COVID-19 AND THE GIG ECONOMY

AN IMPOSSIBILITY TO A REALITY

Once thought to be an impossible economic sector, given the geographical limitations, isolation and lack of infrastructure, the Maldivian tourism industry will soon be marking its 50th anniversary in two years’ time. 

Unyielding to the viability assessment and opinion of the United Nations, the Maldives had entered a new dawn with the birth of its most powerful economic sector the country will ever see. Sparked by a chance meeting in Colombo between Ahmed Naseem, a staff of the Maldivian embassy in Sri Lanka back then and George Corbin, who was an Italian travel agent and a travel enthusiast himself, the beginnings of Maldivian tourism was a humble one, yet it took on fairly quick strides to find its place in the county’s economy. On the 16th of February 1972, George Corbin and the first 22 tourists landed on the lonely airstrip in Hulhule’, now Velana International Airport. The small group, consisting of photographers and journalists were in awe to see an island paradise, so remote and untouched, making it the perfect beach holiday destination. Shortly after the first group’s arrival, the first tourist resort Kurumba Maldives made its appearance in 1973, followed by Bandos, Velassaru, Baros, Vabbinfaru, Ihuru and Meerufenfushi. Although we had quite a number of guest houses at the beginning of the industry, it was brought to a halt soon after, to bring forth the iconic Maldivian tourism concept of “one island, one resort”. Until 2010, this was pretty much how the tourism industry defined itself, at which point guest houses and small hotels were once again re-introduced to the product mix, opening the doors to a wider global audience.

AN ESSENTIAL ROLE FOR GIGGERS

What exactly is a gig economy? Most of us may have come across the phrase, but how well do we understand it? Although this may “sound” like a relatively new trend or a buzz word rattling our highly digitized society, it has actually been a significant aspect to the Maldivian tourism industry right from the beginning.

For those of you who are new to the term; a gig economy is a free market system, where the workforce majorly consists of freelancers and independent contractors in contrast to the traditional employment model of permanent positions. The skillsets in a gig economy can range from photographers to musicians, as well as the humbler jobs such as construction and labor work.

The same qualities that made the gig economy possess such a powerful sense of appeal casted light on the same aspects having a darker side.

This “on-demand” short term professional employment method fit perfectly to the Maldivian tourism scene, where businesses have access to a talent pool of specialized skills that they can call upon whenever a need arises without the strings of employment rights and benefits such as overtime, sick leaves and health insurance. As some temporary jobs may not require any physical presence, company’s often do reach out beyond the local talent pools for such short-term projects, which do put the locals head to head with the world in competing for such on-demand work.

Looking from the perspective of gig workers, the idea of being untethered to the typical corporate policies and regulations or simply being free from clocking that routine 9 to 5 workday is an appealing factor to this kind of work. The level of freedom and flexibility you find performing gigs is something that you would rarely find at a full-time permanent job, and for many, the ability to balance work and life is something that they highly prize.

DISRUPTION AND CHAOS FOR GIGGERS DURING COVID

As the largest industry in the Maldives, the tourism sector was hit the hardest. A study done by UNDP across all industries found that a total of 54% of those impacted were from the tourism industry. This industry felt the immediate shocks of the pandemic as it swept across the world, bringing entire operations to a halt with the closure of borders.

Giggers and independent contractors have been a crucial component in the Maldivian tourism economy right from the beginning in the early 1970’s. it was the musicians who originally formed this segment of the trade. Forming the first bands to perform at the resorts, they became an important element in delivering the complete Maldivian holiday experience. Like merchants, they travelled to and from the islands, sometimes staying overnight or doing a series of resorts over a week or a month. It certainly is no easy job, and it most definitely required a high level of commitment. Following the musicians and the DJ’s, photographers, stylists and wedding planners entered the fold. Giggers consist of a highly mixed pool of specializations and talents and is by no means an exhaustive list.

The same qualities that made the gig economy possess such a powerful sense of appeal casted light on the same aspects having a darker side. Like paper boats caught in the rain, there was little to nothing giggers could do when disaster struck, as there were no strings attached to any official organization that would or otherwise could extend resources for assistance at a time of crisis.

Based on the data collected by UNDP from a resort management survey conducted between April and June 2020, 79% of the resorts work with freelancers, ranging from musicians, DJ’s, to local vendors providing food supplies from the islands within close proximity. In total, the study was able to identify over 500 freelancers providing their services to the surveyed resorts. This indicates the high number of individuals engaged in this sector who are heavily dependent on the tourism industry as their livelihood.

