A decision by the government to end its flagship Covid-19 wage protection scheme would be devastating for the hospitality sector, where about three quarters of employees are either dependent on the scheme or have been retrenched already, according to the Tourism Business Council of SA (TBCSA).
The state looks set for a battle with business and labour unions, after news that the National Coronavirus Command Council has decided that the Covid-19 Temporary Employer/Employee Relief Scheme (Ters) should not be extended past mid-September.
This is in spite of ongoing discussions on an extension at the National Economic Development and Labour Council (Nedlac), while SA’s national state of disaster for Covid-19 has been extended to November 15.
About three quarters of those who were directly employed by the industry at the start of 2020 are probably either already on Ters or some sort of unemployment benefit, according to TBCSA CEO Tshifhiwa Tshivhengwa, with hospitality and tourism still the hardest hit by the Covid-19 pandemic, pointing to a tough festive season.
The TBCSA is an umbrella organisation for more than 14 travel and tourism subsector associations, ranging from bus operators, air lines, and travel agents.
“If this is the government's intention, I really hope they reconsider,” said Tshivhengwa. “Those people will be claiming from the Unemployment Insurance Fund (UIF) anyway.”
CEO of the Federated Hospitality Association of Southern Africa (Fedhasa) Lee Zama said about 600,000 employees in the industry had relied on Ters, and it was yet to recover. Fedhasa represents companies that have borne the brunt of the lockdown. These include hotels, restaurants, conference centres, caterers, self-catering accommodation, home hosting establishments (B&Bs and guest houses), clubs, taverns, shebeens, suppliers and trainers, consultants and service providers to the hospitality industry.
“The abrupt termination goes against the spirit with which the government introduced this relief,” she said. “This is SA workers’ own contribution over the years and is designated for such purpose,” said Zama.
The UIF said last week it had paid out more than R51bn in Ters benefits to just more than one-million companies that applied, disbursing more than 11.5-million payments.
If the government were to extend the Ters benefit to the end of 2020, it is understood that it would cost about R12bn.
SA’s hotels and casinos have been among the hardest hit by the Covid-19 pandemic, which brought local and international travel to a halt. Listed gaming and hospitality group Sun International said in September that the Covid-19 pandemic has had a significant impact on the group’s results for the six-months ended 30 June 2020, with all the company's operations in lockdown from late March 2020 to June 30, 2020.
Even under level-1 conditions, profits remain under pressure due to a need to enforce social distancing; for example, only operating at 50% capacity, while the national curfew also has hit all-night establishments.
SA’s hospitality industry employs supported about 740,000 direct jobs, and contributes 8.6% to the GDP in 2019, according to the TBCSA.
Foreign tourism alone employed over 375,000 people, and the TBCSA has said the sector could contract 75% in 2020.
Tshivhengwa said there had still not been a significant recovery, including due to restrictions on international travel, remained a key issue for the industry.
Both government and corporate travel had also not picked up, Tshivhengwa said. “No-one is going to be able to fully open their hotel on leisure travel alone,” he said.
Ters was introduced in March to help employers in distress provide wage benefits to employees via the Unemployment Insurance Fund.
It was initially to cover three months, from April to June, and was one of the main pillars of President Cyril Ramaphosa’s R500bn Covid-19 relief package. The scheme was then extended by the government from August 16 to mid-September.
With Genevieve Quintal
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