The COVID-19 pandemic has brought the world to a standstill, hurting the tourism industry due to travel restrictions and border control measures designed to reduce contact between people.
Indonesia has been hit particularly hard. In 2020, the number of international visitors dropped by 75% and domestic trips were halved. Tourism businesses have had no choice but to reduce business hours, lay off employees and implement pay cuts.
We studied the impact of COVID-19 on workers and businesses in the tourism industry in Indonesia. We found the collapse of the industry, a key sector in Southeast Asia’s largest economy, disproportionately affected women, youth and low-education workers.
Who is most at risk?
Before COVID, tourism accounted for 5.7% of Indonesia’s GDP.
With COVID-19, the tourism industry’s revenue loss is estimated at Rp 202 trillion (US$14 billion) from January to September 2020. In this time the contraction of tourism has cost the country Rp 272.9 trillion in lost GDP (1.7%).
This placed 3.4 million jobs at risk (2.6% of the national loss of workforce).
Bali suffered the hardest blow, losing 32% of jobs, or one in every three jobs. This translates to around 820,000 workers at high job risk.
Riau Islands and Yogyakarta each lost 11% of jobs, followed by Nusa Tenggara Barat (8%).
Around 1.63 million women, 755,000 youth employees (aged 15-27), 1.12 million people with low education, and 541,000 people with income less than Rp 1 million per month are among those affected across Indonesia. This translates to 3.1% of female workers, 2.7% of youth employees, 3.1% of low-education workers and 2.3% of low-income workers.
Many women are tourism entrepreneurs. They are involved in small and informal businesses such as running shops, restaurants, massage parlours and tourism guides. Related tourism jobs performed by youth, low-education or low-income workers include photographers (on the spot), motorcycle taxi drivers, waiters, tour guides, tourism equipment rental providers and cleaners.
The vulnerability of each group and the areas that are impacted vary. It’s influenced by whether workers can keep their jobs and, if not, whether they can secure a new position quickly to maintain a stable inflow of income.
In the current situation, regions with a strong focus on tourism before COVID-19, such as Bali and Yogyakarta, would struggle to provide new employment opportunities.
Similarly, people who have jobs in sectors that face high unemployment (such as hospitality, retail and transport) would find it difficult to find new occupations due to fierce competition among people with similar skill sets.
As a result of tourism losses in 2020, female workers in Yogyakarta and Bali, youth staff in Bali, low-income employees in Riau Island and Jakarta, as well as low-education workers in Nusa Tenggara Barat face more than 10% unemployment rates.
This job pattern shows how important tourism is to support female entrepreneurs and youth development in high-tourism growth provinces. It also shows the need to provide jobs for low-education and low-income workers in poor regions.
The pandemic has decimated many opportunities for those who were already financially disadvantaged.
What’s next
We carried out this research in collaboration with the Fiscal Policy Agency, Ministry of Finance Indonesia, to provide policymakers with evidence for developing stimulus packages.
This is important because, even with vaccines, the financial impact of the pandemic will continue to impact poor and vulnerable communities.
To break this vicious cycle, the government needs to channel swift and significant mitigation measures to the most needy communities.
We recommend that the national government direct central funding to the regional level to assist with wage compensation, skill training or job relocation. It should also provide low-interest loans and tax relief to small and medium tourism enterprises in the most affected provinces.
We also recommend that the government promote a “domestic-led” travel strategy to fill the empty rooms and seats in destinations that originally relied on international markets. For individuals who have funds to spend, the best support for recovery is to travel again when it is safe, while following the health safety protocols.
Choosing local destinations and patronising small and medium tourism enterprises where possible will help to rebuild jobs for youth, women and low-education workers.
_This research is funded by the Australian government through the PAIR program facilitated by the Australia-Indonesia Centre (AIC).
_The Australia-Indonesia Centre (AIC) supports The Conversation Indonesia (TCID) in the publication of this article.