351 vs 365? Politics of daily wage in tea plantations

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By: Bhaskar Hazarika

Daily wages in organized sector tea plantations of Assam has become a major political issue; figures such as 351 and 365 are appearing in election manifestos and campaign speeches.

I am going to put my analysis here. What does it mean for the workers, employers, unions, politicians and economy of Assam? What are the intended and unintended consequences of such political wrestling?

Let us begin with the present wage structure in tea plantations of Assam. In the tea plantation and production industry, the wage has always been a composite wage of cash and kind. At present the workers are getting a cash amount of Rs 167 and kind benefits shown below:

Cash                                                                    Rs    167.00

 

Pf contribution by employer (12%)             Rs      20.04

 

Gratuity Fund (4%)                                        Rs        6.68

 

VFC                                                                      Rs         1.70

 

Bonus (18 to 20%)                                            Rs      33.40

 

Ration                                                                   Rs      14.20

 

Medical Expense                                             Rs      18.65

 

Housing Facilities                                            Rs       15.22

 

Firewood                                                            Rs         5.74

 

Welfare Facilities                                            Rs         6.26

 

Educational Facilities                                     Rs         1.50

 

Leave with Wages & festival Holidays         Rs       14.95

 

Ex-Gratia                                                            Rs         1.00

 

Total                                                                    Rs     306.34

This figure of Rs 306 is the bare minimum from a sick organized sector tea estate; the figure might be as high as Rs 350 already if the estate has a big hospital and has its own medical staff and lots of other welfare measures that this tea estate lacks. In essence, a permanent worker from an organized sector tea estate is getting paid a composite wage of Rs 306 along with a guaranteed employment throughout the year in the state of Assam where the per capita income per day is around Rs 183.

Is this good enough? Nothing is good enough based on needs but we have to compare with similar things. Over the years Social Justice Warriors, Media, NGO and Robin Hood politicians championed this idea that the workers of the tea tribe that work in tea plantations are heavily underpaid, exploited and oppressed by the evil capitalist owners/tea production companies so the government must interfere and raise the wage. This narrative gave birth to many political careers. The idea caught popular imagination in 2014 when Tarun Gogoi and Nirmala Sitharaman exchanged war of words and it has peaked now, but whenever social justice warriors prescribe public policy affecting industry and economy of the state, we must ask three questions –

  • Less or high compared to what?
  • Implement new policy at what cost?
  • What hard evidence and facts do they have to make a case for such a policy?

If we compare the present composite wage with the wages of tea workers of government owned Assam Tea Corporation then our Rs 306 appears much higher because the government pays only Rs 137 cash and hardly any kind components, but social justice warriors are not bothered because government owned companies have higher moral authority to pay less, remain loss making entity forever as long as government declares 20% bonus before Puja from the Public treasury. If we compare the present composite wage of Rs 306 with the wages of tea workers of the unorganized sector then also Rs 306 appears much higher because the unorganized sector pays only the cash component of Rs 167 and bare minimum benefits such as PF in some cases, but politics of wage is not happening in the unorganized sector, may be because many Social Justice Warriors and Robin Hood politicians also own tea plantations in the unorganized sector. If we compare the composite wage of Rs 306 with the daily wage of casual labours that work in towns and cities then it might appear less in some cases but folks in cities will employ labours for a day or two and then fire them once the work is over unlike in tea estates where they are employed round the year, so this is a wrong comparison. Now we cannot compare them with the workers of Bangladesh, China etc because they do not believe in the concept of government declared minimum wage. They trust the market and let the market decide wages based on value created.

If we compare with the wages of tea workers of south India, what do we see? First the per capita income per day of the Southern states is much higher than that of Assam. Second the South Indian Tea Estates hardly pluck 18 to 20 rounds a year, employ less labour per hectare, mostly employ contractual workers from other states, yet pluck for 12 months throughout the year so the productivity is very high but ultimately employ less man days. In Assam we pluck from 32 rounds to 42 rounds a year in nine months and we have 3 months off season as well. Assam estates pay less cash component but ultimately employ many more man days so at the end of the day equivalent or more money ends up at the hands of workers in Assam. Moreover, south Indian estates do not provide ration. Now if Assam starts paying cash wage equivalent of south India then Assam will automatically move towards plucking less rounds per year, less labour per hectare, less man days over all and huge mechanization for the simple reason that minimum wage cannot be higher than the per capita income of the state. Political force cannot trump economic force. The quality of Assam tea for which we are known will be gone forever. Assam quality is all about high plucking more number of rounds hence employing more people, nothing else. Implementing cash 351 or 361 will have the following consequences:

  • 60% jobs in tea estates will disappear
  • Quality for which Assam is known will cease to exist
  • All the high quality producing tea companies will die, only extremely poor quality mass quantity bought leaf concept will survive
  • The West Bengal model will come alive; Tea entrepreneurs will be demonized to the maximum, those that fail to pay may get killed, others will abandon and flee. Once the estates are abandoned then the unions with government patronage will operate plucking of green leaves for a few years without any agricultural input and the green leaves will be sold to politically blessed bought leaf tea factories. 1% of the green leaf bills will go to the unions, 1% will go to the other interests eventually tea estates as a business will die. There will be hunger, poverty and malnutrition but then there will be no one to blame or demonize.

At the end of the day Employers pay for work, employers are incapable of paying based on needs and demands. If the work is not productive enough to generate the demanded amount it becomes a losing economic proposition for the entrepreneur and the business dies. Nations that understand this phenomenon move from the third world to first world and those nations that fail to understand this remain poor forever.

I can understand why politicians make it a political issue? I can understand that they try to consolidate the vote bank by creating a sense of victimhood among the vote bank by demonizing the employers but citizens ought to know better so I am presenting my analysis. For a politician it is easier to do this than to have an economic vision and knowledge and unfortunately they are often surrounded by rent seeking narrow minded bureaucrats. Hope good sense prevails post election madness.

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