CARIBBEAN: Feeling the Effects of Global Recession

• by Peter Richards (port of spain, trinidad)
• Tuesday, December 16, 2008
• Inter Press Service

Harvey joined thousands of workers in the Caribbean tourism industry who have been laid off in recent weeks as the sector struggles to weather the ongoing global economic crisis.

In the Bahamas, where at least one hotel retrenched as many as 800 workers, Prime Minister Hubert Ingraham warned that the industry was witnessing a deep 'seasonal falloff' and predicted further declines for the start of next year.

'As a result of this economic contraction, government revenue is down,' Ingraham said in a national broadcast on Nov. 10. Since that speech, labour officials note, more than 1,000 workers have become unemployed.

Last week, the Jamaica-based hotel chain Sandals Resorts International added to the woes facing the sector when it announced that it could no longer bear the losses and that a decision had been taken to reduce its staff in the Caribbean.

'Had we not made operational changes earlier, the staff cuts would have been greater at this time,' the company said, noting that more than 1,000 workers would be sent home.

St. Lucia tourism officials have already warned that as many as 4,000 jobs could be lost. Tourism Minister Allan Chastanet said that a government-appointed task force would be submitting a report later this week amid concerns of more layoffs.

'The intention is to give the hotels some breathing space in lieu of the fact that demand for accommodation seems to be contracting pretty severely in the marketplace and the consumers out there are simply looking for a deal,' Chastanet said.

Prime Minister Stephenson King said he had asked the committee to fast track its recommendations even as he acknowledged that he expects the situation to get worse before it gets better.

'What happens in such situations is a sort of domino reaction, there is an element of panic in the sector and reaction. When you have a leading and successful hotel like Sandals finding it prudent to take such measures, it means that other hotels will begin to examine their own staff complement and adopt similar measures,' he told reporters.

The Jamaican government has also announced measures to shore up the industry, with Prime Minister Bruce Golding adding 'now is not a time to curl up or panic.'

Golding, in his television broadcast on Sunday, said that Jamaica has expanded its advertising and marketing programme overseas. He also announced other incentives for the sector, including a reduction in the general consumption tax (GCT) paid by hotels from January next year, and a special loan facility from the Development Bank of Jamaica (DBJ) providing working capital to players in the tourism sector in addition to that already being provided by the Tourism Enhancement Fund.

Barbados is also predicting a decline in tourist arrivals. Central Bank Governor Marion Williams said that the most recent projection was for a four to five percent decline in long stay visitor arrivals in 2009 and no growth in 2010. The situation could affect 14,000 jobs.

'Gross expenditure could be down nearly four percent in 2009 before a small recovery in the following year, and during 2009 our foreign exchange reserves may fall by well over a hundred million,' Williams said, noting that based on present uncertainty, the Bank was also bracing for another scenario, which envisages that if the global recession is deep and prolonged, tourist arrivals could decline by as much as 20 percent in the future.

Antigua and Barbuda, like Barbados, is heavily reliant on tourism and officials have described 2008 as 'a very bleak and grim season'.

General Manager of the Antigua Hotels and Tourists Association (AHTA) Neil Forrester said a meeting with wider stakeholders is scheduled for this week 'so that we can all come up and see how they can help the hotels get through the crisis'.

Hotels occupancy is at least 50 percent behind in reservations as compared to last year and Forrester warns that the figure may reach as high as 80 percent, with accompanying layoffs.

Caribbean countries rely heavily on tourism. According to the Caribbean Tourism Organisation, (CTO), nearly 23 million people visited the region last year, a 19.4 percent increase over 2002.

The United States, Canada and Europe continued to be the main markets with the figures showing that nearly 15 million visitors had arrived here during the period January to July this year.

Last year, the sector recorded revenue of 57 billion dollars compared with 25.4 billion dollars in 2006.

But the Barbados-based CTO noted that the Bahamas and Puerto Rico, both primary vacation destinations, had seen 'notable fall offs' and that the region had recorded marginal declines in cruise tourism since 2006 as well.

The CTO also warned that 'galloping oil prices' had made it difficult for the industry and predicted a weak 2008-9 winter season, especially for visitors coming out of Europe.

Britain has now added to the problems facing the Caribbean tourism sector. Last week, Chancellor Alistair Darling scrapped the planned introduction of an aviation tax -- designed to hit airplanes rather than passengers -- and instead introduced a new, higher rate of air passenger duty.

While persons flying short-haul to Europe will only be hit by a relatively modest increase in duty, the substantial increases in long-haul duty were criticised by tour companies and airlines, who called them a 'tax on families'.

'While hard-working middle class families are feeling the effects of the recession, the chancellor has chosen to tax families that want to escape on holiday,' complained Paul Charles, spokesman at Virgin Atlantic, one of the major carriers to the Caribbean.

He said that the Caribbean, whose duty is increasing from 62 dollars (40 pounds) to 116 dollars (75 pounds) in two years, would be very hard hit.

But even as the tourism sector grapples with the downturn, the Trinidad-based International Labour Organisation (ILO) Office for the Caribbean is urging regional governments to ensure that 'that decent work remains on the national development agenda'.

'It is only through adopting the principles of productive work delivering fair income, security in the work place and social protection for workers and their families...can the Caribbean survive what is said to be the deepest international recession since the 1930s with our human dignity intact,' the ILO said.

© Inter Press Service (2008) — All Rights ReservedOriginal source: Inter Press Service

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