OECD: policies-response to Covid-19
After a critical decade for our country – the decade of austerity and memoranda – and before we could catch our breath, covid-19 was another blow to our health, our way of life and our economy with an emphasis on tourism.
Assessing the unprecedented tourism crisis due to the pandemic and the extremely uncertain prospects, the Organization for Economic Co-operation and Development (OECD) issued a report summarizing the consequences and measures implemented by the political authorities to date and examining and proposing his own point of view, how tourism can recover from the severe damage it has suffered and still exists.
We believe that the remarks mentioned can be a compass for the state, local authorities and citizens who are directly or indirectly involved in tourism.
We chose to launch this website, with an official and important text which essentially “guides and introduces us to the forest”. Because we believe that by knowing the forest we can perhaps “save” the tree.
Here are some key points from this report:
The COVID-19 crisis has hit the tourism economy with unprecedented impact on jobs and businesses. Tourism was one of the first sectors to be profoundly affected by the pandemic. The sector is also in danger of being one of the last to recover, due to ongoing travel restrictions but also due to the global recession. The consequences are not just for the tourism economy. Many other sectors that support and are supported by tourism are also significantly affected.
The unprecedented shock to the tourism economy is exacerbated by the evolving health situation. While the positive news about vaccines boosts the hopes of both tourism businesses and travelers, uncertainties and challenges remain.
Despite the proven resilience of the tourism economy to previous shocks, the sheer scale and combined nature (economy and health) of this crisis means that the road to recovery is extremely uncertain. Domestic tourism has started again in many countries, but can only partially offset the loss of inbound tourism.
The OECD estimates the reduction of international tourism for 2020 by about 80%, there is no significant recovery in international tourism flows until 2021 and it is likely to last a few years. This is in line with the recent forecasts of other organizations. The latest estimates from the United Nations World Tourism Organization (UNWTO) show a 70% year-on-year decline in international tourist arrivals in the first eight months of 2020, with exports of international tourism losing eight times as much as in 2009. economic crisis. The UNWTO also predicts that recovery to pre-pandemic levels is not expected before 2023.
Domestic tourism provides a much-needed boost to help maintain many tourist destinations and businesses and will continue to be a key driver of recovery in the short to medium term. There has been some increase in domestic tourism activity since the middle of the year, in part due to the relocation of international travel restrictions. However, this has been hampered as many countries face further surges of the virus resulting in restrictions on movement within countries. Restrictions on traffic as well as changes in demand patterns and behaviors have prevented all travel destinations and businesses from benefiting.
The tourism crisis due to the pandemic has proven economic and social consequences for many people, places and businesses as well as for the wider economy. Tourism creates foreign exchange, supports jobs and businesses, boosts regional development and supports local communities. Prior to the pandemic, the sector contributed directly, on average, to OECD countries at 4.4% of GDP, 6.9% of employment and 21.5% of service exports (and 6.5% of world exports according to the World Trade Organization). However, these rates are much higher for several OECD countries, where tourism is the main driver of economic activity, such as France (7.4% of GDP), Greece (6.8%), Iceland (8, 6%), Mexico (8.7%), Portugal (8.0%) and Spain (11.8%). The indirect effects of tourism are also significant, exacerbating the magnitude of the shock to national and local economies.
The disruption of tourism is having an impact on the wider economy, given the interconnected nature of the sector. The OECD estimates that more than a third of the added value of tourism generated in the domestic economy comes from indirect effects, reflecting the breadth and depth of links between tourism and other sectors (eg food production, agriculture, transport, business services).
The United Nations Conference on Trade and Development (UNCTAD) estimates that global GDP losses due to the tourism crisis could reach 2.8% of world GDP if international tourist arrivals decreased by 66%, with the consequences being more significant in countries such as Croatia (potential GDP decline of 8%), Portugal (6%), Morocco (4%), Greece (4%), Ireland (3% ) and Spain (3%). This could lead to a 4.2% drop in world GDP ($ 3.3 trillion) if international tourism flows remain stagnant for 12 months.
