The opening of Studio City and of Galaxy Macau Phase II will require gaming labour to expand by 16,000 to 18,000 within this year, which represents an expansion of 27.8 to 31.3 per cent. As the currently unemployed population of Macau accounts for just 6,900, labour costs in the industry are expected to soar as operators fight to staff their new resorts. Among the analysts, the consensus is that in 2015 labour costs will increase by 10 to 15 per cent.
On Monday, the co-chairman of Melco Crown Entertainment, Lawrence Ho Yau Lung, unveiled Studio City, saying that from March on the company would start to recruit 8,000 to 10,000 workers. However, and bearing in mind that Galaxy started a recruitment process to hire 8,000 workers this month, the CEO of Melco Crown admitted that he was “a bit worried” about how this could be achieved.
According to data from the Statistics and Census Service (DSEC), from November last year the Macau workforce totalled 403,100 employees, while 57,550 (14.3 per cent) of the total labour force was employed by the gaming industry. At the same time, the unemployed population totaled some 6,900, or 1.7 per cent.
While immigration is the main key to solving the problem, there are two factors that will contribute to increasing labour costs for gaming operators: the competition of gaming operators for the most experienced and talented workers and the prohibition of hiring non-resident workers as croupiers. These factors were explained by Deutsche Bank research analyst Karen Tang, who predicted inflation would hit 15 per cent per year until 2017.
“For 2015-2017, we expect wage inflation (including bonuses) will remain high at around 15 per cent per year. We think new casinos will offer higher pay to attract the well trained and experienced staff from competitors to work for them”, the analyst explained in a report dating from September. “The market is under the misconception that wage inflation is only serious in this category of staff. In reality, according to government data, wage inflation for non-dealer casino staff, which do not need to be locals by law, is even more acute”, she added.
According to DSEC, the average earnings of full-time employees by industry in June was MOP20,106 per month for gaming employees, which represented an increase of 6.7 per cent year-on-year. Dealers were paid MOP17,530 per month in June, which at the time was an increase of 4.8 per cent year-on-year.
Taking action
If on one side the rising costs of the workforce may be a dark cloud over the gaming industry on the other the operators have started to adopt measures to curb inflation, as a report from Morgan Stanley published on Tuesday explained.
‘The total increase in 2015 may be lower than the 10-15 per cent mentioned by most operators during our Asia conference in November, as casinos began to take various cost-cutting measures’, it was written.
The cost-cutting actions adopted by gaming operators involve encouraging employees to take unpaid leave, which can reach 3 to 4 days a week.
The fact that SJM employees accepted a 5 per cent wage increase, while Civil servants in Macau will receive a 6.75 per cent raise this year is also one of the factors casting a brighter light on the industry.
‘Casino staff are aware of the seven consecutive year-on-year declines in gross gaming revenue for the industry, hence they are willing to compromise’, the report stressed.
However, and despite the more upbeat Stanley Morgan report, the worst for casino operators, and the best for gaming industry workers, has yet to come, as Sands China’s Parisian and Steve Wynn’s Palace are slated to open during the first half of next year. According to the report by the American company, demand for labour will reach its peak at that time.
‘The most labour intensive stage is usually the final fitting out. This implies the peaking of labour demand during 2015 and the first half of 2016 because Galaxy Phase II and Studio City are opening in 2015, while Sands and Wynn are opening around the first quarter of 2016’, the report noted.
