Tourism businesses face risk of labour crisis

Photo: InterContinental Phu Quoc Long Beach

According to statistics from Vietnam’s Tourism Advisory Board (TAB), the number of employees working in the tourism sector decreased by 90 per cent as of the latest pandemic outbreak. The reason for the serious decline is that travel, accommodation, and catering businesses have had to cut many employees over the past year. At the same time, the opportunity to create more jobs is also becoming more difficult as COVID-19 has halted almost all tourism activities.

Research by TAB showed that 18 per cent of tourism businesses have had to lay off all their employees, and 52 per cent are maintaining operations with only 20-50 per cent of their former staff.

In Ho Chi Minh City, in the first five months of the year, nearly 500 travel businesses (48 per cent) suspended their operations.

In Hanoi, 378 out of 1,294 international and domestic travel enterprises have withdrawn their business licenses, with 90 per cent of employees (over 12,000 people) forced to quit their jobs.

Meanwhile, 90 per cent of tourism companies in Danang have also conducted staff cuts, and 61.6 per cent of businesses have reduced the scale of operations, with about 12 per cent of businesses claiming that they can only hold out until the end of 2021.

These statistics are expected to further exaggerate if the situation continues. Understandably, 80-90 per cent of tourists have decided to postpone or cancel their tours in May and June. At this time, the tourism industry is facing three major difficulties: the risk of bankruptcy, the overabundance of a large workforce, and the retaining high-quality workers until the pandemic is controlled.

Common concerns

As CEO of VietSense Travel – one of the few businesses still operating after the impacts of COVID-19 – Nguyen Van Tai admitted his firm may exhaust all its resources to maintain the current personnel if the pandemic continues for a long time.

Tai said that his employees are all excellent people who have been retained so far. They also stay because of their passion for the job. “We worry that the tourism industry might face a severe shortage of qualified workers after the pandemic, while additional workforce cannot immediately adapt to the job,” Tai said.

Nearly a quarter of highly-qualified workers in the tourism industry have moved to work in other industries, according to a survey by the Vietnam National Administration of Tourism (VNAT). Deputy director general of VNAT Ngo Hoai Chung acknowledged that the restoration of this number of workers is a very big problem and Vietnam’s tourism industry will have to increase training to make up for the shortfall.

However, recruitment is not easy because the number of jobs and the demand for them in the tourism sector is extremely limited. Even with famous vocational training centres such as the Saigontourist Hospitality College and Practical Tourism of VietSense Travel, the recruitment process has been delayed. According to the director of Practical Tourism, “Many people may not choose to learn anything about tourism after this crisis.”

Adapting to new conditions

According to industry experts, one of the most urgent issues that needs to be solved is to support businesses through bailout packages.

“There are two issues where we hope to see support from the state. First, financial support for tourism businesses to reduce pressure in the absence of income and avoid the risk of bankruptcy. At the same time, it is necessary to have policies to support unemployed workers, as well as other regimes to retain workers in the tourism sector,” said Chung of VNAT.

However, many tourism companies complained that they have not received government assistance, despite many proposals. Before thinking about further plans, businesses want to soon access the government’s support packages to restore resources and recover from the pandemic.

Nguyen Thi Xuan Lan, CEO of Golden Life Travel, said that her business is currently enjoying extended deadlines for tax payments and a reduction in corporate income tax by 30 per cent.

However, the tax reduction is almost meaningless for tourism businesses as there is no profit to pay tax for. Therefore, Lan proposed to the authorities to exempt corporate income tax and reduce VAT by 50 per cent for travel agencies, especially tour operators.

Some other travel businesses also quickly changed their business strategies to adapt to the new conditions. For instance, by researching new products and routes for a relaunch as soon as the pandemic is under control.

Nguyen Quoc Ky, chairman of Vietravel Holdings, recommends that although tourism is temporarily frozen, industry authorities need an action programme to promote Vietnam’s tourism. “Not only is it important to reposition the domestic market policy in Vietnam’s development strategy, but at this time, the industry needs to complete toolkits in order to welcome international visitors and be ready for the reopening of international tourism,” Ky suggested.