The flight of human capital from the BEACH-sector
Recently, passengers were stranded at Schiphol Airport, Atlanta airport, and Manchester airport. Airline companies cancel thousands of departures. Restaurants are hoping for a cold and wet summer. The chaos is due to a lack of qualified labor. Unfortunately, the crisis in the BEACH sector was foreshadowed.
Tourism is a diverse sector and is often referred to as the BEACH sector - Booking, Event, Air, Cruise, and Hotel. This is a large and important sector in most modern economies and employs many people. The economic basis is based on an interaction between people and mobility across national borders. C-19 made this difficult.
The reason for the current BEACH chaos is that the authorities, for medical reasons, made the sector a risk sector for employees by closing and opening it several times. The employers, for financial reasons, dismissed or laid off the employees accordingly. The employees, for reasons of their finances, gave up and got jobs in other sectors that were more predictable and secure. Now we pay the price. I think it will take a long time before the chaos in the BEACH sector is gone.
The Washington Post reports in an article about how many laid-off people in the BEACH sector discovered the joy of not working, the joy of having more time with the family, the joy of letting go of the long commute, the joy of quieter mornings, the joy of letting go of shifts on weekends or nights, the joy of not being exposed to infection, the joy of jumping off or slowing down the guinea pig wheel!
In the process, many freelancers have discovered that they can maintain a decent lifestyle by taking occasional jobs - GIG jobs in, for example, the sharing economy. Examples of such jobs can be "last mile" delivery for Bring, Foodora, or Uber, renting out available rooms, houses, or cabins via Airbnb, renting out a car via Getaround (formerly nabobil.no), or driving for Uber. The good news is that GIG jobs, which have long been considered negative by workers' organizations, are today more regulated than they were in the early stages of the sharing economy.
New EU rules are emerging to help GIG workers who receive work assignments from an app or platform. When two criteria - the app defines the wage level and working hours - are met, the app or platform is defined as an employer for those who perform the work. As a GIG employee, you are now entitled to a minimum wage, paid holiday, pension, and unemployment and sickness benefit. For many, this freedom, this flexibility, and security are attractive as a full-time job or supplement.
A typical Airbnb host earns just under 1000 USD a month and a Foodora employee around 10 USD an hour plus any tips. In other countries, Foodora states that the salary is closer to 20 USD per hour. The number of Airbnb apartments offered and the number of Foodora cyclists in major cities indicates that these are attractive alternatives.
The result of several openings and closures of the BEACH sector is that 100,000s BEACH employees have either left the sector in favor of other sectors or they have discovered alternative income opportunities through GIG jobs in the sharing economy. Employees who previously worked in the BEACH sector with, for example, art and culture, festivals, restaurants, bars, airlines, or hotels, may be lost for good.
Human capital - the knowledge and skills of the workforce - is the companies' most important resource. The hotels want chefs, cleaners, waiters, and receptionists who know the hotel profession - which is to create good experiences for guests. Bar and restaurant owners want bartenders and waiters who can not only mix drinks or serve food, but also entertain guests and create a good atmosphere. In addition to service settings, airlines and cruise ships require that employees - pilots, officers, stewards, and crew - be certified and trained to create safe experiences. All of this is knowledge and skills that employers got rid of during the pandemic! Then the chaos arises.
The upheaval in the BEACH sector is therefore not so much about the loss of real capital and shareholder value (such as airlines may go bankrupt), but about the flight of human capital - knowledge and skills - to other sectors. The chaos in the sector shows that when we can live normally again - when everyone is safe because everyone is safe - the demand for BEACH experiences got an explosive rebound.
Bottom line: Without the right human capital in numbers and competencies, even the most sought-after BEACH actor is lost. Employers lack manpower and must hire and train completely new employees - something that will take time. The hope for many is a cold and wet summer where customers stay at home.