Six Facts About the Impact of COVID-19 in the Maldives

MALE, Maldives — The Maldives is a gorgeous archipelago located in the Indian Ocean. A majority of its GDP is reliant on tourism and the industries that support it. In 2019 it reached the highest number of tourists in history at 1.7 million people. For 2020 they had estimated they would see around 2.2 million tourists. That unfortunately was not the case as COVID-19 caused a border and travel shutdown. The lack of tourists has had a more devastating effect on the Maldives than the 2004 Tsunami and the 2008 Global Financial Crisis. The following article details facts about the impact of COVID-19 in the Maldives.

The Impact of COVID-19 in the Maldives

1. Tourism makes up 38.9% of the Maldives’ GDP. In a country that heavily relies on tourism for its income, the recent travel bans from COVID-19 have caused a deceleration in economic growth. In 2019 visitor arrivals increased by 14.7%, a record of 1.7 million. Tourism was expected to increase but all visits have been postponed until further notice. According to The World Bank, revenue fell by about 23.4% in 2020’s first quarter. The spending of reserves increased by 10.2% causing an estimated GDP contraction of 8.5%.

2. Many citizens’ jobs reside in the tourism sector. Since a good amount of the Maldives’ GDP is reliant on tourism, it makes sense that a majority of jobs are as well. One-third of adult males and a quarter of women work in tourism jobs. COVID-19 in the Maldives will, unfortunately, lead to a decrease in household earnings for these families as many of their jobs have been placed on hold. The poverty line is subsequently expected to rise as families experience a lack of funds. In order to combat these issues, the Maldivian government has established a price ceiling for staple foods, beverages and supplies to help families save money.

3. Worker compensation during the pandemic. At the beginning of the tourism shutdown, 90% of resorts sent their workers home without pay or cut their salaries by 15-20%. Mauroof Zakir, secretary-general of the Tourism Employees Association of Maldives, estimated that 11,000 workers would be on no-pay leave. The union that Zakir represents has three requests for the government and tourist establishments, “no forced unpaid leave, no layoffs and the implementation of unemployment benefits.” A few local resorts have agreed to pay their workers the base salary for the next three to six months or until business resumes as normal. Migrant workers were removed from resorts and sent to Male, the capital. The Human Rights Watch (HRW) is fighting alongside the union for shelter and access to healthcare for the migrant workers. They are more exposed to COVID-19 due to their large numbers and congested living spaces.

4. Poverty in the Maldives varies. Throughout the regions of the Maldives, there are large gaps in welfare. The southernmost atolls are the most affected with 1 in 5 living in poverty. Public versus private-sector jobs and their desirability also cause differentiation in welfare. Public sector jobs often come with more benefits and a higher wage. For these reasons, 40% of total employment is public sector jobs. They are more desirable than the private sector but as the younger generation is more populous, many of them will have to turn to private-sector jobs if they want employment.

5. Using tourism locations for other purposes. To prevent the worst-case scenario, a negative 26% growth, the Maldivian government has decided to use tourism locations and hotels/houses as isolation or quarantine spots for citizens and travelers who were stuck there. The government partnered with 26 tourism establishments, an estimated 3,000 rooms, for isolation. The use of these establishments allows employers to return to work even if it is less time and not as much money. Along with trying to flatten the socio-economic curve, the Maldives is taking this opportunity to focus on other projects such as climate change policies, strengthening local parity and empowering women in the industry.

6. Reforming spending during the pandemic. The Maldives’ government has laid out five aspects of their spending and saving during the pandemic and their closed borders. The World Bank lists them as “ i) containing recurrent spending and improving the efficiency of social spending; ii) renewing efforts in the economic and social inclusion of all regions across the country; iii) fostering private-sector job creation; iv) reducing vulnerability by enhancing disaster risk preparedness; and v) Public Financial Management reforms and other measures to improve budget credibility.” With these steps, they hope to preserve the GDP that they have and prevent debt while their tourist establishments are shut down. Although this shutdown has and will severely affect their economy, they are taking the necessary steps to attempt to preserve it and better other aspects of their country.

What the Future Holds

His Excellency President Ibrahim Mohamed Solih announced to the country that the Maldives has reopened their borders to tourists. Uninhabited islands opened on July 15 and inhabited islands opened on August 1. They are, of course, taking into account health risks and precautions but they need to save their economy. Although reopening the borders doesn’t guarantee visitation, it provides jobs for the citizens of the Maldives. It also gives them hope that their economy will soon rise to where it rested before. The ultimate impact of COVID-19 in the Maldives will hopefully not be as severe given the government’s concerted efforts.