World Bank Investigates Plantation Practices in Assam

AmalgamatedlogoNEW DEHLI, India — The World Bank has launched an investigation into labor practices on several Assam tea estates managed by Amalgamated Plantations Private Ltd. (APPL).

Tata Global Beverages, which finances APPL operations, has denied any violation of worker rights at its 24 tea estates.  Tata is best known for its Tetley Tea brand.

A spokesperson for APPL said the company would cooperate fully with investigators looking into a joint-venture funded in part by the International Finance Corporation (IFC).

The IFC, a private lending arm of the World Bank, in April 2009 invested $7.8 million in a program to help find permanent employment for almost 31,000 tea workers. The program is designed to assist hard-working, but largely uneducated, tea workers in profiting from their labor. Tata has a 41% stake in of the project’s $87 million budget; IFC contributed 19% and the remainder is financed by workers who received interest-free loans of $128 to buy shares. Currently there are 21,000 workers enrolled in the program.

The investment is a significant sum for workers making less than $2 per day and will require seven years to repay through payroll deductions. The investment’s returns however, motivate workers to contribute their best effort and to share in the profits of the venture, according to those who developed the program.

About a year ago World Bank received several complaints from non-profit organizations associated with workers’ welfare.

Groups such as Nazdeek and PAJHRA (Promotion and Advancement of Justice, Harmony and Rights of Adivasis) and the People’s Action for Development voiced concern over long working hours, inadequate compensation, unsanitary latrines, inadequate housing and unsafe use of pesticides. Productivity targets are so difficult that tea pickers must engage other family members, according to the charities. The charities cited worker unrest in some instances has led to violence.

About 4.5 million of Assam’s garden workers are Adivasis, a cultural minority forcibly relocated as laborers during the colonial period. They make up about 20% of the state’s population.

The project was harshly criticized last week in a Columbia University report that brought to light “dire living and working conditions, in violation of Indian law and the World Bank’s standards for environmental and social sustainability.”

In the 110-page report Prof. Peter Rosenblum at Columbia Law School’s Human Rights Institute WTN140217_TheMoreThingsChange_ColumbiaUniversityvisited 17 tea gardens in Assam and West Bengal during a three year period. His report: “The More Things Change: The World Bank, Tata and Enduring Abuses on India’s Tea Plantations” criticized APPL practices at several plantations.

On Wednesday Thomson Reuters Foundation received an email from Kaushik Biswas, APPL’s company secretary, asserting “We at APPL look after our workers and are compliant with the law. Wages are paid as per industry agreements. Cash wage plus benefits total up to 189 rupees per man day. Working hours as specified in the Plantations Labour Act, 1951,” he said.

The act permits garden owners to pay workers a wage below the national minimums. This is because plantations are required to provide food, shelter, education and medical care at no cost for workers. Compensation varies by contract but Assam workers typically earn INRs 89 ($1.44). APPL estimates plantations contribute another INRs 100 ($1.62) per day in-kind for a total wage of $3.06 per day for tea pickers meeting their established quota, typically measured as 42 kilos of plucked leaf.

Research co-director Ashwini Sukthankar told Supply Management: “Worker ownership and diversification – the most highly vaunted elements of the transition – are obviously appealing, but the implementation was so outrageous that it casts doubt on the sincerity of the project.”

Research director Peter Rosenblum said: “The IFC acted with an excess of enthusiasm and an absence of attention to the known problems in the plantation sector.”

After reviewing several complaints the Compliance Advisor Ombudsman (CAO) initiated the independent review. The CAO in an independent body charged with oversight of IFC investments.

A report in the Financial Times states the CAO questioned whether the IFC had “sufficient evidence to support the strong positive findings on labor relations and occupational health and safety issues” before investing. It also expressed concern about the IFC’s supervision, and assessments, after the two incidents of labor unrest.

“In a preliminary assessment last year, the CAO found that the IFC invested in APPL primarily on the strength of Tata’s reputation of “being at the forefront of Indian corporate practices” in regard to labor standards. But the ombudsman said there was no evidence of any IFC discussions with workers or unions to verify the Tata’s claims about conditions at the plantations,” according the Financial Times report.

The IFC responded that it is reviewing the report and working with APPL to “upgrade estate facilities and improve living and working conditions.”

Investigators will present a report for action by the World Bank’s Board of Directors in May. An action plan mandating IFC to address human rights violations may follow.

Sources: Financial Times, New York Times, Columbia University, Thomson Reuters Foundation and Supply Management.