Road to recovery: Assessing job risk and the impact on the most vulnerable in Indonesia's pandemic-hit tourism industry
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RAPID RESEARCH PROJECT FINAL REPORT
Road to recovery:
Assessing job risk
and the impact on
the most vulnerable in
Indonesia’s pandemic-hit
tourism industryPAIR:
The Partnership for Australia-Indonesia Research (PAIR),
an initiative of The Australia-Indonesia Centre, is supported
by the Australian Government and run in partnership with
the Indonesian Ministry of Research and Technology,
the Indonesian Ministry of Transport, the South Sulawesi
Provincial Government and many organisations and
individuals from communities and industry.
Authors:
Dr Ya-Yen Sun, The University of Queensland The Australia-Indonesia Centre:
Dr Ilmiawan Auwalin, Universitas Airlangga The Australia-Indonesia Centre is a bilateral research
Dr Jie Wang, The University of Queensland consortium supported by both governments, leading
Dr Lintje Sie, The University of Queensland universities and industry. Established in 2014, the Centre
Mr Andri Wijanarko, Universitas Airlangga works to advance the people-to-people and institutional
Dr Eugene Sebastian, Executive Director, AIC links between the two nations in the fields of science,
Helen Brown, Lead, Communications and Outreach, AIC technology, education, innovation and culture. We do this
Mary Downes, Editor, Media Xpress through a research program that tackles shared challenges,
and through our outreach activities that promote greater
Report date: understanding of contemporary
September, 2021 Indonesia and strengthen bilateral research linkages.
Disclaimer: To discover more about the Centre and its activities,
This report is the result of research funded by the please visit: ausindcentre.org
Australian Government through the Australia-Indonesia
Centre under the PAIR program. The report was edited
by the Australia-Indonesia Centre (AIC). The report is not To cite this report:
intended to provide exhaustive coverage of the topic. The This report is the result of research funded by the
information is made available on the understanding that Australian Government through the Australia-Indonesia
the AIC is not providing professional advice. While care Centre under the PAIR program. Visit ausindcentre.org
has been taken to ensure the information in this report is
accurate, we do not accept any liability for any loss arising
from reliance on the information, or from any error or Sun YY., Auwalin I., Wang J., Sie L., Wijanarko A., Sebastian
omission, in the report. We do not endorse any company E., Brown H., D Mary. (2021), ‘Road to recovery: Assessing
or activity referred to in the report, and do not accept job risk andthe impact on the most vulnerable in
responsibility for any losses suffered in connection with Indonesia’s pandemic-hit tourism industry’, The Australia-
any company or its activities. Indonesia Centre.THE PARTNERSHIP FOR AUSTRALIA-INDONESIA RESEARCH (PAIR)
I am delighted to share our
findings from the Partnership
for Australia-Indonesia
Research (PAIR) COVID-19 Rapid
Research Series.
i 3
As the COVID-19 pandemic
spreads, it continues to disrupt
economies, jobs, education
and health systems worldwide.
To address the pressing
Executive summary �����������������������������������P4 Analysis and results �����������������������������������P9 challenges in Indonesia,
1
3.1. Total impact �����������������������������������������P9 we have brought together teams
3.2. Impacts by sector of interdisciplinary researchers
and province ���������������������������������������P11 from both countries to explore
COVID’s impact on people.
3.3. Impacts by gender, We focus on three areas:
Introduction ����������������������������������������������������������P6 education, age health, connectivity and
and income ������������������������������������������P14
2
economic recovery.
4
The report provides the policy
community with timely access
to the best available evidence.
It also responds to the Australian
Methodology ������������������������������������������������������P8 Government’s Partnership for
Conclusion
Recovery strategy. The strategy
and recommendations ������������������������P17 aims to understand and
4.1. Recommendations ���������������������P18 support Indonesia as it deals
4.2. Focusing policymaking on with and recovers from the
the regional level ��������������������������P18 COVID-19 pandemic.
5
Warm regards,
References ����������������������������������������������������������P19
Dr Eugene Sebastian
PAIR Program Director
The Australia-Indonesia CentreRAPID RESEARCH PROJECT FINAL REPORT
EXECUTIVE SUMMARY
The tourism sector is a significant driver of Indonesia’s
economic growth – so important that the country has been
trying to open the doors to international tourists in the
midst of the coronavirus pandemic. But the latest deadly
surge of COVID-19 cases and multiple outbreaks has put
an abrupt halt to those plans. As this report finds, many
vulnerable people who rely on tourism for their livelihoods
are affected most by the ongoing, uncertain situation.
Our research shows that women, young people and lower-educated workers have higher job insecurity in the
tourism industry and therefore have become even more economically vulnerable in the pandemic. This report
also found that while Bali is the country’s prime tourism destination and has been hardest hit by the loss of
visitors, the impact of COVID-19 has been severe in four provinces, accounting for 62 percent of all job losses.
To put the current situation in perspective, in 2019, the year before COVID-19 shut the world’s borders, more
than 12 million Indonesians were employed in the travel and tourism sectors. This included workers directly
employed and also those working in industry supply chains. The nation attracted 16.1 million international
visitors who contributed US$15.8 billion (223 trillion rupiah) to the economy. The value of domestic and
international tourism was 5.7 percent of national gross domestic product.
The COVID-19 pandemic has brought unprecedented disruption. In the first nine months of 2020 it has been
estimated that Indonesia’s tourism industries lost US$14 billion (Rp 202 trillion), leading to a 1.6 percent
decline in GDP, a 1.7 percent shortfall in personal income and up to 3.4 million job losses.
Many of those jobs in the tourism industry would have been filled by people from vulnerable and
marginalised groups.
