Tea growers say high labour costs bad for the sector

Tea farmers have raised concern that the industry is plagued by rising labor costs that could derail the sector’s performance.

According to the Kenya Tea Growers Association (KTGA) labour costs already contribute to half of production costs with further increases proving detrimental.

The association is opposed by the employment and labour relations court ruling last week to award tea workers a 30 percent pay rise back dated to 2014.

“Labour costs already represent 50-60 percent of the cost of production for KTGA members and so this award will increase the cost of production by around nine percent at a time the price of tea is 30 percent below its peak,” KTGA said in a notice in the dailies.

Following the ruling workers employed by KTGA are also entitled to annual leave and traveling allowances as well as medical treatment allowances. The court also ruled to raise the retirement age to 60 with workers having the option to retire at 55.

On Monday close to 15,000 workers allied to the Kenya Plantation and Agricultural Workers Union in Nandi County downed their tools protesting failure to implement the pay rise.

KTGA says that while the government is cutting numerous taxes and levies on tea to make it competitive, the award of high pay goes towards derailing growth of the sector.

“Investment in the tea sector will reduce, resulting in negative impact for local suppliers and contractors and creation of fewer jobs,” the association said.

Kenya is the leading exporter of black tea which raked in Sh125 billion in revenue in2015.

KTGA has said it will be appealing the ruling and urged workers to adhere to the rule of law.