of work a month. The workers eke out an existence by cultivating other crops and odd jobs.

Since the unions and opposition are silent, the question also needs to be posed as to what is driving this proposal. Most probably the opportunity to make a quick buck by either undervaluing the timber being sold or removing more trees than the estates get paid for.

There is now an enabling culture where dealmakers are allowed to flourish. As there is little transparency in processes and no liklihood of punishment, everyone is looking to make money as quickly as possible.

No one is interested in business; everyone wants a 'deal'. Whether it is ETF and Sri Lankan Insurance funds being used to buy overvalued shares (which just happened to be sold by cronies) to clearing jungles, nothing is off the table and nothing is sacred.

Truly, a bandit economy.

ps. I wrote about some of the other aspects of the problem in felling trees on estates here.

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