This paper attempts to discuss the reasons for the improvement of labor productivity after the privatization. This study mainly based on the primary data gathered from the laborers employed in tea estates in the Ratnapura district in Sri Lanka. 120 of laborers are selected representing 40 laborers from 03 privatized estates situated in the Ratnapura District. Data was mainly collected through a structured questionnaire and analyzed qualitatively and quantitative techniques. The study reveals

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... t the financial benefits i.e. salary, allowances, salary increments, overtime and loan facilities and non-financial facilitieswelfare facilities like housing, education, health, daycare centers, transport, electricity etc. provided by the management company for laborers are highly affected to the improvement of labor productivity through the increase of labor satisfaction. Labor satisfaction regarding financial and non-financial benefits was relatively very high. On the other hand, strict management and application of new technology for the factories affect the improvement of labor productivity. Finally, it can be concluded that the labor productivity in tea plantation sector has improved after privatization due to the improvement of labor satisfaction, strict management and application of new techniques of the private companies.