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Temporary Layoffs in the Hospitality Sector - Vatel

Temporary Layoffs in the Hospitality Sector

"That the sector will recover the 2019 levels, I have no doubt, when? That depends on whether it will be able to save a large part of the high season, and on how traveler habits can change, and in what volume."


Faced with the crisis situation that the country is going through, Vatel Malaga teachers offer their experiences and knowledge. The Human Resources professor of the Bachelor program in International Hospitality Management, Paloma Jiménez López helps us understand temporary Layoffs in the hotel sector.

The image presented by the tourism sector at the end of 2019 was as follows, one of the main sectors of the Spanish economy, to which it contributed 125,529 million euros, representing 12.3% of GDP. People-intensive sector, which translated into an even higher contribution as a generator of employment, creating 13.3% of national employment and contributing 2.5 million employees in branches related to tourism, The Spanish tourism sector was at the forefront from OECD countries.

But, in addition, its strategic nature was based not only on its central role in the economic system and as the engine of the labor market, but also on its transversality and great effect of drag and multiplier on the rest of the productive activities, in addition to promoting territorial cohesion and balance due to its extension over the whole of the Spanish economy. It is important to highlight that tourism contributed to the improvement of the international reputation of Spain, as it is positioned both at the country level and as a company, among the world leaders in the industry. As a reflection of this, the Spanish tourism sector led the ranking of world tourism competitiveness. The prospects for the tourism sector for the coming years were very positive. All internationally recognized sources such as the OECD forecast continuous and intense growth in tourist demand, and Spanish destinations are positioned very favorably.

The image has changed, it has been stopped abruptly, the delay imposed by the authorities to try to contain the pandemic has put in check the activity of many companies.

What started as a supply problem due to the health crisis in China has increased exponentially in a matter of days, reaching unimaginable dimensions and economic effects not yet determined, in part, because there is no sign of seeing the end of this crisis, But what is real today is that we are facing disastrous data. With this scenario, many companies have opted for the presentation of the so-called ERTE (Temporary Employment Regulation File), one is a figure that allows a company to suspend the contracts of a group of workers for a certain time. It is also possible to reduce the working hours of certain workers for a time. This implies that the company would save those salaries during the time the ERTE is carried out, although the employees are still linked to the company.

The impact of the coronavirus on employment has begun to be noticed throughout the service sector, but it is having a greater impact on tourism, which represents 12.3% of Spanish GDP and could lose more than 33,000 million and threatens to cause levels job destruction similar to those of 2008 and can send unemployment to almost 2.5 million people in the short and medium term of direct jobs, to which should be added all the underlying employment of the sector, suppliers, similar services if the Covid-19 crisis lasts for four months.

ERTES have been presented by chains such as Iberostar, the hotel company has 34,000 employees worldwide or the Meliá hotel chain that has announced that it will shortly present an ERTE for its staff in Spain, which amounts to an average of around 15,000 people, but they are not the only ones and in the coming days we will see how the list of companies in the sector that join this measure is expanded. Large hotels have already begun to notify temporary employment regulation files (ERTE) to their workers to survive the period of confinement due to the Covid-19 pandemic, which has caused the abrupt drop in demand for rooms, the closure of borders. Spain and that, before the end of the month, will be reflected in the voluntary cessation of activity of all accommodation.

The drama of unemployment in Spain from 2008 to 2013 can be avoided with the prohibition of layoffs and the extension of ERTEs. It is essential to learn from that to avoid the rupture of the productive fabric of that time, and that millions of new unemployed retract consumption. The expectation that this is an option becomes at the same time that, this time, all the means can be put in place to avoid it, stimulating the reduction of working hours and wages, which are undoubtedly always better than layoffs.

The most solvent hotel companies/groups must be supportive, and less clingy than in many cases they have been used to until now. They will be looked at with a magnifying glass if they are an active part of the recovery of the sector, or if they give symptoms of selfishness. Because the whole country and the whole world will be united like never in order to recover, and vigilant about who does not contribute. These chains accumulate historical years of benefits, which can allow them to cope with a very bad 2020, thinking of the most normal 2021. That the sector will recover the 2019 levels, I have no doubt, when? That depends on whether it will be able to save a large part of the high season, and how travelers' habits can change, and in what volume. There is enormous uncertainty about the demand, as to whether it will dare to spend or will be afraid to consume. Or even without being scared, if they would rather not after two months forced to get used to spending on food and little else. But instead, what is certain is that demand will be more stimulated than ever to consume, and thus make the wheel turn again as soon as possible.

Paloma Jiménez López 

Human Resources Professor at Vatel Málaga.

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