Maldives Monetary Authority (MMA) has revealed that only 20 percent of companies in the tourism sector had not dismiss their employees or slash employee wages due to the impacts of the ongoing Covid-19 crisis.

The country’s central bank revealed via its business survey report for the second quarter of 2020 that the employment index declined to -74, which indicates layoffs.

Further, it notes that only 26 percent of businesses reported no change in employment levels.

The report goes on to highlight that the index for wages and other labor costs also fell sharply by 75 points to -78 during the year’s second quarter, which signals salary reductions.

In this regard, only 20 percent of businesses reporting no change in wages and other labor costs.

The business survey report notes that employment levels declined significantly, which was more excessive in the tourism sector, as businesses “reacted to the sharp fall in revenue” due to the decline in demand and temporary closing down of business, with cost cutting measures in place.

The decline in average room rates was significant, having dropped to -98 from a positive 20 in the first quarter. The index for prices paid by tourism businesses dropped to -57 and the index for capital spending fell further to -68 from below zero in the previous quarter.

MMA’s report predicts revenue to increase for businesses in the tourism sector, in the third quarter. This is as shown by the reversal in the expected revenue index for the upcoming quarter, from -28 to 13. The expected bookings index improved 27 points but stayed below zero at -1, as Maldives reopened borders for international travel on July 15.

Despite this, MMA revealed that given the “high” level of uncertainty surrounding the pandemic’s current situation, the expected indexes for employment, wages, capital spending, the financial situation of the company and the overall business situation became more negative, suggesting a negative outlook for the third quarter, with border restrictions in place for travelers originating from a lot of source markets for Maldives tourism.

Due to the Covid-19 pandemic which severely affected the country's economic growth, a number of employees in the tourism sector were dismissed from their posts or put on no-pay leave. This in turn presented hardships for a number of families, who have their means on income on a downward spiral.