The number of migrant workers in Macau fell 11.6 percent by the end of December from an all-time peak in September 2008. This matters to gaming investors because Macau residents are typically paid a fifth more than migrants, according to the government’s own statistics.
If Macau’s gaming market is actually shrinking then of course it makes sense to reduce overheads, and the wage bill is the most obvious target.
Getting rid of migrant workers may not be the most cost effective and operationally efficient way of proceeding. In 2008, the median monthly earnings of the employed population as a whole was 8,000 patacas (USD1,001), while the median for Macau residents as a discrete group was 9,500 patacas, according to the territory’s Statistics and Census Service (DSEC).
However, there are clear political pressures that might make foreign workers the obvious target when casinos are wielding their knives. Galaxy Entertainment Group faced a barrage of criticism by Macau legislators when it made some locals as well as migrants redundant at its City Clubs last year.
Since then, the operators have generally treated permanent resident employees like giant pandas—creatures to be protected at all costs from the turmoil in the wider world.
It’s difficult to see, though, how casinos can square the circle of cutting costs while clinging to that part of the workforce that costs the most to maintain.
Like-for-like substitution of migrants by locals seems an unlikely option as it would dramatically increase overheads. Employing only locals but fewer of them in future, could depress productivity, as Macau school leavers aren’t noted for their educational attainment. Dr Stanley Ho hinted last year that some of the local job candidates seen by his casino operating company SJM couldn’t actually add up properly.
Macau isn’t a world beater in every aspect of its government either, but it’s pretty good at collecting and analysing economic data, and the differential between local and migrant wages is a case in point. How the data is used is the important question.
The pressure on casino operators to hang on to local workers and let the foreigners go first is real and it’s linked to popular opinion. The unemployment rate among locals is actually higher (4 percent) than for the general working population (3.3 percent and holding for the last three months). This is not especially surprising, as work permits for migrants in Macau are often job specific. When the job goes, so does the permit.
The popular image conjured up by the phrase ‘migrant workers’ when discussing Macau tends to be either skilled construction staff from Hong Kong, or casino senior executives from western jurisidictions on attractive salary packages.
The reality is that in the casino industry many of the migrants are actually modestly paid staff in relatively low-status jobs from countries such as the Philippines.
A total of 104,281 migrants were registered to work in Macau as at the end of September—around one third of the territory’s entire active workforce of 326,000.
By the end of December 2008, the number of foreign staff had fallen steadily to 92,161. This still represented year-on-year growth compared to December 2007, but was a significant reversal of the fast upward trend seen during 2008.
Reasons cited in the local media for the fall include casino operators and other employers cutting costs following the recessionary effects of the global financial crisis, as well as a reduction in Macau’s gaming business growth linked to the rationing of entry permits for visitors from China. To prevent joblessness among locals creeping up any further, more foreigners may face the chop, with the possibility that it won’t make the sizeable dent in overheads that operators might hope for.