Across the archipelago, the collapse of tourism has resulted in 3.1 percent of female workers, 2.7 percent of
youth employees, 3.1 percent of lower-educated workers, and 2.3 percent of those in low-income positions
facing high levels of job insecurity.
This study provides policymakers with important evidence for making both immediate
and long-term strategic decisions on the allocation of government stimulus packages.
The road to recovery requires solidarity and collaboration across the industry and government. This Australia-
Indonesia Centre study contributes to this goal by identifying marginalised and vulnerable communities who
have been heavily impacted by the tourism decline, so that those who have endured the most economic
hardship can be supported and given an opportunity to reclaim their livelihoods.
Ultimately the report makes three key recommendations on government priorities to help policymakers with the
recovery from COVID-19.
• Focusing policymaking on the five most affected regions to assist with wage compensation, skills training
or job relocation, which will provide much-needed support to ensure the livelihoods of those communities.
• Promoting domestic tourism and community welfare with a national campaign for local travel that
incorporates small-scale or niche tourism options.
• Formulating a tourism recovery strategy that brings together all stakeholders that prioritise vulnerable
people in their plans for retraining and/or skills building, particularly in the digital economy.RAPID RESEARCH PROJECT FINAL REPORT
Rp 200 Trillion 1.3% GDP 2.6% Jobs 1.7% Income
Tourism Spending
GDP Reduction Job at Risk Income Reduction
Reduction
From Jan - Sept 2020, Rp 208 trillion GDP A total of 3.4 million jobs Rp 88 trillion
tourism industry faces is lost are at risk personal income is lost
an unprecedented crisis
Figure1: The impacts of COVID-19 on tourism jobs in Indonesia.
1 .0 I N T R O D U C T I O N visitors (WTTC, 2020), reporting The same effects are expected in
the highest growth rate among Indonesia. Of tourism-related jobs
COVID-19 has severely disrupted all Southeast Asian countries in Indonesia, 55 percent are held
the world’s economy. The (Statistics Indonesia, 2020a). Since by women and 17 percent
International Monetary Fund (IMF) the coronavirus was first reported by youth (aged 15-24) (UNWTO,
estimated the global economy in Indonesia in March 2020, the 2019; WTTC, 2019). Women in
shrank by 3.5 percent in 2020, tourism sector has been heavily developing countries have less
with a disproportionate effect on impacted (Ramadhian, 2020) by access to education and perform
the poorest and most vulnerable. large-scale social restrictions extensive unpaid work in family
Indonesia has not been exempt; (Pembatasan Sosial Berskala tourism businesses (UNWTO,
its economy contracted 5.32 Besar or PSBB), travel restrictions 2020b). Tourism can also help
percent and 3.49 percent in the and physical distancing. Domestic poor women break the poverty
second and third quarters of 2020 tourism has been negatively cycle through formal and informal
respectively. By October 2020 affected, while international employment, entrepreneurship,
Indonesia entered a deep recession tourism remains suspended training and community
(Maliszewska et al., 2020). (Asmara, 2020; Klikwarta, 2020). advancement (UNWTO, 2020b).
Tourism provides employment
Tourism has been one of the “Many women are
worst affected industries, due to for skilled and unskilled workers,
worldwide restrictions on mobility including groups who may have tourism entrepreneurs,
(Lenzen et al., 2020). The United difficulties finding other jobs. especially in Indonesia.
Nations World Tourism Organization The pandemic has led to an
(UNWTO) estimated there were unprecedented increase in And there are growing
one billion fewer international unemployment. Australia, the numbers of women-
tourist arrivals in 2020, a 74 percent United Kingdom, Thailand and
other countries have reported
owned businesses and
decline that caused a US$2 trillion
loss to world GDP and put 100-120 that women, youth and low- community initiatives
million jobs at risk (UNWTO, 2020a). income groups have been to provide training
disproportionately affected,
Tourism is an important sector of enduring higher unemployment and jobs for women
the Indonesian economy. In 2019, rates and larger pay cuts than their (for example, Women
it contributed 5.7 percent of less marginalised counterparts
national GDP, and Indonesia (ABC News, 2020; Henehan, 2020;
in Tourism Indonesia
attracted 16.1 million international Lekfuangfu et al., 2020). and Wise Step Travel).”
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Box 1: Women in Tourism Indonesia Box 2: Wise Step Travel
Women in Tourism is an independent The company offers thematic, customised
organisation that works to support women in and responsible journeys for groups or
Indonesian tourism. It provides a knowledge individual travellers within Indonesia. It
and experience sharing platform for women promotes educational activities and fosters
in small, medium and large enterprises. deeper appreciation for cultures and local
The organisation promotes gender equality, communities. It supports sustainable
raises public awareness and assists women tourism.
through network activities.
To mitigate the socioeconomic impacts of this crisis, significant and
swift government measures are needed to support the tourism sector.
The United Nations World Tourism Organization and the World Travel
and Tourism Council have called for strong government support, and
one priority is protecting the livelihoods of workers by offering financial
assistance to protect workers in severe circumstances. The first step is to
Photo by Luis espinoza via Unsplash
“incentivise job retention, support the self-employed and protect the most
vulnerable groups” (UNWTO, 2020c). These measures require identifying
those who have been impacted most.
This project identified the groups most vulnerable to tourism losses in
Indonesia, providing the first-ever quantification of the economic impact
of tourism losses. Specific aims are:
• To evaluate how COVID-19 has economically impacted the Indonesian
tourism industry and its suppliers
• To identify the most-affected communities across 34 provinces
• To evaluate the employment losses for women, youth, low-education
and low-income groups.
