The Way Government and Companies Overcome the Economic Crisis in COVID-19
The Way Government and Companies Overcome the Economic Crisis in COVID-19
  • Jang Na-eun
  • 승인 2020.07.01 20:35
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The damage alone is expected to reach around 54 trillion won.
The tourism industry is now at a crossroads of survival
-Yoon Young-ho, The chairman of KTA(Korea Tourism Association)


  In the aftermath of the COVID-19 continued, people in travel-related industry such as aviation industry and lodging industry are experiencing serious financial difficulties. The government also urges the withdrawal of travel plans. On May 21, Ministry of Foreign Affairs announced that they would extend a "special travel warning" which was issued on March 23 and would last until June. Companies are making an effort arranging urgent measures such as a three-day workweek, and a paid or unpaid leave system. In more serious cases, there are many more companies dismissing employees, so unemployed people are increasing these days.


empty parking lot of Incheon international airport출처= www.sedaily.com
empty parking lot of Incheon international airport, 출처= www.sedaily.com

  The travel-related industry recorded unprecedented disastrous sales. As the aftermath of COVID-19 began in earnest from February to March, Hana Tour and Mode Tour finally received their negative results. Hana Tour recorded operating losses of 27,534 billion won and a net decline of 34,872 billion won. All Tours also suffered a loss of 1,398 billion won in net profit. It is the first time that Hana Tour recorded an operating loss of more than 20 billion won since its foundation. According to data from the Korea Association of Travel Agents (KATA), the number of domestic and foreign travel agencies that reported closures to each local government or autonomous region increased to 192 from January 20, when the first infected person of COVID-19 was found, to April 10.

  In response to this increasingly serious situation, the government has also provided financial support. The Ministry of Employment and Labor provide up to 90 percent of employee leave allowances designating travel, aviation and tourism as "special employment maintenance support sectors". Meanwhile, The Ministry of Culture, Sports and Tourism has set aside 100 billion won in special loans and provided 55.9 billion won to 1,090 travel agencies(as of May 14). The Seoul Metropolitan Government is also in the process of providing 5 million won in cash to 1,000 travel agencies, but the tourism industry is still in shock. According to the data from The Ministry of the Interior and Safety, the number of travel agencies that has been closed reached 319 from January 1 to May 10.

  The majority of companies are arranging self-help measures including a three-day workweek, paid or unpaid leave system to overcome financial difficulties. Hana Tour has paid 80 percent of employees' wages when implementing a three-day workweek by utilizing the employment support fund of government. Mode Tour also implemented a two-month paid leave system that guarantees wages of up to 70 percent for all executives and employees from March. All employees of YB(Yellow Balloon) Tour have worked four days a week since February. Jau tour and Red cap tour have implemented voluntary retirement. Especially In the case of Hana Tour, it plans to take the unpaid leave system in June for the first time since its foundation, except for the minimum number of employees who work three days a week. They will implement unpaid leave system for three months from June. The government will receive 100 percent of the government's subsidy and the employees will be paid within 50 percent of the average monthly wage.

  Although many people suffer from financial difficulty, there is also heartwarming news. First, Gyeongsangnam-do(South Gyeongsang Province) will push for a "Gyeongnam-type Travel Business Crisis Overcoming Project" to help the local travel industry recover and provide substantial support. Second, Walkerhill Hotel, located in Gwangjin-gu strives for co-prosperity between labor and management by maintaining a paid leave system without conducting layoff.

  According to a Damage Survey on Tourism Companies conducted by the provincial, municipal governments and the Gyeongsangnam-do Tourism Association in April, the sales of travel industry drop about 71.7 percent compared to the first quarter of last year. 143 out of 298 surveyed companies having no sales during the first quarter. To survive the local travel industry recover, Gyeongsangnam-do will push for a "Gyeongnam-type Travel Business Crisis Overcoming Project". Gyeongsangnam-do expects that through the project, travel agencies in the province will create travel packages for small-scale individual tourists and lead to actual product sales and promotion contributing to the recovery of the travel industry.

  Walkerhill Hotel, located in Gwangjin-gu, Seoul, came up with its own labor-management win-win plan on March 31 to maintain employment through paid leave system. Hwang Il-moon, CEO of SK Networks Walkerhill Hotel, said about the background of win-win cooperation between labor and management, "As the number of COVID-19 confirmed person has soared again overseas in March, I thought it will be difficult to overcome the COVID-19 crisis in a short period of time. In the case of the paid leave system, we discussed with the union that all members take one month's paid leave sequentially for six months, taking into account the equity of their members," he explained.


 The president Moon chose the Walkerhill Hotel as the place which has overcome difficulties maintaining employment in the COVID-19 economic crisis. On April 29, he visited the hotel and listened to the current state of the hotel industry and encouraged people who made mutual efforts between labor and management to maintain employment. President Moon stressed the message that if users and workers work together, they can overcome the job crisis.


 Those cases show the desirable attitude that the government and company can show in COVID-19 incident. Especially for employees, the sense of loss and fear will be even greater because they lost their means of making a living right away. The company has to arrange appropriate policy for employees. Of course government has to make wiser policy for companies until the day when tourism related companies recover their sales and workers can smile again.


“All tourism related workers are having difficulties. We will make efforts to save the entire tourism industry. The social responsibility of a company in the present situation is to maintain employment. The government also supports the corporate crisis with its strong support policy.”
-President Moon




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