Businesses struggle to maintain wages after earthquake impact

A recent report released by the Vanuatu Chamber of Commerce and Industry (VCCI) and the Department of Labour (DoL) indicates that nearly half of the businesses affected by the December 17th earthquake can only sustain their current employment levels for 1-2 months.

Following the earthquake, the VCCI and DoL conducted a preliminary assessment of severely impacted commercial establishments. A total of 169 businesses provided information regarding employee retention, relocation activities, and their needs for post-disaster recovery support.

The VCCI stated, "The VCCI will continue to work with the Government and other partners to ensure the economy recovers as quickly and healthily as possible. Improving communication and safely reopening the Central Business District (CBD) as soon as possible were the most popular options identified in the survey. The VCCI is also continuing to work with the Government to discuss possible assistance packages."

The report focuses solely on severely affected employers and, therefore, fails to capture the many other economic impacts of the earthquake. In particular, numerous small vendors, bus drivers, and other informal commercial entities were also severely affected by the closure of the Central Business District, hindering their ability to operate fully.

The VCCI stated, "This rapid analysis also does not consider the scale and impact of the broader economic slowdown on the overall economy, including other islands. The VCCI will examine these larger issues in future analyses."

However, initial findings indicate that nearly 900 employees lost their jobs among the surveyed businesses, including 45% of reported full-time staff. The most severely affected sector was food and beverage, with surveyed businesses reporting a 71% reduction in employment, followed by retail (48% job losses) and accommodation (30%).

The VCCI stated, "46% of surveyed businesses have resumed operations to some extent, with only 35% fully operational and the remainder partially operational. Nearly one-third (31%) of businesses indicated they are waiting for the Central Business District to reopen before resuming operations."

Despite this, the VCCI also found some surprising information – one of the most significant findings was that no businesses reported permanently closing due to the earthquake.

The VCCI added, "This extraordinary result is a testament to the strength and ingenuity of the business community and deserves to be celebrated and affirmed – including sending a message internationally that Vanuatu welcomes tourists with open arms and a smile."

However, the VCCI also acknowledged that, at the same time, many businesses and individuals are suffering. Many businesses expressed concern about their ability to continue operating if the economic downturn persists.

The VCCI concluded, "Businesses were also asked how long they could sustain current employment levels, with slightly less than half indicating they could only pay wages for 1-2 months."