Photo by Farano Gunawan via Unsplash
Photo by Visualsofdana via Unsplash Photo by Gede Adhiputra via Unsplash
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2.0 M E T H O D O L O G Y No official data on domestic tourism were available for our study period, so
the classified hotel occupancy rate was used as a proxy for demand, assuming
This study employed a multi- hotel customers would represent the composition of international and domestic
regional input-output (MRIO) tourists before and during the pandemic. By combining information on hotel
model, a valuable tool for analysing occupancy and international visitor numbers, we derived approximate figures
economic impact and supporting for domestic tourist journeys. Reduced spending from domestic tourism was
related policies. An MRIO model then gauged by combining estimated reduced volume with the spending profile,
uses a matrix to capture inter- provided by the Indonesian Ministry of Tourism and Creative Economy.
industry linkages across regions
and sectors (Kitzes, 2013;
The MRIO model
Leontief, 1970), producing two We estimated the impact on 34 Indonesian provinces using the MRIO framework,
distinct benefits. First, it evaluates allowing us to track connections between sectors and across regions, which is
both direct and indirect effects essential to assessing the spillover effects of reduced tourist spending. This study
of tourism losses – for instance, used 2019 provincial gross domestic product (GDP) data published by Statistics
how a 2 million drop in Chinese Indonesia (Statistics Indonesia, 2020b). The MRIO tables consisted of 17 sectors
travellers in 2019 led to job losses for 34 provinces for 2019, due to data availability. Table 1 shows the 17 sectors
in the accommodation sector and in the Indonesian economy and those that are directly affected by a fall in tourist
related suppliers (Sun & Pratt, volumes and spending.
2014). Secondly, MRIO traces
inter-regional transactions and
Table 1: Indonesian MRIO sectors in relation to sectors with reduced tourism
links labour inputs with socio-
spending (items).
demographic characteristics. The
reduced spending from Australian No. Indonesian MRIO sectors
Sectors with
reduced tourism spending
tourists, for example, can be
seen in the job losses for female 1 Agriculture, forestry and fishing -
employees in West Java, Jakarta 2 Mining and quarrying -
or East Kalimantan. This allows 3 Manufacturing -
identification of regions and groups 4 Electricity and gas -
most vulnerable to tourism losses. 5 Water supply and waste management -
6 Construction -
The first step was estimating the
7 Trade Shopping, souvenirs
decline of tourism expenditure,
Transportation, local air transport,
using 2019 as a baseline and 8 Transportation and storage
other local transport
assuming demand would have
Accommodation and Accommodation, food, beverage,
been unchanged without the 9
food service activities and tobacco
pandemic. We compared domestic 10 Information and communication -
and international tourism volume 11 Financial and insurance activities -
in the January to September 2020
12 Real estate activities -
period with the same period in
13 Business activities -
2019 to estimate the effect of
14 Public administration -
the COVID-19 pandemic. The time
15 Education -
frame was determined based on
16 Health and social work activities -
data availability.
Recreational and cultural services, other
17 Other services activities
Arrivals records showed the tourism services, others
decline in international visitors,
with drops in revenue derived by To estimate the impact of COVID-19 on employment in the tourism sector, we
multiplying average visitor spending used the National Labour Survey (Sakernas) of February 2020, the most recent
(sourced from the Indonesian available at the time of this study. This survey covered about 75,000 households,
Ministry of Tourism and Creative and the data were used to construct an employment satellite account for the MRIO,
Economy) by reduced visitor allowing us to examine the effects of COVID-19 on the tourism industry in the
volume. Across Indonesia’s 34 following categories:
provinces, reduced tourism receipts
were estimated across eight • economic sector
categories: accommodation, food • gender, with particular emphasis on women
and beverage, local air transport, • age, with particular emphasis on the youngest quintile
other local transport, shopping, • level of education, with particular emphasis on those who attained elementary
souvenirs, recreational services, school or less
and others. • level of income, with particular focus on the lowest income quintile.
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3.0 A N A L Y S I S international tourists visited Bali (Rp 22 trillion, 31 percent), and
A N D R E S U LT S and Jakarta, respectively. When shopping/souvenirs (Rp 16 trillion,
inbound tourism collapsed, these 22 percent).
provinces experienced the greatest
economic shock. Table 3 shows The distribution of domestic trips
3.1 T O T A L I M P A C T
about 40 percent of international differed from inbound tourism,
tourism revenue losses occurred with a relatively even distribution
International tourism.
in Bali, followed by Jakarta across 34 provinces. East Java,
In 2019, there were 14.92 million
(22 percent) and Kepulauan Jakarta, West Java, Central Java,
international visitors to Indonesia,
Riau (7 percent). The economies Bali and Yogyakarta led the way.
with 12.1 million arrivals from
of West Nusa Tenggara, Bali, These provinces experienced
January to September. While
Kepulauan Riau, East Kalimantan higher losses from the domestic
numbers were strong at the
and West Kalimantan were market’s contraction.
beginning of 2020, arrivals
dropped drastically after March as found to be most dependent
Total tourism losses. Compared
COVID-19 related restrictions were on the international market,
with January-September 2019,
imposed. Indonesia hosted fewer which accounted for more than
the tourism industry experienced
than 200,000 inbound visitors 75 percent of their tourism
an estimated total loss of
from May to September, and total losses. These destinations
201.85 trillion rupiah
international visitors from January have been much more
(US$14 billion). The collapse
to September 2020 were about economically vulnerable to
of international travel accounted
3.56 million, 70.57 percent below the COVID-19 pandemic.
for two-thirds of the losses.