Another set of data that was analyzed was from JobCenter. Hosted by the Ministry of Economic Development, this is the government’s online job portal, dedicated as the primary platform for the public to report complaints on employment and wage reductions related to COVID-19. The study showed that every 02 out of 10 individuals who reported income loss were self-employed. It is important to note, that there was a serious gap identified while conducting this study. Again, this unravels an “Achilles heel” of the gig economy, and how the absence of formal contracts creates obstacles in situations such as these, when documentation was a key requirement in the reporting process to prove income losses.

RELIEF LOAN SCHEME BY SDFC

Back in February 2019, a governmental organization under the name of SME Development Finance Corporation Pvt Ltd (SDFC) was formed. The core role of this institution was to enable easier access to financial support for micro, small and medium sized enterprises, both for startups and existing businesses. 

At the beginning of April 2020, as the pandemic hit the country in full force and halted nearly all key economic activities, a relief loan scheme was introduced as a short-term financing facility to enable small businesses as well as independent workers to sustain their operations and support themselves during this period of hardship.

With a maximum cap of MVR 30,000 for freelancers, this loan product does not require equity nor security, and the interest rate is fixed at 6 percent per annum with a re-payment period of 3 years excluding 6 months of grace period. Data shown on the UNDP report indicated that a total of 1,356 applications were approved for the relief loan totaling up to MVR 245.7 million.

RETHINKING A NEW REALITY

Fezu from Detune, one of the most established music bands in the country explained how they had adapted to a new reality. 

Somewhere around October or November last year, with a lot of talk about COVID-19 in the news by then, they had already started anticipating some form of a ripple effect that could possibly come this way. With an uneasy feeling that they may soon feel the brunt force of the virus, Fezu had warned all members of her band to be cautious of their expenses and to start saving up. 

For Fezu and her band, they were in a better position than most when the pandemic came to Maldivian shores. They have been lucky to have had a great success with their events during the previous festive period, allowing them to ride out a couple of months at the very least. Further to that, their intuitiveness and foresight also allowed them to anticipate an incoming storm that would have otherwise caught them off-guard like many of the freelancers.

How hard freelancers were hit due to the pandemic depends on their respective fields and specialization. Graphics designers, whose work is typically done online may not be affected as much as photographers who now would not have weddings, events or parties to cover. Bands unfortunately fall into the latter. Many have been forced to adapt and find new ways to getting back on their feet. It is no easy task, and many are still struggling to find their bearings. For Fezu, fishing had always been a passion of hers, and even has a boat of her own. During this time, Fezu and the band brought fishing to the forefront, and took to the seas as a means to support themselves through the pandemic.

Ahmed Shuau, also popularly known as “Obofili” is a self-taught photographer and a prominent member of the Maldivian photography community. His experience through this ordeal reflects on how the pandemic spared some niche segments of the gig economy from its full force.

The majority of photographers in the Maldives are focused on covering weddings and events. There are only a handful of them have dared to venture into further specializations. Shuau is one of them. With a strong background of architecture and design, it had helped him to develop an excellent eye for details, allowing him see things just a little different to most photographers. Using this to his advantage, Shuau primarily focuses on brand photography for numerous resorts in the country.  In doing so, his business was not as affected as others, where he had continued to work on his ongoing projects. Interestingly enough, he also highlighted that with the closure of the borders, some resorts were actually taking this opportunity to do further developments within the property or do major renovations while they were under lockdown. This therefore opened up opportunities for such brand photographers, where these resorts will be contracting parties for the development of a whole new set of brand collaterals which they would need for the new and upgraded facilities. 

One of the most crucial elements to surviving massive economic disruptions and ensuring business continuity is the ability to adapt and diversify operations. The same principal applies to an individual freelancer as well. In Shuau’s case he also supplemented his core business with graphics designing services, which was an area relatively untouched during the entire ordeal. On the contrary, the virus had created a world where public messaging and awareness campaigns were crucial for public safety. Therefore, there was a need for such talent and skillset even at a global scale.

Umar Ziyad is one of the most prominent DJ’s in the country. Stepping into the industry in the early 90’s he is one of the most seasoned veterans in the local DJ scene. Umar, along with DJ Vifaq currently operates UBER, an event and talent management platform primarily catering to the resort sector. 

For Umar, it was an awakening, a realization. “For the first time, I felt vulnerable, as almost overnight I had lost that the sense of security that I had taken for granted for the past 22 years as a DJ. But even after 22 years, at the end of the day I am still a freelancer. As a freelancer, I was not entitled to any staff benefits nor securities that a permanent staff would otherwise enjoy at the company. Therefore, there was no contractual obligation for the company to provide any additional support apart from the gigs we have agreed to. It was just a simple phone call to inform me that from that day on, they were not going to be able to have any outside contractors on the island until further notice. That was the end of it, I was on my own. 

