“It is not the strongest of the species that survives, nor the most intelligent. It is the one most adaptable to change.” — Charles Darwin
Two things can fittingly sum up the immediate challenge for the Guam economy. The first one is a date – Sept. 4, 2021 – which marks the end of the unemployment benefits for those who have been unemployed or underemployed since the start of the pandemic. The second one is a percentage – 16.5 percent – Guam’s unemployment rate as of March 2021.
At a budget hearing last June, Labor Director Dave Dell'Isola estimated that a total of $875 million would have been paid out by the time the unemployment benefits end. These payouts have been helpful in so many ways during the pandemic, including making the economy have some level of activity as well as ensuring that those affected are able to endure the impact of unemployment and/or underemployment.
The end of these benefits comes at a chaotic time for many Guam workers. Guam currently grapples with increasing cases of the more contagious delta variant despite its higher vaccination rates (~62 percent are fully vaccinated on Guam vs ~53 percent nationally based on the end of August reports).
While the economy has opened up a bit, new executive orders have reinstated restrictions that can potentially further derail the economic recovery. And with its derailment, the possibility of more jobs for those impacted by the pandemic seems dimmer.
In March, the the16.5 percent unemployment rate shows some improvement vs the unemployment rate peak of 19.5 percent in December 2020. However, it is still a far cry from the lower pre-pandemic level, which was hovering around 6 percent.
“We initially estimated that it will take two years for a full recovery and we were hopeful that we were on our way when Guam started to open again,” said Catherine Castro, president of the Guam Chamber of Commerce. “However, these latest developments have given us another blow. Really, it is a daily struggle for many business owners.”
While Guam has sustained investments from the federal government and sees an increasing number of small home-based businesses, the tourism industry is the hardest hit and with it, its employees and those of its complementary and peripheral businesses. In fact, if one looks closely at the employment data, there was a 16.8 percent decline year-on-year as of March in the private sector net of construction, which had greater than 9 percent growth in employment.
“The impact has largely been in the private sector, and almost entirely due to tourism,” said Gary Hiles, chief economist at the Guam Department of Labor.
During his presentation at the Rotary Club of Northern Guam in July, Joe Bradley, chief economist at the Bank of Guam, said Guam’s economic future was difficult to predict. “While the island’s economic activity is headed toward a semblance of normalcy, getting people back in the workforce remains a challenge. We don’t have that many available jobs here,” he said.
Among the tourism-related businesses that shrank operations is Loco Boutique, a swimwear retailer that caters mainly to tourists. The zero-arrivals forced Loco Boutique to shut down two outlets, one in Saipan and the other at Tumon Sands Plaza, leaving only two stores that remain open, one at Micronesia Mall and another at Guam Premier Outlets.
Carolina Villanueva, the franchise’s area manager, said the closure of three stores left most employees jobless. “We do not have any openings right now but we receive an average of five applications every day,” Villanueva said.
Tes Reyes-Burrier, food and beverage director at the Lotte Hotel Guam, said the governor’s latest executive order has made it harder for businesses to operate. “Among the challenges we are experiencing is the lack of experienced workers.
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There’s not enough time for actual on-the-job training. Also, there’s the fear of getting Covid-19 while at work, whether from customers or from co-workers,” Reyes-Burrier said. “The situation we are in is unpredictable. Looking at the data of where we are at now, it is important that we weigh things out before making decisions that will affect others.”
Even the Taiwanese tourists coming to Guam for the Air V&V initiative will not bring a significant impact on the visitor industry, according to Sam Shinohara, United Airlines’ managing director of business development for Asia-Pacific.
“Businesses are open only for limited hours,” Shinohara said on Aug. 24, speaking before the Rotary Club of Tumon Bay during a meeting at Lotte Hotel. “Most of the complaints I have heard is that there’s nothing to do here. It’s not a great story to tell about the island. We have to give them a reason to come back.”
Shinohara said United will be adding more flights and upgraded seats in the coming months. However, he acknowledged that Guam is facing the challenge “to return the industry to some semblance of normalcy. “Businesses will be impacted by the lack of people,” he said. “Guam needs to get everybody on the same page.”
With the military buildup and some renewed positive outlook in real estate, the construction sector is one industry that is bucking the trend. “The military build-up is showing some significant increases favorable to the construction sector, but it has a modest impact to the whole market,” Hiles said.
While the June 2021 report was not yet available during the interview and as of this writing, there is an expected increase in employment levels. It may show further improvements in the construction sector. However, increases in the construction sector do not automatically equate to the same level of increases in economic activities. “The spending level of those employed in the construction sector is just not the same compared to the tourism sector,” he said.
So what now, Guam?
The impact of the continued unemployment rates and lower spending levels stunts the economic recovery that Guam seriously needs. While there are recent talks of a possible extension of unemployment benefits beyond the Sept. 4 end, nothing yet is cast in stone. Even so, should Guam totally depend on these unemployment benefits for economic activity? How can Guam workers pivot if the tourism sector continues to suffer?
“You know, the pandemic accelerated the five to 10 digitalization plans of most companies. We need everything digital now,” Castro said. “The underemployed or unemployed, especially the younger ones, need to prepare for the future job force now, which is very different from before.”
Nationally, two of the fastest-growing industries are health care and technology.
The same may likely be true on Guam.
To this effect, there are various skills and apprenticeship programs run by Guam Community College, the University of Guam, Guam Marianas Training Center, GCA Trades Academy and the various Guam Registered Apprenticeship Program partners. These include certifications for nursing assistants, phlebotomy technicians, pharmacy technicians, physical therapy aides, medical billing and coding specialists, technical engineers, and digital services among others.
“Even prior to the pandemic, there is anecdotal evidence of families seeking better employment opportunities and migrating to the U.S. mainland. But the reverse should be made true. There is a significant attraction on Guam, and we’ve recently seen visitor increases from U.S. mainland,” Hiles said. “Although not yet presently happening, there is likewise an opportunity for Guam to capitalize on the increasing control in capital investments that China has imposed that have affected Taiwan and Hong Kong economies.”
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It is indeed business unusual.
On one hand, workers can wait either for their old jobs to come back or for an extension of the unemployment benefits to tide them over again during the pandemic. On the other hand, workers can change the way they look at things, get the proper training, learn new skills and find new meaningful employment.
On one hand, business owners can hope for a strong revival of the same tourism industry despite the pandemic. On another, they can pivot to attract other markets, have more digitally-oriented services, create new businesses, and move toward a more pandemic-resilient Guam economy.
No one can deny that the pandemic has brought about a tremendous impact on Guam’s economy. Life and business unusual will be the continuing mode for a foreseeable future. How Guam responds and changes as a community in light of that will determine its economic recovery more than any executive order can. (With additional reports from Mar-Vic Cagurangan)
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