the baseline (2019). Overall, the accommodation
Domestic tourism. To estimate
the reduction in domestic tourism sector was most affected (down
This reduction of 8.54 million
demand, we used the classified 61 trillion rupiah or US$4.4 billion),
international travellers resulted
hotel occupancy rate as a proxy accounting for 30 percent of the
in a total loss of international
for changes. The occupancy rate spending shortage, followed by
tourism revenue of Rp 129.45
was 52.3 percent from January food and beverage (24 percent,
trillion (US$9.25 billion,
to September 2019, but dropped 48 trillion rupiah or US$3.4 billion),
Table 2). The accommodation
to 30.1 percent during the same and transport (18 percent,
sector experienced the largest
period in 2020. Using international 37 trillion rupiah or US$2.6 billion).
losses, with an estimated revenue
arrival data, domestic volume Regionally, Bali experienced the
reduction of Rp 56 trillion
required to maintain a 30.1 biggest loss ( 55 trillion rupiah),
(43 percent, US$4 billion), followed
percent occupancy was calculated. followed by Jakarta (40 trillion
by the food and beverage sector,
rupiah), East Java (19 trillion
Rp 25.5 trillion (20 percent,
We estimated domestic tourism rupiah), West Java (18 trillion
US$1.82 billion) and shopping/
in January to September 2020 rupiah) and Central Java (12 trillion
souvenirs, Rp 18.8 trillion
(15 percent, US$1.34 billion). was reduced by 100 million trips rupiah). Bali alone accounts for
from the 2019 baseline of 27 percent of the national total
The distribution of inbound 212 million, representing tourism losses. Because tourism
travellers across the 34 provinces a 47 percent decline. Estimated contributes 46 percent of Bali’s
was found to be uneven. Foreign reduced domestic tourism GDP and the province has seen
travellers strongly favoured receipts were Rp 72.4 trillion a rapid expansion of inbound
destinations in six provinces: Bali, (US$5.17 billion, Table 3). Most tourism demand over the years
Jakarta, Kepulauan Riau, West losses were in the areas of (Law et al., 2016), Bali has been
Java, Yogyakarta and East Java; transport (Rp 23 trillion, the epicentre of the tourism crisis
33 percent and 22 percent of 32 percent), food and beverage during the COVID-19 pandemic.
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Table 2: Reduced tourism spending by sectors, January to September 2020 (unit: billion Rupiah).
Total
Food and Shopping/ Recreational Pct by
Sectors Accommodation Transport Others reduced
beverage souvenirs services segments
spending
Domestic
4,755 22,342 22,825 15,796 1,971 4,709 72,397 36%
tourism
International
56,000 25,470 14,331 18,829 4,108 10,711 129,449 64%
tourism
Total 60,755 47,812 37,156 34,625 6,079 15,420 201,846 100%
Percentage
of total 30% 24% 18% 17% 3% 8% 100%
spend
Table 3: Distribution of reduced international and domestic tourism spending across 34 provinces,
January to September 2020 (unit: billion Rp).
Pct of losses Ranking of
Domestic International
Total Ranking of contributed by international
Province tourism tourism
tourism losses tourism losses* the international tourism
spending losses spending losses
market contribution**
Aceh 919 280 1,198 17 23% 21
North Sumatra 2,243 4,869 7,112 8 68% 9
West Sumatra 1,287 3,337 4,624 10 72% 7
Riau 897 168 1,065 19 16% 25
Jambi 189 109 298 29 37% 17
South Sumatra 906 185 1,091 18 17% 24
Bengkulu 336 44 380 28 11% 30
Lampung 674 108 782 22 14% 26
Bangka Belitung 409 135 543 24 25% 20
Kepulauan Riau 2,023 9,005 11,027 6 82% 3
Jakarta 11,984 28,135 40,119 2 70% 8
West Java 10,667 7,107 17,774 4 40% 15
Central Java 10,251 1,434 11,685 5 12% 29
Yogyakarta 5,491 5,200 10,690 7 49% 11
East Java 12,172 6,743 18,915 3 36% 18
Banten 1,316 367 1,683 15 22% 22
Bali 6,389 48,636 55,025 1 88% 2
West Nusa 755 6,263 7,017 9 89% 1
Tenggara
East Nusa Tenggara 781 931 1,712 14 54% 10
West Kalimantan 510 1,675 2,186 12 77% 5
Central Kalimantan 597 95 692 23 14% 27
South Kalimantan 706 107 813 21 13% 28
East Kalimantan 426 1,755 2,181 13 80% 4
North Kalimantan 68 61 130 33 47% 12
North Sulawesi 642 422 1,064 20 40% 16
Central Sulawesi 421 99 520 25 19% 23
South Sulawesi 1,806 1,575 3,381 11 47% 13
Southeast Sulawesi 278 231 509 26 45% 14
Gorontalo 228 21 249 30 8% 34
West Sulawesi 209 26 235 31 11% 31
Maluku 23 68 91 34 74% 6
North Maluku 139 16 154 32 10% 32
West Papua 285 111 397 27 28% 19
Papua 1,374 132 1,506 16 9% 33
Total 72,397 129,449 201,846 64%
Note: pct = percentages; * 1 = most heavily impacted; ** 1 = the highest percentages
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3.2. I M P A C T S B Y S E C T O R So there is the first direct impact which is typically measured by GDP,
AND PROVINCE employment and personal income. The secondary impact results in
suppliers facing the same process of reduced jobs, fewer payments to
Total impact. Reduced tourism employees, lower business profits and less tax paid. This flows on to the
spending adversely affects the suppliers of suppliers. This loss in the supply chain is referred to as the
economy in two ways. indirect effect. The sum of the direct and indirect effects gives a complete
picture of the impact of reduced tourism demand.
