Tea farms would indeed have moved immediately to cut costs through automation and mechanisation if they had lost an appeal relating to a new collective bargaining agreement with workers.
Workers wanted a total of 30 per cent salary increase for 2014 and 2015 but the Court of Appeal cut this to 16 per cent.
The the tea subsector's labour expenditure has risen to about 60-70 per cent of total cost of production.
Rising costs of production will force the tea subsector to increasingly mechanise and automate while freezing new hiring, a plantations’ lobby has said.
The Kenya Tea Growers Association (KTGA) chief executive Apollo Kiarii said owners would indeed have moved immediately to cut costs through automation and mechanisation if they had lost an appeal relating to a new collective bargaining agreement with workers.
Workers wanted a total of 30 per cent salary increase for 2014 and 2015 but the Court of Appeal cut this to 16 per cent, besides reducing or setting aside allowances that had been given earlier by the High Court.
“If the court had maintained the increments and allowances given in the previous case [in the High Court] we would have had to quickly mechanise. Now we will allow natural attrition when it comes to reducing the cost of labour. But if costs continue rising then we will have to seriously consider mechanisation,” Mr Kiarii said.
He said labour costs had risen to a point where they constituted between 60 and 70 per cent of the total cost of production, making the local tea subsector less competitive globally.
He noted that the cost of production in 2014, for example, stood at $1.96 per kilo versus the tea auction price of $2.00 a kilo – leaving a balance of only $0.04 per kilo as compensation to investors.
“Sri Lanka and China are direct competitors to us, but they have been increasingly mechanising. We have not really mechanised much because we are still using a lot of labour. We have a total of about 60,000 workers, plus or minus 5,000. Wage demands are rising every day, so we have to rethink,” said Mr Kiarii.
He said the industry would minimise employment when workers retire or leave the company.
The tea lobby said it was ready to negotiate the 2016, 2017 and 2018 CBAs with the workers.
Tea farms would indeed have moved immediately to cut costs through automation and mechanisation if they had lost an appeal relating to a new collective bargaining agreement with workers.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
