Daily wage in organised 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 the 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+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 organised 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 + 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 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, NGOs 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 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 a 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:
(a) Less or high compared to what?
(b) Implement new policy at what cost?
(c) 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 + 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 the 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 unorganised sector then also Rs 306 appears much higher because the unorganised 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 unorganised sector, maybe because many social justice warriors and Robin Hood politicians also own tea plantations in the unorganised sector.
If we compare the composite wage of Rs 308 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 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 mandays.
In Assam, we pluck from 32 rounds to 42 rounds a year in nine months and we have 3 months offseason also. Assam estates pay less cash component but ultimately employ many more mandays 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 mandays overall 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, it will come back to bite.
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:
(a) 60% jobs in tea estates will disappear.
(b) Quality for which Assam is known will cease to exist.
(c) All the high quality producing tea companies will die, only extremely poor quality mass quantity bought leaf concept will survive.
(d) West Bengal model will come alive; tea entrepreneurs will be demonised 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 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 moves from the third world to the first world and those nations that fail to understand this remains 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 easy 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 prevail post-election madness.
(The author is a Moran-based tea planter. He can be reached at firstname.lastname@example.org)