“Fewer customers Given an estimated 202 trillion rupiah reduction in visitor spending during
means fewer job January-September 2020, the direct economic impact included 100 trillion
opportunities, lower rupiah (US$71 billion) reduction in GDP, 1.8 million jobs at risk and a
47.5 trillion rupiah (US$3.4 billion) cutback in salary among tourism
wages to the existing employees (Table 4). The impact on the supply chain of decreased tourism
employees, decreased activity led to a 1.3 percent fall in GDP, 2.6 percent drop in nationwide
employment, and a 1.7 percent loss in personal income.
business profits and
fewer tax dollars paid
Table 4: Economic impacts of reduced tourism to the Indonesian economy,
to the government. January to September 2020.
And then the reduction
Pct of
in tourism revenue Indicators
Reduced
GDP
Pct of
national
Affected
employment
national
Affected
personal
Pct of
national
employment
then impacts the (billion Rp) GDP (000's)
(2019)
income income
supply chain – a hotel Direct
100,481 0.60% 1,799 1.40% 47,529 0.90%
effect
with low occupancy Total
208,248 1.30% 3,384 2.60% 88,655 1.70%
will reduce, effect
Note: pct = percentages
for example,
orders for vegetables
and fruits for It is important to note that the MRIO model assumes a linear relationship
between reduced tourism spending and unemployment. If one billion rupiah
breakfast, laundry in tourism spending supports 15 jobs, a reduction of 10 billion rupiah
services and spending in the model will be expected to lead to 150 job losses. Tourism
businesses may not, in reality, lay off people in direct proportion to their
the purchase of
business losses, but it is very likely these positions are at high risk of
cleaning products.” being laid off, converted to part-time or being rotated to different business
entities. In this report, these job estimates provide a proxy for the likely
impact on employment.
Across the economy, accommodation and food services suffered the
biggest losses, accounting for 36 percent and 31 percent of total GDP
and employment reduction respectively, followed by trade, other services,
and transport sectors (Figure 2). With a strong connection to the tourism
industry, the agriculture and manufacturing sectors have also been
affected, with a GDP drop of 7 percent and 10 percent, respectively.
Since accommodation and food services have been heavily affected, we
examined the influence of the pandemic within the sector. During the study
period, it has been estimated that one million workers in this sector were
at risk, with an estimated loss of Rp 24.7 trillion rupiah of personal income.
This translated to a staggering 11.5 percent of total hotel and food service
employees at risk, with 13.6 percent of their income reduced.
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GDP reduction Employment reduction
Other sectors Accomodation and Transportation Manufacturing
10% food service activities and storage 5% Other sectors
36% 9% 0%
Accomodation and
Manufacturing
food service activities
12%
31%
Transportation
and storage
12% Agriculture,
forestry
and fishing
11%
Agriculture, Other services
forestry activities
and fishing 17%
7% Other services Trade Trade
activities 15% 27%
8%
Figure 2: Economic impact of tourism losses (%) on GDP and employment by major sectors.
Regional impact. Since tourism
demand is highly concentrated
in specific provinces, a regional
analysis of economic impact was
necessary. As expected, impacts
were heavily felt by regions with
a high level of tourism. Five
provinces experienced GDP losses > -2%
of more than 2 percent, and four -1.2% ~ -2%
provinces reported a reduction of -0.8% ~ -1.2%
-0.5% ~ -0.8%
1.2-2 percent (Figure 3). The most
< -0.5%
affected region, Bali, experienced
51 trillion rupiah GDP losses, Figure 3: GDP losses (percentages) across 34 Indonesian provinces.
accounting for 22.5 percent of
GDP (total wages, profits, tax
and depreciation) in the province Tourism-related losses (Rp trillion) Percentage losses
(Figure 4). The second most- -51 Bali 22.5
affected region was Jakarta, with -40.3 Jakarta 1.7
an estimated GDP loss of -19.6 East Java 1
-19.4 West Java 1.1
40.3 trillion rupiah. However,
-12.4 Central Java 1
due to its capital status and -9.2 Kepulauan Riau 3.5
complex and large economic -9.1 Yogyakarta 7
system, this tourism crisis -7.5 North Sumatra 1.1
-5.9 West Nusa Tenggara 5.1
accounted for only a 1.7 percent
-4.3 West Sumatra 2.1
GDP reduction in Jakarta, allowing
-50 -40 -30 -20 -10 0 0 5 10 15 20
the destination to better absorb
the economic shock. Figure 4: GDP losses and percentage losses for the top 10 provinces (%).
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The regions most impacted by
employment losses rank slightly
differently (Figure 4). Most tourism-
related job losses were reported
in Bali (819,621), West Java
(454,148), East Java (287,633),
Central Java (286,953), Yogyakarta
(241,847), Jakarta (241,488) and
West Nusa Tenggara (204,201). > 200,000
These seven provinces comprised 35,000 ~ 200,000
25,000 ~ 35,000
75 percent of total tourism-related
10,000 ~ 25,000
unemployment. Bali faced extreme
< 10,000
difficulties in retaining tourism-
related positions, with one in Figure 5: Employment losses (numbers) across 34 Indonesian provinces.
every three threatened by reduced
demand. While several provinces
had more than 10 percent of local
employment at risk, including
Yogyakarta (11.3 percent) and
Kepulauan Riau (11.3 percent).
“Bali faced extreme
difficulties in retaining
tourism-related
positions, with
one in every three
threatened by reduced
demand. While several
provinces had more
than 10 percent of local
employment at risk...”
Photo by Oliver Sjöström via Unsplash
Figures 4 and 5 demonstrate the
impact of the tourism crisis on GDP
and employment. We were able to
conclude that Bali, Yogyakarta and
Kepulauan Riau have been much
more economically vulnerable to
falling tourism demand.