The crisis is endangering millions of jobs in the tourism sector. Tourism has a high workload and provides a large volume of jobs for low-skilled workers, as well as higher-skilled jobs. According to the International Labor Organization (ILO), the accommodation and food services sub-sectors alone provide employment to 144 million workers, about 30% of whom work in small tourism businesses with 2-9 employees.
The scale of job losses is not yet apparent, as government aid has protected workers from the full impact of the pandemic. However, the World Travel and Tourism Council (WTTC) estimates that up to 174 million jobs are at risk worldwide by 2020. The European Commission Joint Research Center predicts between 6.6 – 11.7 million jobs in businesses operating and / or depend on tourism. Related activities may be at risk of reduced working hours or permanent losses, representing between 3.2% and 5.6% of the total active population in the European Union. Women, young people, rural communities, indigenous and informal workers are disproportionately affected.
Estimates at the national level similarly reflect the scale of the impact on tourism, as well as the challenges of making forecasts in a rapid and uncertain situation. Quantifying the current and future effects of the crisis on the tourism sector is a challenge, with the crisis revealing shortcomings in tourism information systems, including the lack of strong, comparable and timely information to update policy and business decisions. The available data underline the sharp decline in international travel flows and tourism spending, as well as the contraction of domestic tourism activities.
Efforts to predict the impact of the pandemic on the tourism economy have repeatedly been overtaken by the rapidly evolving health situation and frequent changes in pandemic mitigation measures. Traditional forecasting methods are unreliable in the current environment.
The outlook for tourism is extremely uncertain and the recovery will depend on the interrelated effects of the economic and health crisis on supply and demand factors. These include the evolution of the pandemic, the availability of a vaccine (or alternative control measures) and the lifting of travel restrictions, as well as the survival and readiness of businesses throughout the tourism ecosystem to meet demand, impact, consumer confidence and the behavior of travel but also the developments in the wider economy. The global scale and the prolonged duration of the crisis, the continuing uncertainty and the interconnected economic and health nature of this crisis are causing shock to the tourism system that is unprecedented.
The road ahead is brighter as progress on vaccines has raised hopes, but challenges remain and recovery will be uneven across countries and in various areas. Growth has recovered in many parts of the economy, but tourism and other sectors have slowed slowly and this is affecting the recovery in many countries.
Potential effects of long-term tourism policy
Sustainability may become more apparent in tourism choices, due to greater awareness of climate change and the negative effects of tourism. Natural areas, regional and local destinations are expected to lead to recovery and shorter travel distances may lead to lower environmental impact of tourism.
Domestic tourism is expected to benefit, as people prefer to visit destinations within their own country. Domestic tourists are often more price sensitive and tend to have lower spending patterns.
Travelers’ confidence has been hit hard by the crisis and ongoing uncertainty. This can lead to a reduction in demand and tourist consumption that continues long after the initial shock.
Traveler behavior will be affected by the evolution of the crisis, as well as by the long-term trends of consumers. This may include the emergence of new positions and market segments, as well as a greater focus on safety protocols and intact tourism experiences.
Safety and hygiene have become key factors in choosing destinations and tourism activities. People are likely to prefer “private solutions” when traveling, avoiding large concentrations and prioritizing private transportation, which may have an adverse effect on the environment.
A structural change in the tourism offer throughout the ecosystem is expected. Not all companies will survive the crisis and capacity in the sector is likely to decline over time, limiting recovery.
Lack of skills in tourism can be exacerbated, as many jobs are lost and workers will be redeployed to different sectors.
Reduced investment will require active policies to motivate and restore investment in the tourism sector to maintain the quality of the tourism offer and promote a sustainable recovery.
Digitization in tourism services is expected to continue to accelerate, including the wider use of automation, payment and contactless services, virtual experiences, and real-time information provision.
