Tea Industry Employment and Economic Impact

Sri Lanka's tea industry remains one of our nation's most vital economic engines, employing thousands of workers and generating substantial export revenue that supports families across the country. With the sector projected to grow between 10–12% in 2026, understanding how tea production impacts employment and our economy has never been more relevant for locals seeking insight into this cornerstone industry.

The Economic Powerhouse Behind Ceylon Tea

Tea is central to Sri Lanka's economy, generating approximately USD 1.4 billion annually and contributing between 10–13% of total export earnings^[1]. This makes our tea sector one of the largest sources of foreign exchange for the country, directly supporting rural communities and contributing to national development.

In 2025, the industry shipped 257.4 million kilograms of tea, earning USD 1.506 billion in export revenue^[2]. The average export price remained stable at around USD 5.85 per kilogram, reflecting sustained international demand for Ceylon tea^[2]. These figures demonstrate the resilience of our tea exports even during challenging economic periods.

Looking ahead, industry officials forecast growth of 10–12% in 2026, with a production target of 300 million kilograms^[3]. This optimistic outlook is supported by government initiatives and favourable market conditions, though achieving this target will require addressing current structural challenges within the sector.

Tea Production Trends and Recent Performance

2025 Production Figures

Tea production in 2025 reached 264.12 million kilograms, up from 262.69 million kilograms in 2024^[2]. This represents a growth of 1.43 million kilograms year-on-year. Notably, this output was also 8.03 million kilograms higher than production recorded in 2023, showing recovery from earlier challenges^[2].

The improvement in 2025 was largely attributed to the government's fertiliser subsidy programme, which helped offset rising input costs and supported farmers in maintaining productivity^[2]. Without such interventions, the sector would have faced steeper declines.

Production Challenges

Despite overall growth, the sector faced significant headwinds. The Department of Census and Statistics' third-quarter report for 2025 indicated an 8.1% decline in tea production volume^[2]. This downturn was driven by several supply-side challenges:

• Rising input costs (fertilisers, pesticides, fuel)
• Delays in replanting tea bushes
• Labour shortages across estates
• Weather-related losses, including damage from Cyclone Ditwah

These challenges highlight why employment stability and fair wages are critical to sustaining production levels and meeting export targets.

Employment in the Tea Sector

The Workforce Behind Ceylon Tea

The tea industry employs thousands of workers across Sri Lanka's plantation regions, primarily in the central highlands. These workers form the backbone of our tea production, yet they've historically faced challenges including low wages, difficult working conditions, and limited access to services.

Tea estate workers represent a significant portion of Sri Lanka's agricultural workforce, with employment concentrated in districts like Kandy, Nuwara Eliya, and Matara. Many workers come from communities with limited alternative employment opportunities, making tea estate jobs crucial for household income and rural livelihoods.

2026 Wage Increases and Government Support

Recognising the importance of fair compensation, President Anura Kumara Dissanayake announced significant wage increases in the 2026 budget. Estate worker wages are being hiked to a total of 1,750 rupees per day^[4]. This represents a substantial increase from the previous minimum wage of 1,350 rupees per day^[4].

The wage increase is structured in two components:

• 1,550 rupees daily wage — implemented from January 2026^[4]
• Additional 200 rupees daily incentive — provided by the government to encourage consistent attendance (targeting 25 working days per month)^[4]

The government has allocated 5,000 million rupees to fund this attendance incentive programme^[4]. President Dissanayake emphasised that "estate workers should be paid a fair daily wage commensurate with their work," signalling a shift in how the government values tea sector employment^[4].

Impact of Wage Policies on Productivity

Industry officials have noted that government intervention in plantation wages has historically discouraged productivity-based payment systems, which can lead to lower tea production and reduced earnings^[4]. However, the 2026 wage increase aims to strike a balance—improving worker welfare whilst supporting industry growth through better attendance and morale.

The wage hike comes at a critical time, as labour shortages contributed to the 8.1% production decline in late 2025^[2]. Fair wages and incentives may help attract and retain workers, addressing one of the sector's most pressing challenges.

Global Context: Sri Lanka's Position in World Tea Markets

Globally, Sri Lanka accounts for approximately 3% of world tea production^[5], positioning us as a key secondary producer after China (top producer) and India (second-largest)^[5]. Whilst our production volume is smaller than these giants, our reputation for high-quality Ceylon tea commands premium prices in international markets.

Sri Lanka ranks among the top five tea exporting nations, alongside Kenya, China, India, and Vietnam^[5]. This global prominence means our industry's performance affects not just local employment but also our standing in international trade.