Photo by Surya Prakosa via Unsplash
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3.3. I M P A C T S B Y 3.4 million jobs at risk, by reduced tourism) with total
G E N D E R , E D U C AT I O N , representing 2.6 percent of employees in the same group
AGE AND INCOME national total employment. ‘Jobs (eg, all female workers).
at risk’ implies these positions
One important objective of this were much more likely to be laid Gender. Globally, women have
study is to analyse job losses off or converted from full-time been found to be more affected
across demographic groups to to part-time. Of these 3.4 million by the tourism crisis than men.
better understand the impact jobs, 1.63 million were held by This is also the case in Indonesia,
of the tourism crisis. We feel women; 755,000 by youth (15-27 where 16 out of 34 provinces
employment data represent the years old); 1.12 million by lower- reported a higher number of jobs
best proxy, as they capture effects educated workers; and 541,000 held by women were at risk than
on job security, which has a jobs were in low-wage occupations. jobs held by men. The highest
profound influence on individual, On a percentage basis, the number of women’s jobs at risk
family and ultimately societal collapse of tourism has placed were reported in Bali, West Java,
welfare. COVID-19’s impact has 3.1 percent of female workers, Central Java and East Java.
rendered several groups much 2.7 percent of youth employees, In terms of vulnerability, Bali,
more economically vulnerable, 3.1 percent of lower-educated staff Kepulauan Riau, Yogyakarta
including women, youth (15-27 and 2.3 percent of low-income and West Nusa Tenggara were
years old), lower-educated workers workers in a situation where their found to be the key spots, with
(whose highest level of education job risk is extremely high. more than 10 percent of total
is elementary school) and the women-held positions under
lower-paid (monthly income up to The following four figures provide threat. In Bali, a staggering
one million rupiah). a more detailed look. The absolute one-in-three female workers
number is the number of positions and entrepreneurs were highly
Nationally, the 202 trillion rupiah affected, while the percentage impacted, creating both
(US$14 billion) reduction in compares affected positions financial and social problems
tourism spending has put (eg, female workers affected for the community.
Photo by Anggit Rizkianto via Unsplash
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Youth. The influence on youth Tourism-related losses (thousand) Percentage of province jobs
employment has also been found -416.4 Bali 34.9
to be significant. Nationally, -195.4 West Java 2.4
22 percent of the affected -132.1 Central Java 1.7
-125.6 East Java 1.4
workforce was 15-27 years old.
-123.5 Yogyakarta 12.7
This ratio was much higher in -113.7 West Nusa Tenggara 10.5
21 provinces, indicating that -86.4 Jakarta 4.4
youth workers in these areas -78 North Sumatra 2.6
-69.5 West Sumatra 6
were more prone to job losses.
-60.2 Kepulauan Riau 16.5
In terms of absolute numbers,
-400 -300 -200 -100 0 0 5 10 15 20 25 30 35
most youth-filled positions at
risk were reported in Bali, West Figure 6: Female employment losses and percentages for the top 10 provinces.
Java, Central Java and East
Java. In percentage terms, Bali,
Yogyakarta, Kepulauan Riau and Tourism-related losses (thousand) Percentage of province jobs
West Nusa Tenggara Barat were -201.3 Bali 38.2
found to be most vulnerable, -93.6 West Java 2
-59.7 Central Java 1.7
with more than 9 percent of -54.2 East Java 1.4
total youth-held positions under -50.4 West Nusa Tenggara 9.2
threat. Retaining youth workers -49.3 Jakarta 4.7
is especially important for Bali, -43.1 Yogyakarta 12.7
-37.7 North Sumatra 2.1
as about 40 percent of young -30.8 West Sumatra 5.2
people have been on the brink -18.3 Kepulauan Riau 9.5
of losing employment. -200 -150 -100 -50 0 0 5 10 20 30 40
Low education. Workers with an Figure 7: Youth employment losses and percentages for the top 10 provinces.
education level of elementary
school or lower, without exception,
have been more affected in this Tourism-related losses (thousand) Percentage of province jobs
tourism crisis. Nationally, -234.2 Bali 28
24 percent of the impacted -177.9 West Java 2
-120.2 East Java 1.2
workforce was lower-educated
-119.7 Central Java 1.5
workers. This ratio was found to -78.8 West Nusa Tenggara 7.9
be much higher across -65.1 Yogyakarta 10.4
25 provinces, indicating that -44.6 North Sumatra 2.1
-42.6 Jakarta 5.4
low-education staff, mostly in
-35.7 Kepulauan Riau 14.1
basic and front-line positions, -35 West Sumatra 3.8
were prone to job losses. Most
-200 -150 -100 -50 0 0 5 10 20 25 30
low-education positions under
threat were reported in Bali, West Figure 8: Low-education employment losses and percentages for the
Java, East Java and Central Java. top 10 provinces.
In terms of the unemployment
ratio, Bali, Kepulauan Riau and
Yogyakarta have been found to Tourism-related losses (thousand) Percentage of province jobs
be most vulnerable, with more -90.4 Bali 32.3
than 10 percent of lower-educated -71.7 West Java 1.9
-61.1 East Java 1.4
workers under threat.
-60.9 Central Java 1.7
-53.6 Yogyakarta 12.7
-38.5 West Nusa Tenggara 6.7
-31.9 North Sumatra 2.5
-15 Kepulauan Riau 17.3
-15.6 Jakarta 4.7
-14 West Sumatra 3.2
-100 -80 -60 -40 -20 0 0 5 10 15 20 25 30 35
Figure 9: Low-income employment losses and percentages for the top
10 provinces.
