Political Sleight of Hand: How Sri Lanka’s Estate Wage Promise Became a Numbers Game

Introduction

The question of wage determination in Sri Lanka’s plantation sector has long occupied a space where law, politics, and economic survival intersect. Each attempt to revise or restructure estate wages has not merely been an act of industrial negotiation but a reflection of the State’s orientation towards its constitutional obligations, its fiscal capacity, and its political commitments. This debate has re-emerged following the 2026 budget proposal.

But behind this appearance of progress lies a more troubling question. The budget speech of 2026 by President Anura Kumara Dissanayake promised to raise the minimum daily wage of an estate worker upto LKR 1550 from January 2026 and added a daily attendance allownace of LKR 200, with LKR 5000 million set aside for it. It must not be forgotten that such promise is made when back in the budget speech of 2025 (made during February 2025), the President had already promised to raise the estate workers' daily wage from LKR 1350 to LKR 1700. This article critique's the game of numbers that the government has been playing which circumvents valid wage structures and imposes a deviation, well-intentioned perhaps, but legally tenuous and economically unsustainable.

Courtesy: Sunday Times

Wages are Not a Matter of Executive Grace

At the crux of the matter is wage determination, and what must be appreciated, at this initial stage, is that wage determination in Sri Lanka’s estate sector is not a benevolent exercise of political will. Wage determination is a statutory function governed by the Wages Board Ordinance. Under this law, the power to determine minimum wages rests with the Wages Board, a tripartite body representing the interests of workers, employers, and the State. It is not a prerogative of the Cabinet or the President.

In fact, the Court of Appeal of Sri Lanka in Agarapatana Plantations Limited v Hon. Nimal Siripala de Silva (CA Writ 143/21) reaffirmed this point with clarity. "When one looks at the wording of sections 28 and 29 of the Wages Board Ordinance, it is clear that the decision is made by the Wages Board, and not by the Minister. The plain reading of section 28 is clear, the word used is the ‘proposed decision of the Wages Board’ until the objections are called and deliberated by the Board. Therefore, the wording used under section 29 is quite clear, what is transmitted to the Minister for his approval is the confirmed decision of the Board.”

This observation is decisive. The Wages Board, not the political executive, is the lawful authority to determine the quantum and structure of minimum wages. Any alteration, whether by subsidy, incentive, or re-characterization, ought to emanate from that process or be validated through explicit statutory amendment. Otherwise, such change remains a policy announcement without legal effect.

The Precedent set by the Previous Administration

It is worth recalling that this pattern is not without precedent. The Ranil Wickremesinghe administration confronted the same impasse in August 2024, when it sought to introduce a composite wage of LKR 1,700, divided as LKR 1,350 plus a LKR 350 attendance allowance. However, it is worth noting that reports suggest that this proposal emerged through the Wage Board process, with fourteen members voting in favour and only three plantation companies dissenting.

Nevertheless, even though that proposal was not an arbitrary executive declaration, the initiative proved legally unsustainable. The plantation companies challenged the Gazette notification before the Supreme Court, which ultimately ordered the Gazette to be cancelled, holding that any wage determination must adhere strictly to the procedural requirements of the Wages Board Ordinance, including proper consultation and deliberation.

This episode should have served as a cautionary tale. But the administration under President Dissanayake, further departing from even the basic institutional appraoch now seeks to achieve the same numerical outcome.

The Actual Baseline from August 2024 Gazette

The last lawful determination of estate wages remains the August 2024 Gazette, which set a daily wage of LKR 1,350, supplemented by LKR 50 per kilogram of tea plucked beyond the daily quota. This framework is important for two reasons.

First, it was adopted through due process, following deliberation and confirmation by the Wages Board. Second, it introduced a productivity-linked component that aligned workers’ earnings with the industry’s output, ensuring sustainability while respecting employer responsibility.

Under this structure, workers had a clear entitlement and employers a clear obligation, both enforceable under the Wages Board Ordinance. There was no ambiguity as to source of payment or mechanism of enforcement. The 2026 proposal, in contrast, creates precisely that ambiguity.

Accordingly, what the government is seeking to replace is this lawful, self-contained mechanism, but with a subsidy-based experiment that neither the law anticipates nor the Treasury can easily sustain.

A Game of Numbers

Courtesy: Daily Mirror

The government’s presentation of figures, LKR 1,350 becoming LKR 1,550 plus a “special allowance” of LKR 200, creates a very tricky illusion of increase. In nominal terms, the number 1,750 appears as progress, but in reality, the employer’s actual contribution rises by only LKR 200, while the remaining burden shifts to the taxpayer, if the proposal is made operational.

Such fiscal juggling obscures the central fact that estate workers are not receiving a new legal right but a conditional benefit dependent on annual budgetary discretion. Therefore, what is projected as a wage increase is in truth a reallocation of fiscal liability, unfortunately from private enterprise to public finance.

It is here that the President’s own words return with irony. “If management cannot pay a worker Rs. 1,750 a day,” he asked, “what does this industry signify?”. Yet the very policy that follows absolves management of precisely that duty. The question, once posed as moral indictment, is now answered by fiscal subsidy.

