Treasury Funds to Private Estates Set Dangerous Precedent

A recent government proposal to allocate Rs 5,000 million from the unified Treasury fund to pay wages or allowances exclusively for workers in plantation companies — raised by MP Rohini Kaviratne and sent to the Auditor General’s Department and other oversight bodies — signals a significant shift in public‑finance policy with serious implications for the Sri Lankan economy.

At issue is the scheme’s focus: only plantation workers in certain companies would benefit from state funds. This raises both fiscal and equity concerns. Official labour‑force data show the “estate” residential sector accounts for roughly 316,658 employed persons (in the first quarter of 2024) out of about 7.9 million employed in total.

While historic data suggest the plantation workforce once numbered in the hundreds of thousands, some sources put active labour in plantations now at about 115,000 with wider dependent families.

The immediate economic burden: if Rs 5,000 million is to be spent, and assuming roughly 40,000 plantation workers (as cited by the MP) are covered, the average additional cost per worker would be Rs 125,000 or over Rs 10,000 per month, equivalent to far more than existing typical wage levels. Given the mean monthly wage for “estate” sector monthly‑earners is around Rs 42,000 (median) in 2023.

Extending this to a larger population (e.g., 100,000+ workers) would raise costs sharply, potentially placing unsustainable demands on public finances already under strain.

Beyond the numbers, the precedent is troubling: using public funds to subsidise what are essentially private‑sector plantation wages erodes the principle that the private sector should fund its labour costs.

It blurs lines between public and private responsibilities. The risk is further magnified by the fact that only some plantation companies (particularly large or state‑linked ones) would be eligible, creating a two‑tier system and possible inequity vis‑à‑vis smaller or medium‑sized private plantations and their workers. The MP herself voiced concern of “differential treatment” of workers in smaller estates.

Moreover, attributing the scheme to mistakes or mis‑management at the Treasury raises governance issues: if the budget procedure assigns such wage funding via the existing Public Finance Management Act to the Director‑General of Budget, misuse or unintended liabilities could become a recurring burden. The MP’s letter argues for intervention by oversight institutions to safeguard legal and administrative propriety.

For the economy, this proposal comes at a delicate time: the plantation sector remains a key source of export earnings (for example, tea exports alone constitute a significant foreign‑exchange inflow), yet cost pressures (wage increases, fertiliser, fuel) already threaten competitiveness.

By shifting wage‑funding onto the state, the policy may relieve plantation firms, but at the expense of the national budget and possibly at the cost of global competitiveness.

In conclusion, while the aim of improving wages for plantation workers is socially justifiable given long‑standing poverty in the sector, the mechanism proposed using public consolidation funds to pay private plantation wages risks placing large, open‑ended liabilities on the state, distorting public‑private boundaries, and setting a damaging precedent. A more sustainable option would involve establishing a wage‑support fund co‑financed by the state and the plantation industry, clearly time‑limited and targeted, with transparency on costing and coverage.