Tourism policy needs to react more and in the long run move to more flexible systems, able to adapt more quickly to the changes to which tourism policy will focus. Crisis management and safety and health issues will be specific areas in which tourism policies will focus.
Tourism policy needs to react more and in the long run move to more flexible systems, able to adapt more quickly to the changes to which tourism policy will focus. Crisis management and safety and health issues will be specific areas in which tourism policies will focus.
As the pandemic continues to evolve, the full consequences are not yet clear. However, it is unlikely that we will return to “business as before”. Policy makers at all levels (national, regional, local) are called upon to learn from the crisis to build a stronger, more resilient tourism economy for the future. Today tourism is high on the global political agenda and similar calls have been made by many international organizations.
While it is still too early to say for sure, we quote some of the “lessons” we have faced in dealing with the pandemic:
- The crisis has led to a call for governments at all levels to respond in a coordinated manner and stressed the importance of integrated tourism policy approaches to support the recovery. Providing targeted support actions as quickly and effectively as possible to vulnerable tourism businesses, employees and tourists is vital. Governments at all levels and the private sector need to be better prepared and have the ability to react and adapt quickly. This requires stronger risk assessment and crisis management mechanisms and closer coordination – locally, nationally and internationally.
- Enhanced multilateral cooperation and strong support are needed to reactivate tourism. Countries must work together, as the actions of a government affect travelers and businesses in other countries as well as the global tourism system. Countries need to develop cross-border cooperation systems to ensure travel security, restore the confidence of travelers and businesses, stimulate demand and accelerate the recovery of tourism. More effective international coordination systems are also needed to deal with future shocks
- Specific sectoral support policies are needed to address the special needs of workers in tourism, business and destinations and to support wider economic recovery. Tourism has benefited significantly from the general economic stimulus measures. However, it is one of the most impactful sectors and will have an impact on the wider macroeconomic recovery in many countries. Areas of the tourism ecosystem that are not yet open and where demand is likely to decline or be reduced for some time will require special attention, as well as the destinations and small businesses that have been hit hardest and most vulnerable.
- Ongoing government support should already begin to grow towards a more sustainable and resilient tourism economy. Destinations and tourism businesses need help to be ready to provide tourism services to meet demand during the recovery. It will be important for tourism businesses to become viable beyond the end of support. Measures must increasingly take into account broader environmental, economic and social objectives.
- Political clarity and measures to reduce uncertainty (as far as possible) will be vital in supporting the recovery of tourism. The prospects for the tourism economy remain extremely uncertain. Clear communication, well-designed information policy and clarity of epidemiological criteria will be particularly important when there is a need to change travel restrictions and restraint measures to deal with epidemics and changing health conditions.
- Information gathering, research and data analysis are key to policy and business decision making. The crisis has highlighted shortcomings in the availability of valid, comparable, detailed data in rapidly evolving situations. Reliable and consistent indicators are needed to evaluate the effectiveness of programs and initiatives and to monitor progress in tourism recovery and resilience. Risk solutions for the safe lifting of travel restrictions and the activation and operation of the international tourism ecosystem must be based on reliable scientific evidence
- The crisis is a unique opportunity to move towards fairer, more sustainable and sustainable models of tourism development. The pandemic has once again revealed structural weaknesses in the tourism system and vulnerability to external risks. There is an urgent need to diversify and strengthen the resilience of the tourism economy, to better prepare for future shocks, to address long-term structural weaknesses and to encourage digital transformations of low carbon emissions that are more tourism development models.
SOURCES:
- OECD (2020-12-16), “Mitigating the impact of COVID-19 on tourism and supporting recovery”, OECD Tourism Papers, 2020/03, OECD Publishing, Paris. http://dx.doi.org/10.1787/47045bae-en
- http://www.oecd.org/coronavirus/policy-responses/rebuilding-tourism-for-the-future-covid-19-policy-responses-and-recovery-bced9859/#section-d1e133
Nontas Sklavenitis
