The heritage of land reform

 

Editorial-August 17, 2013

The front page lead story in yesterday’s The Island highlighted a report that superintendents of state-owned and managed estates are resigning for fear of arrest over the non-payment of EPF and ETF dues of their employees. It said that the Superintendent of Kumarawatte Estate in Moneragala had spent a night in the police lock-up before he was released following the intervention of the Ceylon Planters’ Society. This superintendent, fearing further harassment, had decided to throw in the towel and submitted his resignation. Another plantation manager in Pupuressa had also resigned fearing similar treatment, it is reported. It is well known that both the Janatha Estates Development Board (JEDB) and the Sri Lanka State Plantations Corporation (SLSPC), as well as Elkaduwa Plantations, due to cash flow constraints, have not been paying EPF and ETF dues of their employees running into hundreds of millions of rupees and has also been unable to pay the gratuities of retired workers placing managers and superintendents of these plantations at risk of prosecution. Given that these estates are state-owned properties, it is reasonable to assume that the labour department would be less anxious to wield the big stick than if the plantations were privately owned. But there must be a point at which the enforcement machinery is seen to be doing its job whoever be the owner.

Where the ETF (Employees Trust Fund) is concerned, the total payment is the employer’s liability; so also the gratuity. As for the EPF, there is both an employer’s and an employee’s contribution which is deducted from the worker’s wages. When these dues are not remitted despite being deducted from the checkroll wages, there is more than an element of robbery that comes into play. After all, a percentage of the worker’s earnings is deducted and not paid to the duly constituted authority responsible for his retirement benefits. One of the easiest ways of contending with cashflow difficulties is not to make EPF and ETF payments; and it is not only on plantations that this method is widely adopted. Nonpayment or late payment attracts penalties, but those come later. So it is easy enough to deal with instant problems of the lack of cash by not paying these dues. Also state agencies are often given special treatment, for good reasons and bad, for failing to meet their statutory responsibilities. That is why the CEB and SriLankan Airlines, just to mention two, did not have their deliveries from the Ceylon Petroleum Corporation stopped for non-payment of dues. Any other Silva or Perera would certainly have been treated differently.

The land reforms of the United Front government of Prime Minister Sirima Bandaranaike, that also included ministers from what is now commonly referred to as the `old left,’ were stampeded by the JVP insurrection of 1971 into embarking into an ill-thought program of alleviating land hunger in the country. In the event, private capitalists were replaced by less efficient state capitalism with the two monolithic plantation corporations, the JEDB and the SLSPC taking over the management of much of the country’s plantation economy. Other state agencies like the Coconut Cultivation Board and the National Livestock Development Board also took over some of large coconut estates with their owners left with 50-acre blocks. While the ownership of the plantations changed, there was no alleviation of land hunger which continued as before. Politicians like the late Minister Hector Kobbekaduwa felt deeply about the Kandyan peasants dispossessed of his land by the infamous Waste Lands Ordinance of the British who disposed of upcountry land to mostly British entrepreneurs for as little as 50 cents an acre to open first coffee and then tea plantations. Apart from the sociological damage caused by the alienation of common grazing and pastoral land, the denudation of forest covered mountains to plant cash crops created environmental consequences that continue to this day.

But the methods adopted by the UF government in dismantling the so-called `Plantation Raj’ was hardly the best. Supporters of ruling party politicians found rich picking in estates that were taken over with various political authorities extending patronage to fellow-travelers and supporters to make a killing. While there was an effort on the part of both the JEDB and the SLSPC to keep intact the systems that kept the foreign and locally-owned plantations ticking, what had previously been tax-paying entities became a liability on the state. That led to the privatization or ``people-isation’’ as President Premadasa imaginatively labeled it, of various state corporations and entities including the management of estates. Premadasa decreed that the ownership of the plantations will remain with the state with what was privatized being their management. Employees of the various privatized entities were gifted 10 percent of their equity which most of the beneficiaries subsequently sold. It would be an interesting exercise to find out how many worker shareholders remain in the share registers of the listed plantation companies – not many if at all!

The present problems facing the state-owned and managed plantation sector relates to those estates that fell within the purview of the JEDB, SLSPC and Elkaduwa that for various reasons were not handed over to the various Regional Plantation Companies (RPCs) for various reasons. Many of these have proved unviable and unable to generate the resources to continue. Some of them, including those estates where the superintendents have become the hapless victims of their employers’ inability to meet statutory obligations, are in an unenviable situation. The minister in charge of some of these entities went public with the suggestion that valuable timber stands on these plantations be felled and sold off to meet their debts. While there must be sensible extraction and replenishment of timber resources, whether a forestry plan is in place in many of these estates is an open question. It is likely that much of the timber trees now proposed to be felled were in fact planted by the previous owners of such estates. Environmental concerns too have been expressed over the proposal. While the magic of private sector management if often repeated as a mantra, minority shareholders of some of the quoted RPCs are painfully aware that while they have received no dividends for years, their controlling shareholders skim off the cream by way of hefty management fees! Sadly few of them attend the annual general meetings of these companies to protest.