Labor costs for Macau’s casinos are growing faster than gaming revenue, and analysts say the situation is likely to get worse before it gets better.
The impacts of the city’s acute labor shortage—unemployment is running at 1.7 percent, one of the lowest rates in the world—have been a major concern for a while, and that is growing in the wake of recent labor unrest, coupled with a massive upcoming round of hiring to fill new casinos.
According to Morgan Stanley research, total staffing costs for the six operators rose 19 percent in the first half year on year against revenue growth of 13 percent.
With revenue now down for the fourth straight month, that trend is likely to continue, the investment bank said. It sees the negative spread widening to 30 percent in the first half of next year, based on a projected 15 percent decline in revenue and a 17 percent gain in staffing costs.
Macau maintains strict controls on imported labor and only locals are able to work as dealers in the casinos. Newly reappointed Chief Executive Fernando Chui Sai On has pledged that won’t change. As a result, casino operators have been forced to compete to attract and retain key staff, pushing up costs.