The global tea export market reached 1.94 million metric tons in 2024, representing 27.6% of total crop production^[5]. More than 70% of worldwide tea production is consumed domestically in producing countries, emphasising the importance of export markets like ours for generating foreign exchange^[5].

Challenges Facing the Tea Industry Workforce

Structural Issues

Beyond wages, the tea sector faces several structural challenges that impact employment stability:

• Ageing tea bushes — delays in replanting reduce yields and require ongoing labour investment
• Rising input costs — fertilisers and electricity have become increasingly expensive, squeezing profit margins
• Climate vulnerability — cyclones and irregular rainfall threaten production and employment
• Limited skills development — workers often lack access to training for higher-value roles

Social Concerns

The Ethical Tea Partnership notes that violence against women in tea estates is higher than the national average^[1], highlighting workplace safety and dignity issues that go beyond wages. Addressing these concerns requires comprehensive workplace policies and support systems.

Government Support and Future Outlook

Fertiliser Subsidy Programme

The government's fertiliser subsidy has been instrumental in supporting production. This direct support helped boost 2025 output and demonstrates ongoing commitment to the sector's viability. However, long-term sustainability requires balancing subsidies with productivity improvements and market competitiveness.

2026 Growth Projections

Industry officials remain optimistic about 2026, forecasting growth of 10–12% despite recent challenges^[3]. Achieving the 300-million-kilogram production target will depend on:

• Favourable weather conditions
• Successful implementation of wage increases and incentive schemes
• Progress in replanting programmes
• Stable input costs and government support
• Sustained international demand for Ceylon tea

Frequently Asked Questions

How many people work in Sri Lanka's tea industry?

Whilst the search results don't provide exact employment figures, the tea sector employs thousands of workers across plantations in the central highlands and other regions. The industry is one of Sri Lanka's largest employers in the agricultural sector, with employment concentrated in districts like Kandy, Nuwara Eliya, and Matara.

What's the new minimum wage for tea estate workers in 2026?

The minimum wage for estate workers has been increased to 1,750 rupees per day, comprising a base wage of 1,550 rupees plus a 200-rupees daily attendance incentive^[4]. This represents a significant increase from the previous minimum of 1,350 rupees per day^[4].

How much foreign exchange does tea generate for Sri Lanka?

In 2025, tea exports earned USD 1.506 billion^[2], contributing between 10–13% of the country's total export earnings^[1]. The sector generates approximately USD 1.4 billion annually on average^[1].

What challenges is the tea industry currently facing?

The sector faces rising input costs, labour shortages, delays in replanting tea bushes, and climate-related risks such as cyclones^[2]. These challenges contributed to an 8.1% production decline in the third quarter of 2025^[2].

Will tea prices increase in 2026?

The average export price has remained stable at around USD 5.85 per kilogram^[2]. Future prices will depend on global demand, supply from competing producers, and quality factors. The 2026 growth forecast suggests confidence in sustained demand for Ceylon tea^[3].

How does Sri Lanka's tea production compare globally?

Sri Lanka accounts for approximately 3% of global tea production^[5], ranking as a key secondary producer. Whilst smaller than China and India, our Ceylon tea is renowned for quality and commands premium prices in international markets^[5].

What This Means for Sri Lanka's Future

The tea industry's projected growth of 10–12% in 2026 offers encouraging prospects for rural employment and national economic development. The government's wage increases demonstrate commitment to improving worker welfare, which should help address labour shortages and boost productivity.

However, realising this growth potential requires sustained effort on multiple fronts—from managing input costs and climate risks to investing in worker development and workplace safety. For locals in tea-growing regions, these developments translate to better employment opportunities and improved household incomes.

As we move through 2026, keeping an eye on production figures, export earnings, and employment trends will help us understand whether the sector can deliver on its promising forecasts. Supporting our tea industry—through fair trade choices, awareness of working conditions, and backing government initiatives—contributes directly to the prosperity of thousands of Sri Lankan families who depend on this vital sector.

Sources & References

1. Ethical Tea Partnership — Sri Lanka — etp-global.org
2. Sri Lanka Tea Industry Forecast to Grow 10–12% in 2026 Despite Challenges — lankanewsweb.net
3. Ceylon Tea Industry Looks Forward to a Promising 2026 — lankagreenfoods.com
4. Sri Lanka Budget 2026: Plantation Worker Wages Hiked by State Decree — economynext.com
5. Tea Statistics By Market Size, Production, Trends and Facts (2026) — electroiq.com