Tourism industry lobbying for TERS extension for the sector

SATSA submitted the below motivation for TERS extension to TBCSA in support of their lobbying efforts with Department of Employment and Labour and UIF for continued support to the tourism industry.   

Urgent assistance needed to save thousands of tourism jobs

Whilst the COVID-19 crisis and subsequent lockdown has had a negative impact on all business sectors, it has been particularly hard on the tourism industry, which felt the impacts as early as February and will most likely be one of the last sectors to recover.

The industry is facing dire consequences. Each day the tourism sector remains in lockdown and borders remain closed R748million of spending is lost to the industry and the economy. The TBCSA estimates a loss of 600,000 jobs if the sector remains closed with serious knock-on effects in other sectors.  A Bureau for Economic Research analysis indicates that 1,02 to 1,15 million jobs in total through-out the economy could be lost due to the extended shut down of the tourism industry.  Roughly 49,000 SMMEs have already been negatively affected and many have already permanently closed down.

Whilst other sectors have been opened and can operate at close to normal levels, tourism remains severely affected with intra and interprovincial leisure travel not allowed, and international travel entirely prohibited. A significant portion of the industry’s revenue (44%) is generated by international inbound tourism, and hence the sector cannot be sustained by domestic tourism only and certainly not by the current reduced business travel and even the gradual reopening levels of domestic tourism expected.

Prolonged travel restrictions will have a devastating impact on tourism business survival and the private sector is working hard to lobby for the earlier opening up of the industry, having put world-class safety protocols in place. However, government scenarios places recovery only towards the end of 2020 / beginning 2021.

The UIF TERS benefit saved many thousands of tourism jobs over the past three months, with more than 250,000 employees applying for the scheme in April and May, and this is something that the industry wishes to express its sincere gratitude for. However, with TERS discontinuing from June 2020, the sector is facing mass retrenchments. A sobering fact considering that South Africa’s official unemployment rate was at 30,1% for the first quarter of the year.

The most recent TBCSA, IFC and National Department of Tourism survey of 1,500 respondents indicates that 61% of tourism businesses remain fully closed and 33% are only partially operational. 65% of those closed do not expect to open till September or later with 33% expecting to open in December or later, or simply not knowing when they might open. 66% of closed businesses indicate that international inbound travel has to resume before they can open. As they hope or plan to re-open, a full 69% expect that they will only partially re-open, i.e. not all jobs will come back on stream. 

With many businesses either not open, or only partially open, many jobs in travel and tourism will not be sustained for the balance of 2020, and potentially well into 2021.

The survey also showed that 5% of businesses had already made all their staff redundant and a further 11% had made more than 50% of their staff redundant. Job losses are already happening.

In addition, 34% of enterprises have furloughed more than 50% of staff, and 16% of enterprises have furloughed all staff. To support furloughed staff, 65% of respondents had applied for TERs and 46% had been successful.  

We, therefore, call on the public sector to partner with industry to assist our sector to ensure employees have some income and to protect tourism jobs for the recovery. The motivation for continued employee support is two-fold:

  • hundreds of thousands more people will be destitute as tourism income, jobs and TERS support dries up; something which South Africa cannot afford
  • the tourism sector will  recover (as is currently being demonstrated in countries which have moved well beyond their peak). As such tourism can and will continue to be an engine of beneficial, job-rich economic growth for South Africa, something the country will be in dire need of

 Since the lockdown regulations and travel restrictions are enforced by government regulation, and the industry is unable to continue to do business, we believe that there is an innate fiduciary responsibility for Government action to assist the industry to survive.

Without support, there will be no industry to reopen. We will forego and lose a substantial portion of an industry that contributes in total 8,6% to GDP, supports 1,5 million jobs throughout the economy, is our 2nd biggest export sector, is critical to our balance of payments and is vital to support our all our international trade and FDI.

The industry will need government financial assistance for tourism employees to be able to have some income and avert destitution and for businesses to survive. The TERS fund has been amongst the, if not the best, scheme for this and enables formal employees to be direct beneficiaries. 

Allowing tourism activity to resume safely and re-opening borders as soon as we reach the lower levels of the post-peak pandemic (as is happening currently in many countries), will assist in supporting more jobs. This will reduce the extent of reliance on TERS but will not be sufficient to support all jobs.

To limit job losses, the tourism industry is hereby calling for TERS to be extended until December 2020. This will allow businesses to avoid retrenchments and preserve jobs until operations can resume and restructuring and recovery processes can be implemented.  It will ensure that vital skills are retained within the sector.

Through the TBCSA and its member associations, the management of the TERS fund distribution can be done as a public-private partnership through an industry-driven self-regulation project. This will protect the reputation of our industry by ensuring proper verification and the elimination of potential fraud or the incorrect distribution and use of the funds.

Kind regards,
Hannelie du Toit