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Low income. Low-income workers, The above discussions are based on two sets of results – the potential
surprisingly, have been found to be unemployment total and the possible unemployment rate. The first result draws
less affected by the tourism crisis attention to provinces with a large loss in tourism revenue. The second indicates
than other studies reported. This the vulnerability of particular groups, sometimes from small regions. A high
was evident by contrasting national unemployment ratio implies strong tourism dependence. This has important
total affected jobs implications for those at risk because the COVID-19 situation will make it much more
(2.6 percent) with affected difficult for them to find alternative employment in either the tourism industry, which
positions held by those with has contracted significantly, or other sectors where their skill set may not satisfy job
monthly income up to 1 million requirements. Groups with a high estimated unemployment rate have been identified
rupiah (2.3 percent). A possible below (Figure 10).
explanation is that before
COVID-19, those who worked in • Bali – 820,000 possible job losses, and the unemployment rate for youth, women,
tourism, both directly and indirectly, lower-educated and low-income workers exceeding 30 percent in the region
had comparatively higher income • Yogyakarta – 242,000 possible job losses, and the economic risks for women,
than those who did not. The 2020 youth and low-income workers being five to six times higher than the average
Labour Survey data showed that across the country
24 percent of the total workforce • West Nusa Tenggara – 204,000 possible job losses, and the economic burdens
had a monthly income below 1 expected to be more prominent for female workers and lower-educated workers
million rupiah; in contrast, only with a 10 percent unemployment rate
5 percent of employees in the • Kepulauan Riau – 114,000 possible job losses, and one in every six low-income
accommodation and food service and female workers expected to endure significant job and income losses
sector in Bali were in this category. • Jakarta – 241,000 job losses. Youth and low-income workers at a relatively higher
The reduction of tourism demand job risk.
therefore affected more of those in
relatively higher-income groups. “... The COVID-19 situation will make it much more
difficult for them to find alternative employment in
either the tourism industry, which has contracted
significantly, or other sectors where their skill set may
not satisfy job requirements.”
32% 11.273% 11.271% 8% 5%
Kepulauan Riau
Low-income: 17%
Women: 16%
Low-edu: 10%
Youth: 10%
Yogyakarta Bali
Youth: 13% Youth: 38%
Women: 13% Women: 35%
Low-income: 13% Low-income: 32%
Low-edu: 10% Low-edu: 31%
Jakarta
Youth: 5% West Nusa Tenggara
Low-income: 5% Low-edu: 12%
Women: 4% Women: 11%
Low-edu: 2% Youth: 9%
Low-income: 7%
Figure 10: The potential unemployment rate for demographic groups across five provinces.
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Photo by Arty via Unsplash
4.0. C O N C L U S I O N A N D decline in international tourism figures support the conclusion
R E C O M M E N DAT I O N S and a 47 percent contraction in that women, youth and lower-
domestic tourism in Indonesia educated workers in Indonesia
Evidence-based policy is between January-September 2019 are disproportionately affected
required to manage complex and January-September 2020, by the pandemic. Unexpectedly,
socioeconomic systems and with a resulting revenue loss of the impact on low-income
related tourism impacts 202 trillion rupiah (US$14 billion). workers has been less significant.
(Cvitanovic et al., 2016; Based on the multi-regional input- This may be because relatively
UNWTO, 2014). Evidence-based output model (provided by the higher wages are offered in
policymaking refers to policy Ministry of Finance) and tourism the accommodation and food
decisions being informed by satellite account (Ministry of service sector in many tourism-
rigorous research and high- Tourism), the study estimated the dependent provinces, especially
quality empirical evidence from reduced tourism spending has in Bali and West Nusa Tenggara.
a balanced perspective. This resulted in a 208 trillion rupiah dip Working in tourism before
approach to policymaking helps in GDP (1.6 percent), 88 trillion
COVID-19 generated higher
mitigate the risk of idiosyncratic rupiah loss of personal income
income relative to other sectors
decisions and leads to a better (1.7 percent) and a potential
of the economy. Thus, when
long-term outcome. 3.4 million job losses (2.6 percent).
tourism demand disappears,
Of those jobs affected, 62 percent affected positions tend to be in
To effectively manage COVID-19
related impacts, we need strong were in four provinces: Bali a higher income group.
and valid evidence to guide policy (32 percent), Kepulauan Riau
measures towards vulnerable (11 percent), Yogyakarta “These figures
(11 percent) and West Nusa
groups, to allow an inclusive support the
recovery. This project fills this Tenggara Barat (8 percent). Among
information gap by providing a these at-risk workers, 1.63 million conclusion that
high-resolution economic analysis were women; 755,000 were women, youth
mapping economic impact to both youths (aged 15-27); 1.12 million
geographic region and socio- were lower-educated workers; and lower-
demographic status. It presents and 541,000 were low-wage. This educated workers
the first detailed regional-level translates to 3.1 percent of female
workers, 2.7 percent of youth in Indonesia are
analysis of the direct and indirect
effects of reduced tourism. employees, 3.1 percent of lower- disproportionately
educated staff and 2.3 percent of
COVID-19 related restrictions and low-income workers who are facing
affected by
risk aversion saw a 70 percent high levels of job insecurity. These the pandemic.”
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4.1 . R E C O M M E N D A T I O N S
In response to the pandemic in
2020, Indonesia’s government
allocated 695.2 trillion rupiah
(US$47 billion) in stimulus funds
up to September 2020, including
support for the tourism industry
and low-income workers. Not all
was disbursed due to bureaucratic
red tape and/or unreliable data
(The Jakarta Post, 2020). This
Photo by Tienko Dima via Unsplash
study has identified specific
vulnerable groups at the regional
level, with recommendations for
promoting Bali, Kepulauan Riau, gain new qualifications and
further support discussed below.
