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Plantation Labour Act rigidity
What it is
Tea estates must provide housing, healthcare, schooling, rations and welfare to resident workers and their families under the Plantation Labour Act, on top of wages. These social costs are a large share of production cost and cannot be reduced with output
Wages are set through tripartite negotiation rather than productivity
Impact on industries
- Labour and welfare are 60%+ of tea production cost and are essentially fixed, so a weak auction price flows straight to loss
- Obligations extend to non-working dependants, so cost does not scale with employment or with crop volume
- Estates cannot mechanise or downsize easily, since the social obligation attaches to residence rather than to work performed
- The same rigidity underpins a stable, resident workforce in remote areas where hired labour would not otherwise be available