Cash hand-out calms tempers

The cash hand-out was announced a few days prior to the May 1 demonstrations. But the last quarter was to bring bad news. The government reacted again, successfully reducing the damage . . .

“In 2008, Macau’s economic development experienced dramatic fluctuations,” acknowledged the government in an official report. “Since the onset of the international financial tsunami in the third quarter, economic growth dropped significantly. As overall economic growth slowed, all industries began facing varying degrees of difficulty. Some of the more evident problems facing economic development were: pillar industries such as the tourism and gaming industries and their related industries were hit by the financial turmoil; investments and exports decreased; business became more difficult for some small and medium-sized enterprises (SMEs); and the unemployment rate rebounded.” 

The “international financial tsunami” occurred in the “the third quarter” but several months before the government had anticipated what was coming, adopting a measure which, 10 years later, under a completely different scenario, seems to have remained forever: the Wealth Partaking Scheme.  

Under this scheme, every Macau resident identity cardholder received MOP5,000 from the public coffers, while non-permanent resident identity cardholders were given MOP3,000 [in 2009, the government launched a second Wealth Partaking Scheme adding another MOP1,000 for residents and MOP600 for non-permanent individuals. And at the end of that year the government further announced a Central Saving Scheme, benefiting all permanent residents aged 22 and over. Last year, the scheme cost more than MOP6.08 billion, shared by 638,627 residents – each received MOP9,000 – while 61,985 non-permanent residents received MOP5,400. 

The big question is this: what motivated the government to proceed with this measure when Macau had not yet felt the effects of the crisis (either socially or statistically)? The authors of Social Welfare Policy: A Flexible Strategy suggest an explanation: “In the light of the global financial crisis, a deteriorating economy, and rising discontent among Macau citizens, the government launched the Wealth Partaking Scheme,” state Chan Kam Wah and James Lee. 

Scalded by what had happened in 2007, Edmund Ho did not want to risk it! 

On May 1, 2007, between 2,500 and 5,000 demonstrators tumbled onto the streets “to decry official corruption and rail against illegal immigrants working in Macau’s construction industry.” The protests quickly erupted into violence and local television stations showed police beating back protesters with batons and dragging away a number of them whilst firing warning shots into the air to disperse the crowd. Some protesters demanded the resignation of Edmund Ho, the Chief Executive of Macau. 

“It was not the scale of the protest or the chaotic situation that caught people’s attention, but the uncommon scene of civil unrest staged against the background of an economic boom and 17 per cent GDP growth from the previous year,” according to the authors of the book Political Economy of Macau since 1999: The Dilemma of Success. “Nothing like this had happened in Macau’s recent history, not even during the economic recession in the 1990s under Portuguese Administrative rule. The MSAR Government suddenly faced political pressure from the low-paid working class,” add Yufan Hao, Li Sheng and Guanjin Pan. 

The usual May 1 street demonstration in 2008 was much less turbulent, thus it is possible to surmise that The Wealth Partaking Scheme had cushioned what might be to come (the scheme was announced eight days before these protests). 

Other factors did not come under the government’s purview, so – unsurprisingly – “during the global financial crisis in 2008 the reduction in the salaries of casino staff, massive redundancies and labour repatriation following the retraction of foreign investment in Macau greatly affected the territory’s employment conditions and social stability,” according to Hao, Sheng and Pan’s book. “All of the government’s key policy initiatives during 2006 – 2010 were created under the circumstances of serious social unrest and a crisis of legitimacy.” 

In addition to the cash hand-outs to residents (followed by medical subsidies), the Macau Government budgeted MOP$1.3 billion for investment in public works and took measures – including fund provision for small and medium enterprises, tax breaks, housing subsidies, textbook allowances and electricity subsidies – to further quell tensions. 

Measures which helped mitigate a greater impact. Macau’s overall economy moderated markedly in 2008 with growth of 13.2 per cent, significantly lower than the 25.3 per cent of 2007. Worse still was the 7.6 per cent contraction in the last quarter of 2008 and an even more severe plunge of 12.9 per cent in the subsequent quarter. 

The expatriate’s nightmare 

“From January 2007, the number of officially registered non-resident workers had increased from 66,769 to a peak of 104,281 in September 2008 and decreased then to 83,616 in June 2009. Migrant workers who had lost their jobs had to return home at a time when there were few job opportunities to return to.  

Many of Macau’s upscale property projects were tailored to attract well paid expatriates in the management of the new casino resorts; however, with the crisis many expatriates had to leave Macau. Those who were fired were forced to leave the territory within days despite the challenge of searching not only for a new job but also schools for their children, and buyers for their newly acquired homes. Dreams of a career in boomtown Macau turned into a nightmare.  

Attracted by Macau’s new dynamic image and slogans such as ‘In a world of difference, the difference is Macau’, foreign workers realised that in the moment of crisis the Macau Government concentrated on its long neglected residents fearing a boiling over of their frustration. To calm local sentiments the government reacted with investments in its social security net by providing more housing subsidies, by distributing ‘candies’ to all members of society, and by offering better loans to small and medium enterprises hurt by the global downturn”  

(Professor Hendrik Tieben, School of Architecture, The Chinese University of Hong Kong, 2009)