West Java, East Java, West Nusa prepare to regrow the tourism
Tenggara and Yogyakarta as workforce through learning,
4.2. F O C U S I N G destinations for domestic travel innovation and digitalisation.
POLICYMAKING ON may help encourage people who For example, although many
THE REGIONAL LEVEL had planned to travel abroad to Indonesian women are digitally
stay at an Indonesian destination. connected, business owners’ and
Overall, we identified five A strategic plan to leverage workers’ digital skills continue
provinces with specific existing domestic travel demand to lag (Bentley, 2020). Capacity
social groups who have been and convert outbound journeys building and support through
significantly impacted, including to domestic trips will boost local vocational, on-the-job or online
Bali (women, youth and lower- businesses. Government support training are a must for tourism-
educated workers); Yogyakarta for creative small-scale (niche) related employees, particularly
(women, youth and low-income tourism products run by local for those with limited access
workers); Kepulauan Riau (women businesses is also recommended. or means to do so otherwise.
and low-income workers); West These businesses tend to support Aligned with sustainable health
Nusa Tenggara (women, youth local employment with extensive and safety measures regulated
and lower-educated workers); integration of the area’s culture, by government and industry,
and Jakarta (youth and low- arts, souvenirs and gastronomy, such training offers opportunities
income workers). This information delivering more benefits to the to upskill, reskill and multi-skill
allows specific relief and subsidy local suppliers. current staff and increase the
programs to be targeted at resilience of the local tourism
affected businesses and workers. Tourism recovery sector. This will create a win-
Directing central funding to the win situation, with high-quality
The tourism industry has been
regional level to assist with wage tourism experiences and staff
a driver of economic growth
compensation, skills training or ready when tourism returns
in Indonesia. The road to
job relocation will provide much- (CREST, 2020).
recovery requires solidarity
needed support to ensure the and collaboration across the In restarting tourism in the post-
livelihoods of those communities. industry and destinations’ local COVID-19 era, the United Nations
communities as well as public (UN, 2020) has recommended
Promoting domestic tourism
and private partners such five primary areas of focus, with
and community welfare
as Wonderful Indonesia, the people at the centre. The priority
The pandemic has not only caused Indonesia Hotel and Restaurant is to mitigate socioeconomic
loss of income and jobs, but led Association and the Indonesian impacts, especially for women
to many families falling below the Chamber of Commerce and vulnerable groups. Our
poverty line. A “domestic-led” and Industry. Stakeholder study contributes to this goal
strategy promoting domestic collaboration supports tourism by identifying marginalised and
travel, especially to regions recovery plans at the regional vulnerable communities who
heavily dependent on international level. People are at the centre have been hard hit by the tourism
tourism before COVID-19, will of the recovery. Programs are decline, so that those who have
help fill empty rooms and seats. needed for vulnerable people endured the greatest economic
A national marketing campaign to be retrained, so they can hardship can be best helped.
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THE AUSTRALIA-INDONESIA CENTRE:
POLICY PARTNERS:
PA R T N E R S F O R I M PAC T:
Program Management Team: Research Advisory Panel: Acknowledgements:
Dr Eugene Sebastian, Anna McNicol, Profesor Jamaluddin Jompa, The Australia-Indonesia
PAIR Program Director Acting Minister-Counsellor Advisor for Marine Ecology at Centre (AIC) acknowledges
Helen Fletcher-Kennedy, (Economic, Investment and the RI Ministry of Maritime the Australian Government
Chief Operating Officer Infrastructure), Australian Affairs and Fisheries for its generous support of
Embassy, Jakarta Jana Hertz, Team Leader the Partnership for Australia-
Dr Leonardo Pegoraro,
Profesor Budu, at the Knowledge Indonesia Research (PAIR)
PAIR Program Manager
the South Sulawesi Provincial Sector Initiative through the Department
Dr Hasnawati Saleh, of Foreign Affairs and
Government’s Development Muhammad Sani Azis,
PAIR Research Coordinator Trade. The AIC also
Acceleration Team (TGUPP) Regional Coordinator
Dr Martijn van der Kamp, gratefully acknowledges
Bronwyn Robbins, Australian (South Sulawesi), Indonesian
PAIR Team Capability the Government of
Consul General in Makassar Seaweed Association (ARLI)
Coordinator Indonesia’s support for
Dr Elan Satriawan, Dr Musdhalifah Machmud, PAIR through its Ministry
Marlene Millott,
Chief of Policy Working Deputy Minister for Food and of Research and Technology.
PAIR Program Officer
Group, National Team for Agriculture, RI Coordinating
Fadhilah Trya Wulandari, the Acceleration of Poverty Ministry for Economic Affairs This research was supported
PAIR Program Officer Reduction (TNP2K) by the Australia-Indonesia
Prakosa Hadi Takariyanto,
Dr(HC) Erna Witoelar, Technical Director Centre’s Small, Rapid
Former UN Special PT Pelabuhan Indonesia IV Research Grants 2020.
Ambassador for Millennium (Persero) We thank Dr. Futu Faturay
Development Goals (MDGs) of the Indonesian Ministry
Pratiwi Hamdhana, Founder
in the Asia Pacific of Finance for providing the
and Managing Director,
Multi Regional Input Output
Dr Eugene Sebastian, Tenoon, Driver Engagement,
modelling as the main
Executive Director, The Gojek Makassar
analysis in this research.
Australia-Indonesia Centre Profesor Wihana Kirana Jaya, This research would not have
Dr Hasnawati Saleh, PAIR Special Staff to the been completed without the
Research Coordinator, The RI Minister for Economic excellent research support
Australia-Indonesia Centre Affairs and Transportation from Dr. Lintje Siehoyono Sie
Profesor Heri Hermansyah, Investment, Ministry (Postdoctoral fellow at the
Acting Director of Research of Transportation Business School, University
and Community Engagement, of Queensland). We also
Ministry of Research thank Andri Wijanarko
and Technology, (PhD student at Universitas
Republic of Indonesia Airlangga) for assistance with
Dr Ishak Salim, Co-Founder the labor data preparation.
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