Legal Characterisation: Wage or Welfare?

The proposed LKR 200 “attendance allowance” defies clear classification. If it forms part of the wage, it must be paid by the employer, and failure to do so would constitute a breach under the Wages Board Ordinance. If, on the other hand, it is a government benefit, it ceases to be part of the wage and becomes a welfare transfer, outside the purview of labour law.

The government appears to oscillate between these two positions, calling it an “incentive” in rhetoric while structuring it as a budgetary allocation in practice. The result is conceptual instability, since it is a payment that is neither enforceable as a wage nor guaranteed as a welfare right. The estate worker thus stands between two uncertain promises, an employer who is no longer fully liable, and a government whose payment depends on revenue constraints.

Enforcement and Institutional Mismatch

The issue is further exacerbated by the question of who is the enforcer, and this question was not clarified during the speech or in the aftermath. The Wages Board Ordinance provides a clear enforcement chain. The Commissioner of Labour monitors employer compliance, investigates non-payment, and prosecutes violations. None of these mechanisms apply when the payer is the State. There is no statutory officer tasked with verifying attendance, disbursing funds, or penalizing delayed payments under a government-funded allowance.

If payments are to be routed through employers, they become intermediaries of public money, yet the law grants them no such role. If funds are transferred directly to workers, the process mirrors a conditional cash transfer scheme, for which the Treasury would require new administrative infrastructure and legal authorization.

This institutional gap exposes the legal fiction at the heart of the policy. A subsidy may be budgeted, but until it is anchored in law, it remains non-justiciable. A worker cannot claim it as of right, nor can the Commissioner enforce it as obligation. The government’s promise therefore lives only within the rhetoric of the budget speech, not the text of the statute book.

The Fragile Foundation of Fiscal Sustainability

The government’s allocation of LKR 5,000 million to fund this attendance incentive invites closer scrutiny. With approximately 200,000 estate workers in the country, the annual cost per worker is roughly LKR 25,000, or approximately a month's wages. The figure may appear manageable in isolation, but within the context of an economy under IMF supervision, where the State must generate a primary surplus, the sustainability of such recurrent expenditure becomes doubtful.

Fiscal history provides warning. Temporary subsidies have a tendency to become permanent political obligations. Once introduced, withdrawal becomes politically perilous. Yet, maintaining them under fiscal constraint becomes economically reckless. Eventually, what was presented as a compassionate reform thus risks becoming a cycle of expectation and disappointment, played out at the expense of those least equipped to absorb uncertainty.

Moral Hazard and Policy Incoherence

The subsidy structure also creates perverse incentives for the plantation companies themselves. If the government fills the wage gap, employers face diminished pressure to restructure operations, improve productivity, or negotiate fair settlements. Profit margins are preserved while public funds absorb the burden.

Courtesy: Aljazeera

It is important to reiterate that in In the 2025 Budget Speech delivered in February 2025, the President promised to raise the estate workers’ daily wage from LKR 1,350 to LKR 1,700 by January 2026. Yet, now with the 2026 Budget Speech, the form of the same promise has been altered to LKR 1,550 plus a government-funded “attendance allowance” of LKR 200, with LKR 5,000 million set aside for the scheme. Accordingly, the original commitment made in in February 2025, envisioned compelling the industry to pay a fair wage. The new arrangement, instead, uses public money to subsidize private non-compliance. It is a political sleight of hand.

Therefore, rather than confronting the plantation companies that resist reform, the State appears to have retreated into fiscal accommodation. The attendance allowance is, therefore, not merely a matter of budgetary design. It must be considered as a political concession that normalizes corporate evasion and converts worker welfare into a political accounting exercise.

Such arrangements invert the very logic of wage regulation. The purpose of a minimum wage is to compel the private sector to meet a social standard. The policy, therefore, rewards inefficiency and encourages dependency, breeding the expectation of future bailouts whenever wage revisions arise.

Political Optics of Compassion

There is no denying that the plight of the estate worker evokes deep political sympathy. Generations have laboured in conditions of marginality, often excluded from mainstream policy discourse. For any administration, gestures towards their welfare carry immense symbolic value. Yet, symbolism without structure can become deception.

The government’s 2026 proposal, presented as a compassionate reform, appears instead as an attempt to balance political credibility with fiscal caution. The result is a halfway measure that satisfies neither law nor justice.

By claiming credit for a Rs. 1,750 wage while transferring Rs. 200 of it to the public account, the government has turned numerical creativity into political theatre. It, much like previous governments, presents arithmetic as policy and illusion as reform.

Conclusion

The estate worker’s wage cannot be redefined by semantic invention or fiscal substitution. The “attendance allowance” may ease political pressure in the short term, but it does not advance the cause of justice. It transforms the worker from a rights-holder into a recipient of conditional charity and converts the government from regulator to paymaster.

In the end, this is not a story of reform but of retreat—a retreat from the principle that labour must be compensated by those who profit from it, and that wages are a matter of right, not relief. If Sri Lanka is to restore integrity to its wage governance, it must abandon the game of numbers and return to the rule of law.