This was something he had not foreseen. He was not ready for it. Today, instead of re-building their business and strengthening it to grow it bigger in the future, their thoughts are bent upon downsizing it. Umar and Vifaq believes that scaling down to a level where they personally could run the show is the way to go for now, especially amidst a world of uncertainty. Previously, they had multiple staff on payroll along with an expansive warehouse for storage of all of their lighting and sound equipment that had grown in numbers dramatically over the past few years. All of these were factors that would bring them greater financial risk should things turn for the worse again. 

Umar does believe that eventually things should improve, once the resort’s start getting back on their feet again. “DJ’s do have a bigger advantage over bands for instance, where resorts would only need to take in one person instead of five. This would make a big difference at a time such as this”

It was just a simple phone call to inform me that from that day on, they were not going to be able to have any outside contractors on the island until further notice. That was the end of it, I was on my own. 

DJ Umar

This is a tale of many varied experiences. Although we may all be in the same storm, we are not in the same boat. For some, the pandemic was a force multiplier that had intensified their already vulnerable states, while for others there was the luxury of taking a moment to re-think and calibrate to fit their skillsets to a new use.

As of 27th December 2020, 80,763,522 people have been infected globally and 1,765,629 people have died from the virus. The financial, psychological and social impacts on all societies across all cultures have been astronomical. In the case of the Maldives, it was no different to the rest of the world. The Maldives felt the biggest blow from the halt of tourism, which trickled down to numerous sub segments of the economy. Now as the economy restarts, we will be forced into adapting new ways of thinking and strategies that foster adaptability within chaos. 

As companies start to shift their operations online and start seeing the practicality and economic benefits of enabling staff to work off-site, more and more businesses are starting to embrace this new work model. Businesses are now able to significantly downsize office space and retain a major portion of their earnings which would otherwise be spent on monthly rental. Another advantage to tapping into a giggers market would also be the ability for a business to connect with specialized talent when and as needed. 

This shift in operations however may not carry a “one size fits all” solution and may only be applied to niche areas in hospitality and tourism operations as this is a service industry. Many travel companies are expected to scale up their online presence and scale down physical retail outlets. At the same time, even within hotel operations, certain areas of work that could remain remotely serviced are now being considered as to be made permanently remote.

Legislative action and formalization of contracts to encourage a greater degree of financial security and safety for freelancers is definitely a crucial component to address, after witnessing the aftermath of the pandemic. However, an even greater point to address would be in developing a more resilient workforce at a national level that could potentially withstand major shocks and disruptions that could come our way in the future.

What we have seen evidently during this global pandemic is that it was the non-essential sectors that were hit the hardest, while a majority of the essential services experienced a steep increase in demand, which called for a huge shift in workforce from one area to another as some of the segments went into a complete shutdown. How well the workers can shift on demand and assimilate into new roles is going to determine the resilience of the national workforce at its entirety. Steps to be taken to develop a resilient workforce is not just a responsibility that needs to be taken up by the government. This is a model that needs to adopt at a corporate level within organizations down to the individual workers themselves embracing this system with open arms to make an effort to upskill themselves to allow him or herself to have the tools necessary to adapt as needed. This results in creating a workforce that is “sector-mobile”, with skillsets that are transferrable across the industry, and can ultimately contribute to making it relatively resilient to global shocks, which could spare greater economic drawbacks that could otherwise potentially cripple the national economy due to high levels of unemployment.

The gig economy may very well be the new reality forged by the pandemic for many organizations across the world.  Although many within the segment itself has felt a massive blow from the pandemic, industry pundits expect even more free lancers to enter the arena in the months and even years to come.  However, it could also be argued that the shift is a “temporary” adaptation to fit the current climate. Another crucial question is, with a greater number of people moving into the gig economy with its appeal of flexible work hours and in the ultimate pursuit of a better work life balance, would the increased pool of talent reduce the share of opportunities available to each individual?

How the effects of the pandemic will ultimately shape the workplace of the future is still yet to be seen. As COVID-19 has unfolded to become one of the biggest transformative events of recent history that brought on disruptions at a global scale, it is of utmost importance for us to analyze and prepare ourselves better for any similar future events.

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Naufal Naeem is an editorial advisor and contributor to Hotelier Maldives. He is a sales and marketing specialist with a background in hospitality and tourism operations. 

You can reach him at naufal@hoteliermaldives.com