The Maldives tourism industry is preparing for a significant workforce contraction in the second quarter of 2026, according to the Maldives Monetary Authority’s (MMA) latest Quarterly Business Survey, as businesses respond to weaker revenue expectations, seasonal demand declines and external economic pressures.
The survey indicates that employment growth in the tourism sector had already begun slowing during the first quarter of the year. The industry’s employment index fell from 57 in the fourth quarter of 2025 to 20 in the first quarter of 2026, signalling a moderation in hiring activity even before companies began forecasting staff reductions.
Labour costs also grew at a slower pace during the quarter. The index measuring wages and other labour costs per employee declined by 34 points to 28, suggesting that businesses had started exercising greater caution in payroll spending.
However, expectations for the second quarter point to a much sharper adjustment.
The survey found that the tourism sector’s expected employment index has fallen to negative 54, representing an 86-point decline from current conditions. More than half of tourism businesses surveyed expect to reduce their workforce during the quarter, while none reported plans to increase employee numbers.
Companies also anticipate lower spending on wages and labour costs. The expected wages and labour costs index turned negative, falling 65 points to negative 9, reflecting broader efforts to contain expenditure amid deteriorating business conditions.
The projected workforce reductions come despite ongoing labour market challenges within the industry.
Businesses continue to identify shortages of skilled labour as a key constraint on operations. The proportion of respondents citing a lack of skilled workers increased compared with the previous quarter. Employers also highlighted shortages of local labour and rising labour costs as persistent barriers to expansion.
The findings highlight a growing paradox within the tourism sector, where businesses are reducing staff numbers while continuing to face difficulties sourcing qualified employees.
Industry expectations suggest that the planned workforce adjustments are being driven primarily by weakening demand projections.
Tourism operators reported a sharp deterioration in outlook for the second quarter, with the expected resort bookings index dropping to negative 78 and the expected occupancy rate index falling to negative 90. These declines coincide with the end of the peak tourism season and the continued impact of geopolitical tensions in the Middle East on travel sentiment and booking patterns.
Revenue expectations have also weakened considerably. The expected total revenue index fell to negative 90, with 95 per cent of surveyed businesses anticipating a decline in revenue during the second quarter.
With lower occupancy rates, reduced bookings and weaker revenue forecasts, many tourism operators appear to be reassessing staffing requirements as part of wider cost-management efforts.
The survey suggests that the tourism sector is entering a period of operational adjustment, with workforce optimisation emerging as a key strategy for businesses seeking to navigate a more challenging economic environment while maintaining long-term competitiveness.
