We can all agree that everyone is affected by the Covid-19 pandemic. Nobody is safe from the virus, regardless of their social status. Top politicians, celebrities, and sports personalities have been infected. Nevertheless, if the disease spreads further, it will continue to expose the inequalities that exist in our society.
According to the International Labor Organization (ILO), the pandemic has cruelly highlighted inequalities in many countries. From catching the virus and staying alive to coping with its dramatic economic consequences, the vulnerable people are taking a much harder hit.
To imagine how serious the impact will be for those vulnerable, it is important to note that Thailand is already listed among the top ten most unequal countries in the world in terms of wealth distribution. The gap between rich and poor is getting wider and wider every year. The root cause of this problem is in fact a very structural one, which is therefore very difficult to fix. The outbreak’s impact will only make this matter worse.
Without a doubt, the tourism sector will be directly hit by the Covid-19 lockdown as everyone is minimizing risk by avoiding traveling both internationally and domestically.
Tourism has played an important role as a driving force for economic growth, especially when other engines are not working to their full potential. Asked how important tourism is for Thailand, the sector is estimated to account for around 20 per cent of the country’s GDP from both direct and indirect revenues. In terms of employment, three related sectors – hospitality, wholesale and retail trade, and transportation and communication together employ more than ten million workers or comprising more than 25 per cent of total employment.
About 35 per cent of these employees get paid monthly from business owners; whereas, 60 per cent are self-employed and expected to bear the brunt of the economic impact of the lockdown. The reason is many tourism operators’ first decision would be to ask their employees to leave without pay, cut down the number of workdays per month or pay wages at a reduced rate.
It is possible that staff terminations could be avoided initially, given the difficulty it may cause once the business demands return to normal, but a prolonged crisis means terminations will occur.
According to an early March Tourism Authority of Thailand (TAT) estimate, the number of foreign tourists coming to Thailand this year will drop around 30 million people or down 10 million from last year in a worst-case scenario. But it is now April and the death toll and number of confirmed cases continue to climb. If this does not change, we can expect to see an even sharper drop in inbound tourism this year.
Moreover, once the situation is resolved, it does not mean normal life will resume immediately. The first wave of the returns will be those business travelers and people in the MICE (Meetings, Incentives, Conferences, Exhibitions) industry, whereas the leisure travelers might need some time before jumping back to their vacation plans. 2020 is no doubt a lost year for the tourism and travel industry.
Government to the rescue
To mitigate the fallout from the declining tourism numbers and a stagnating economy, the Thai government has come out with a 5,000-baht handout, which is intended for temporary employees, contract employees, as well as those self-employed individuals that are not covered by the social security system.
This menial sum of payout is insufficient to provide relief for those impacted by the current situation and would not be enough for the impacted people to even cover their basic cost of housing and 3-meals a day.
The insufficient fund was one of the key reasons for the mass exodus of the temporary workers who started to move out of Bangkok soon after the partial lockdown of the city began on March 26.
The scene of thousands of people flocking to bus stations made social media waves as arguments, online and offline, centered on who was to blame for the whole fiasco. However, one could hardly blame the less fortunate for fleeing the city for provinces where cost of living is lower.
Bailout
After coming up with measures to help the poor, the Thai government has come out to help the tourism sector as well by providing a 10-billion-baht credit line, specifically for tourism operators, that would be managed directly by the Government Savings Bank.
Apart from this, the government has also extended the payment period for rental fees and the use of state property to September 2020. These measures are a good starting point but to assist the severely hit sector, which accounts for 20 per cent of the country’s GDP, will require much more aggressive initiatives.
The World Travel and Tourism Council (WTTC) has given guidelines for governments to roll out policy measures for their tourism sectors during the outbreak. The WTTC said that measures should focus on protecting livelihoods and ensure incomes, especially for those working in the self-employed sector, are protected during the lockdown period.
For instance, fiscal support and unlimited interest-free loans should target operators to make sure they have enough funds to pay salaries and to prevent them from collapse. All governments dues and financial demands on tourism sector need to be waived with immediate effect for at least the next 12 months. Lastly, a series of cash flow assistance need to be implemented as liquidity is the most important factor during the business survival period.
The Thai government could learn from other countries’ impressive measures which have been executed around the world and be creative in their relief initiatives.
Such interesting polices include Australia’s waive of fees and charges for tourism businesses that operate in the Great Barrier Reef Marine Park and commonwealth National Parks, the UK’s no VAT payment for companies until the end of June, Singapore’s rebates on aircraft landing and parking charges, and Portugal’s vocational training scholarships for affected people.
Policy responses must ensure that support reaches the workers and enterprises who need it most, especially if the lockdown period is extended.
While some workers can reduce their exposure to the risk of contagion by teleworking from home, this is not a luxury that is afforded to all.
Those most vulnerable economically are also the most vulnerable health-wise. There is a responsibility on both society and the government to make sure they are okay.
By Oliver Chan
