The Tourism Employees Association of Maldives (TEAM) has voiced concerns over the impact of amendments to the Foreign Exchange Act, which has led to the conversion of resort employees’ salaries and service charge payments from US Dollars to Maldivian Rufiyaa. The new law, effective from January 2025, requires foreign exchange-earning businesses, including resorts, to exchange either $500 per tourist or 20% of their revenue into Maldivian Rufiyaa.
As a result, some resorts have begun paying salaries and service charges in local currency instead of US Dollars, prompting criticism from TEAM. The organisation has called for government intervention, citing the financial strain the changes have imposed on workers.
Financial Challenges for Employees
TEAM highlighted several issues caused by the currency conversion. Workers reportedly experience a reduction in income, with losses estimated between MVR 3,000 to MVR 5,000 when salaries and service charges are paid in Maldivian Rufiyaa. The rising cost of goods and living expenses further exacerbates the financial burden on employees, impacting their ability to maintain financial stability.
The organisation also underscored the challenges faced by foreign workers, who make up approximately 70% of the tourism sector’s workforce. Many rely on earnings in US Dollars to support their families abroad, and the currency conversion adds an additional layer of difficulty for these workers.
Call for Government Action
TEAM has urged the government to address the situation by halting the conversion of salaries and service charges into Maldivian Rufiyaa. Additionally, the organisation stressed the importance of preserving the original terms of employment contracts, arguing that altering payment agreements undermines financial security for workers in the tourism industry.
Despite TEAM’s concerns, the government has not yet issued a response or provided clarity on the potential impact of the amendments on tourism sector employees.
Wider Implications
The tourism sector, a cornerstone of the Maldivian economy, relies heavily on its workforce to maintain the high standards expected by international visitors. TEAM’s statement reflects growing apprehension about how the changes to the Foreign Exchange Act may affect employee satisfaction and the sector’s overall stability.
As the tourism industry grapples with the implications of the new law, the need for clear communication and action from the government remains critical. Addressing these concerns will be essential to ensure the wellbeing of workers and sustain the sector’s vital contributions to the Maldivian economy.
