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Impact of Covid 19 on Tourism sector of Asia Pacific, International Labour Organisation report

Impact of Covid 19 on Tourism sector of Asia Pacific, International Labour Organisation report

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  • GS 3 || Economy || Services || Tourism

Why in the news?

  • The latest ILO data on the labor market impact of the COVID-19 pandemic reveals the devastating effect on workers in the informal economy and on hundreds of millions of enterprises worldwide.

Tourism as a sector

  • Tourism creates a large number of semi-skilled jobs for the local population is not only local hotels and catering trades but also in other fields like transport, retailing, heritage interpretation, etc.
  • The hospitality sector is entirely dependent on travel, trade, and tourism for its sustenance. The massive spate of cancellations in recent weeks has largely eroded the ability of hotels across India to remain operational (without piling up worrisome losses).
  • It is believed that around 70% out of a total 5.5 crore workforce could get unemployed due to this lockdown. Job losses and layoffshave already begun throughout the country.
  • Significance of Tourism:It can be seen in terms of getting foreign exchange, creating employment (directly and indirectly, such as, for service providers, taxi drivers, etc.), building character, tolerance, awareness, etc.
  • World GDP:10% of the world’s GDP (Gross Domestic Product) comes from coastal tourism.
  • Job Creation:These sectors are one of the crucial sectors for the Indian economy which are closely linked to employment and job creation.
  • 12.75% of the total jobs in the country (directly or indirectly) come from the tourism and hospitality sector.

Impact of Covid 19 on the Tourism sector of Asia Pacific

  • The impact of the COVID-19 pandemic on the tourism sector in Asia and the Pacific has been nothing short of catastrophic.
  • Even with countries in the region focusing heavily on vaccinations and designing strategies to slowly re-open borders, jobs and working hours in the tourism-related sector are likely to remain below their pre-crisis numbers in Asia–Pacific countries into next year.

Job losses and unemployment

  • Evidence from five countries where data is available – Brunei Darussalam, Mongolia, Philippines, Thailand, and Vietnam – reveals job losses in tourism-related sectors in 2020 were four times greater than in non-tourism sectors.
  • Nearly one-third of total job losses were linked to the tourism sector with an estimated 1.6 million tourism-related jobs lost in these five countries alone.
  • With many additional jobs indirectly linked to the sector, the real estimate of tourism-related jobs suffering the effects of the COVID-19 pandemic in the region is likely to be much higher.

Impact on women’s works

  • Where decreases in tourism-related jobs were seemingly small, a deterioration in the quality of available jobs was still evident.
  • Women workers appear to have been particularly hit with an increased concentration of women carrying out food and beverage serving activities, the lowest-paid jobs in the sector.

Philippines

  • In the Philippines, employment losses and decreases in average working hours in 2020 were among the largest.
  • Employment in the sector contracted by 28 per cent (compared to an 8 per cent loss in non-tourism-related sectors) and average hours worked by 38 per cent.
  • Workers in the tourism-related sector working zero hours per week rose two thousand-fold (affecting 775,000 workers).

Vietnam

  • In Viet Nam, the dire consequences of the crisis on the tourism sector were reflected primarily in decreasing wages and increased informality. Average tourism wages fell by nearly 18 per cent, with the decline for women employees even higher at almost 23 per cent. While the number of informal employees in tourism increased by 3 per cent in 2020, the number of formal employees decreased by 11 per cent.

Thailand 

  • The impact of the crisis on tourism employment in Thailand was more muted, yet contractions in wages and working hours were stark and jobs in the sector contracted while jobs in non-tourism-related sectors experienced a slight gain.
  • Average wages in the tourism sector decreased by 9.5 percent overall as tourism workers moved into lower-paid jobs like food and beverage serving activities.
  • Average hours worked declined by 10 per cent. In the first quarter of 2021, employment was below pre-crisis numbers in all tourism-related sub-sectors other than food and beverage serving activities.

Brunei Darussalam

  • The tourism sector in Brunei Darussalam was hard hit in terms of both lower employment and fewer average hours worked, which contracted by more than 40 per cent and nearly 21 per cent respectively.
  • It was also the country that saw the largest difference between employment losses in tourism and non-tourism-related sectors.

Mongolia

  • Likewise, in Mongolia, tourism employment and average working hours suffered considerably from the pandemic and contracted correspondingly by almost 17 per cent and more than 13 per cent.
  • The impact on employment among male tourism workers was particularly sizeable, falling by around 29 per cent.

India

  • India is a large market for travel and tourism. It offers a diverse portfolio of niche tourism products – cruises, adventure, medical, wellness, sports, MICE, eco-tourism, film, rural and religious tourism. India has been recognized as a destination for spiritual tourism for domestic and international tourists.
  • India ranked 34 in the Travel & Tourism Competitiveness Report 2019 published by the World Economic Forum.
  • In WTTC’s Economic Impact 2019 report, India’s Travel & Tourism GDP contribution grew by 4.9%, which was the third-highest after China and the Philippines. Additionally, the report also highlights that between 2014-2019, India witnessed the strongest growth in the number of jobs created (6.36 million), followed by China (5.47 million) and the Philippines (2.53 million).
  • The COVID-19 pandemic has dented the tourism industry. In September 2021, the Ministry of Tourism announced plans to allow international tourists to enter India and formal protocols are under discussion. According to previous announcements, the first 5 lakh foreign tourists will be issued visas for free.
  • The hotel & tourism sector received a cumulative FDI inflow of US$ 15.89 billion between April 2000 and June 2021.
  • In 2020, the travel & tourism industry’s contribution to the GDP was US$ 121.9 billion; this is expected to reach US$ 512 billion by 2028. In India, the industry’s direct contribution to the GDP is expected to record an annual growth rate of 10.35% between 2019 and 2028.
  • Due to higher forward and backward linkages, the sector has a multiplicator effect on the local economy.
  • This sector can be seen as a medium for the creation of jobs, a tool for boosting soft power, and a foreign exchange earner and plays a critical role in ensuring decentralized development.
  • Therefore, the collapse of the Tourism and Hospitality sector will certainly hit these areas.
  • Drastic changes in people’s social behavior are evident in the post-pandemic scenario. This will impact the current business model of the tourism and hospitality industry.
  • India has been no exception, due to almost zero revenue, the sector is facing major concerns like liquidity crunch, delay in payment of salaries, and job losses.

Way forward

  • Recovery will take time and affected workers and enterprises in the tourism sector will continue to require assistance to replace lost incomes and preserve assets.
  • Governments should continue to implement support measures while striving to vaccinate all residents, migrant workers included.
  • Measures for economic reactivation should follow a job-rich approach, backed by stronger employment policies and institutions, better-resourced and comprehensive social protection systems.
  • International coordination on stimulus packages and debt relief measures will also be critical to making recovery effective and sustainable. International labour standards, which already enjoy tripartite consensus, can provide a framework.

Mains model Question

  • Discuss briefly the significance of the Tourism and Hospitality industry and it has been impacted due to Covid-19.

References