31 August 2020, Author: Richard Williams of Richard Williams & Associates
The Caribbean private sector and especially the hotel sector is struggling with the implications of the severance window which in many instances, expires in September 2020, meaning that employees laid off for the past many months can trigger their severance applicability during the next few weeks ahead. However, it is worth recalling, this Covid-19 ‘lay-off’ was never initiated because of failing businesses but instead by the onset of the pandemic. In short, the furlough was not a matter of the employers making and so it actually falls under the guidelines of ‘force majeure’.
Many Caribbean governments have acted judiciously to extend the severance window from its original 12 weeks to 26 weeks, anticipating that duration to be sufficient to protect hospitality from the extenuating circumstances of an unintentional ‘flood’ of severance applications, such individual decisions brought on because the claimants may have no other alternative but to seek that recourse as an interim solution to their lack of income, driven purely by the mere need for families to survive this extended window of business closure.
It is unfortunate, that as Covid-19 would have it, even 26 weeks may not be a sufficient to protect the hotel industry from massive and imminent claims. The hotel winter season is still 14 weeks away, and the trendlines for advance bookings appear weak, at best. The uncertainty of the current market has driven down the lead times for advance bookings ruling out any early predictability for a good season ahead. This may actually be a perfect storm, as looking back to earlier in this year, the industry lost half of its winter season (March & April), and along with that situation, it also lost the financial reserves needed for sustenance during the long summer of 2020. So the hotel businesses of the Caribbean (and the world) are facing their greatest period of weakness and their most significant challenge for as long as any can remember.
Unfortunately, there is a flip side to this story. The storm is a ‘catch-22’, as the employees of Caribbean hospitality are also unintentional victims of this pandemic, having faced months of lost income, with no immediate end in sight. The question is, how do we, as societies of this beautiful region, help sustain our principal industry and also protect our people, the many faces of Caribbean hospitality, who greet our visitors and who deliver our services, making these islands such a unique place for so many who visit us again and again?
We must dig deep to find the solution to this puzzle.
The solution must come in different parts and the points below may help kick-off a few possible considerations:
- The collective society must recognise the threat for what it is, a significant danger to our way of life. There is an essential need for us to find a variety of solutions.
- Hotels should be incentivised by Government to re-employ immediately, even if they do so on the basis of interim, reduced wages as well as shortened hours. No doubt, worker unions may resist such steps, but we have to get our people back to work.
- Employees agree to undertake redesigned job descriptions with expanded areas of responsibility. Everyone on the team needs a new flexibility and a modern ‘all-hands on deck’ approach. This approach may include a re-think of the workweek to 12-hour days and the introduction of a 4-day week, amongst other issues.
- Government must recognise the high-risk nature of the hotel industry and take a series of long-term steps to enhance industry profitability, steps designed to offer better support for investors in the industry by largely integrating a more proactive role for the private sector in tourism matters of national concern. This is particularly the case in matters of tourism promotion with controversial divides often existing between many island hotel associations and their respective government-owned tourism promotional boards.
- Government should offer a menu of reduced import fees along with reductions in other taxes and duties aimed at driving up profitability in a historically low-profit industry. The Caribbean hospitality highway is littered with the spectre of unprofitability, driven by a scenario of high cost operations, too often fueled by overt taxation on operational imports along with other items.
- Hospitality employees might be issued with special industry identification, enabling them to enjoy a short window of special benefits from all retailers, most especially for food and fuel, lasting for the duration of the lay-off and/or the pandemic, whichever is the shorter.
- Consideration should be given by the hotel industry to establish a ‘reserve fund’ designed to act in an apolitical environment and intended to grow and enhance training and development for the hospitality service sector in concert with the various hospitality training institutions across the region. We have a responsibility to step-up the skills of our home-grown talent and develop them as the leaders for the future.
- No doubt, these points will be the subject of debate, especially by those who opine that the industry, on some islands, already has the benefit of the right incentives.
As someone who is involved in hospitality on different islands across this region, I have had the privilege of working with several tourism teams to consider some of these issues. With the imminent severance claim on our very doorstep, we must all work with our governments to help find a way around the impasse. Failure to do so may threaten the extinction of many hotels, already challenged with insufficient cash-flows and struggling with the costs of re-starting their businesses for the coming winter season.
It may be instructive for us to look beyond our region for partial solutions to the first part of this problem. In Canada, legislators initially extended the severance window by 3 months but then in June 2020, recognising the potential duration of the pandemic, they introduced legislation to cover a further 6 months, extending the window of severance suspension to a minimum of 9 months, until 31st December 2020. When the Province of Ontario took up the discussion, their legislators also saw the need to accommodate a further extension stating: “All employees who have been laid off (either completely, or by having their hours reduced by more than 50 percent in one week) due to COVID-19 are deemed not to have been laid off; instead, they are deemed to be on a leave of absence. This means that employers will not need to worry about the time limits for a temporary layoff under the law….”
The Canadian solution is at least a start. Beyond it, we must hold hands to work together for each island to develop a menu of solutions.
It is certainly not ideal. But at least it would be a start.
Written by: Richard Williams of Richard Williams & Associates
Consultants in Calypso Hospitality
Cayuga Member: www.cayugahospitality.com