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The global tourism industry isn’t destroyed – it’s only on hold

It’s the jobs and livelihoods of hotel & tourism workers that face destruction

by Dr Hidayat Greenfield IUF Asia/Pacific Regional Secretary

22 April 2020

There is no doubt that the COVID-19 pandemic has hit the tourism industry hard. With flights cancelled and countries on lockdown, tourist arrivals stopped, and hotel occupancy rates hit zero. In most countries in Asia, the temporary closure of hotels will be extended until June. But what makes the COVID-19 pandemic a COVID-19 crisis is the failure of governments and employers to mitigate the worst effects of this public health emergency. Clearly the biggest failure is rooted in decades of privatization and commercialization of public health care, leaving us with underfunded, understaffed, underequipped public health care systems and overworked public health workers. For millions of tourism workers facing unemployment and poverty, the pandemic became a crisis when the companies leading this trillion-dollar industry (international tourism revenue in 2018 was US$ 1.45 trillion), decided to shift the cost of the COVID-19 pandemic onto workers.

Yes, occupancy rates are zero. Yes, hotels are temporarily closed. But the response of employers in the hotel industry has a long-term impact on workers and their families. Lay-offs are permanent. Wage cuts during a temporary hotel closure aren’t temporary – lost wages won’t be repaid when the tourists return. Wages are simply gone. Also gone, it seems, is the revenue accumulated over years of high occupancy rates and a booming tourism industry. Where did all that money go? Why are workers expected to bear the costs of the COVID-19 shutdown?

In Southeast Asia, like elsewhere, the part-payment of wages during a temporary hotel closure is presented by employers as an act of generosity – proof we are fighting COVID-19 together. In Indonesia, the CEO of the family-owned media, real estate and financial services conglomerate was praised for his role in the “total war on coronavirus”, allowing a private hospital to open a temporary hospital in one of its many malls. (There was no mention of the fact that the same conglomerate owns both the private hospital it was aiding and the newspaper that reported this generosity). This same conglomerate also owns the Aryaduta hotel chain which was closed using force majeure. This misuse of force majeure allowed the company to escape its legal obligations and employer responsibility. The five-star Aryaduta Jakarta and Aryaduta Bandung were closed and all workers were forced to take ‘early retirement.’ In other words, termination.

Several international hotel chains operating in Indonesia are paying workers only 50% of basic pay during temporary closures. In every announcement and every letter to employees, this is presented as generosity: half your wages are better than nothing at all. But the fact is that hotel workers’ wages depend heavily on the redistribution of service charge. For the vast majority of hotel workers basic wages are equivalent to the legal minimum wage: 50% of basic pay is 50% of the legal minimum wage.

At the luxury Aman resorts, workers were sent home on 50% of their basic salary. Yet the basic salary is equivalent to the minimum wage of IDR 2,042,000 [120.30 Euro; US$130.50] per month. So now they are on IDR 1,021,000 per month, or just US$2.50 [Euro 2.31] per day.

In a letter to management on April 10, the union at the Amanjiwo Hotel Borobudur expressed its full understanding of the situation faced by the hotel, but pointed out that after 10 to 20 years of service, union members cannot understand why their good service and contribution to high annual revenues in the past means nothing now. The union also raised concern about wages falling well below a living wage:

Workers who are temporarily laid off only receive 50% of wages every month from April 1, 2020 to May 31, 2020, where the average received by workers is IDR 1,000,000 (US$61) per month. This is of course a very difficult burden for us to bear. The wage is below the legal minimum wage and does not allow a decent living standard. It will not be enough to cover the living costs of our spouses and children each day in the coming months, especially in this COVID-19 pandemic situation.

The union adds that the decision by management to pay only 50% of the Religious Holiday Allowance (THR) during Ramadan is a violation of their legal rights:

“… the Religious Holiday Allowance (THR) is our right and was already budgeted by the company last year (2019). Therefore, it should also be paid in full.”

The company refused.

Even where 50% of basic pay means a poverty wage below the legal minimum, employers will still withhold payment. At the Courtyard by Marriott in Bandung, after very difficult negotiations the union reached an agreement with management on April 1 to receive 50% wages and 100% of the legally required Religious Holiday Allowance (THR). Two weeks later the property owner cancelled the agreement, declaring that no wages will be paid at all in May or June.

What makes any negotiation over wages difficult is the climate of fear and uncertainty fostered by management. Management uses this fear and uncertainty to compel workers to agree to wage cuts and surrender their rights, adding to the prevailing COVID-19 anxiety. One result is an increased incidence of mental stress as a workplace illness, even while workers are removed from the workplace.

Part of the mental stress management creates is to communicate wage cuts and temporary layoffs as a personal matter. AccorHotels, for example, sends letters to employees that describe the closure of hotels, use of annual leave and compulsory unpaid leave as a personal issue. At Accor’s luxury resort Sofitel Nusa Dua Beach Resort in Bali, workers were told that the company will “assist you further in organizing your personal life for the upcoming months” adding: “We recommend that you remain mindful of your spending.” It is as if the COVID-19 pandemic and its impact on tourism is a personal experience, based on personal choices. It’s as if the decision on whether you or not you descend into poverty is up to you – just watch your spending! These so-called choices are presented by Accor’s Sofitel management in an “option form” with just two options:

Write X in one of the columns

  • (    )  Yes, I agree to accept the offer and decided to take the unpaid leave until further notice on my volition. I agree to return on duty as soon as the company requires me to. I sign truthfully without coercion from any party.
  • (   ) No, I do not accept the offer, I will bear the consequences of any future salary adjustment.

Without coercion. Yet everything about this choice of options is coercion. No pay indefinitely or take a chance and get nothing in future. There is no third option that consider years of accumulated profits and a successful business that only temporarily – for 3 to 6 months – has no revenue. The right to receive the legal minimum wage from the world’s largest hotel group is not an option.

In the same “option form” Sofitel management declares that the only responsibility the company will take for workers in this global pandemic is a “Special token of care for our Sofitel family” of IDR 2,000,000 or US$128 [Euro 118]. Not monthly. Just once. And that’s it. The rest is indefinite unpaid leave.

There is another important consequence of the non-payment or deliberate underpayment of hotel workers below the legal minimum wage. The biggest hotel companies in the world could contribute to the fight to stop the spread of COVID-19 by ensuring that workers at closed hotels can remain at home on full basic pay. These companies chose not to. Instead, they’ve reduced workers to poverty wages or no wages at all. Hotel workers are now among the working poor out on the streets searching for jobs in the informal economy. They must go out and find work of any kind to survive amidst the fear, uncertainty and anxiety of the COVID-19 crisis.


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