As Thailand's travel and hospitality businesses continue to face unprecedented challenges, there remains a chance for business leaders to shine. Many of the largest companies in the tourism sector have long touted their commitment to a wide range of stakeholders that have supported them, including local communities that provided staff, service and products.
Yet, committing to models of virtuosity, sustainability and the strongest environment, social and governance (ESG) standards when times are good is one thing. Adhering to these principles when the going gets tough is another matter, and tough times may well still lie ahead for the many involved in this sector.
By some estimates, according to industry publication TTG Asia, tourism contributes nearly one-fifth of Thailand's GDP at 18 percent and nearly three trillion baht (US$134.2 billion) annually. This in turn has fuelled direct and indirect employment for about 10 million people.
The ongoing Covid-19 pandemic has wreaked havoc not just in Thailand but across the Indo-Pacific region, displacing populations, challenging governments and healthcare systems, and even stretching the limits of "conscious capitalism" in some of the world's most developed economies.
Across the region, countries face what the International Monetary Fund (IMF) projects to be the worst recession since the Great Depression. According to the IMF's June 2020 world economic outlook report, the global economy is projected to shrink by 4.9 percent in 2020, a stark contrast to the 3.3 percent global GDP expansion for this year that it forecast in January.
For Southeast Asia, the IMF expects the "Great Lockdown" recession to lead to an overall decline of some 2.0 percent in 2020 GDP of the five largest Asean economies -- Thailand, Singapore, Malaysia, Indonesia and the Philippines. That figure,though, masks a more significant decline in Thailand. According to Bloomberg, the Bank of Thailand forecasts Thailand's gross domestic product will contract 8.1 percent this year, which would be the largest recorded decline ever for the nation.
Even wealthy Singapore, with its exemplary governance, infrastructure and business environment, has faced challenges. We see this first-hand as the city state is home to the Milken Institute Asia Centre, where we both serve as fellows of this non-profit, non-partisan economic think tank.
During this public health crisis, the best -- and not necessarily just the biggest -- companies and large family businesses in Thailand's tourism sector and across Southeast Asia should step forward and step up in their treatment of employees at home and abroad. Business owners, executives and investors can help ensure that long-touted ESG leadership in travel and hospitality is not simply a buzzword from when times were good.
Regardless of what laws mandate, all stakeholders in the travel and hospitality sector must focus on what the virus bodes for implementing ESG principles. While the best environmental and governance practices have been embraced by many companies, their true test now emerges in the "S", or social issues, space.
Traditionally, the "S" in ESG has covered several topics, including product safety and consumer protection, labour practices, workforce diversity and human rights across a company's supply chain. It can also encompass treatment of a company's most important resource, its workforce.
How companies in Thailand and across Southeast Asia treat their employees in a given market now will influence how their business and product brands are perceived long after the pandemic. This will include treatment of female workers, contract employees and part-time staff.
The coronavirus has tremendously disrupted business and society. Companies continue to cut costs and re-evaluate their workforces as countless employees live in fear over their job security.
Growing job loss numbers underscore the scale of the global coronavirus shock. In the United States, unemployment filings show no signs of slowing and reached more than 26 million by the third week of April, nullifying all job gains made since the end of the last recession. And in economies with limited social safety nets and where large portions of the workforce constitute the informal sector, the loss of a job can be even more devastating on individual households.
A report for 1Q 2020 by the Office of the National Economic and Social Development Council indicated that the Covid-19 pandemic posed a risk of 8.4 million people losing their jobs in Thailand, according to travel trade publication TTG Asia. Those at risk, the report noted, included 2.5 million of Thailand's 3.9 million tourism labour force.
Amid these challenges, however, anecdotes also abound of major businesses around the world vowing to take care of their workforce. Importantly, large corporations are not the only ones showing the way. Numerous smaller businesses with significantly fewer resources have also stepped up to strengthen safety nets for their employees via innovative measures.
Good leadership is innovative. Good leadership is contagious.
Leaders in Thailand and across Asean take note. Civil society must be engaged and governments will have to play a role, whether through policy changes or direct or indirect financial support.
It will be far from easy, but whether in Thailand or elsewhere, difficult times call for all companies to work towards greater employee security. Protecting employees today will enable businesses to establish a strong foundation for continued success and legitimate ESG bragging rights in a post-pandemic world for Thailand's and the region's travel and hospitality leaders.
Curtis S Chin, a former US ambassador to the Asian Development Bank, is the inaugural Asia Fellow of the Milken Institute. Abhinav Seetharaman is the Princeton-In-Asia Fellow at the Milken Institute Asia Center in Singapore. Follow them on Twitter at @curtisschin and @AbhiSeetharaman.