Macau’s labor shortage is proving costly for the city’s casino operators and is likely to become more so.
The recent wave of protests by disgruntled gaming floor workers demanding higher wages and better career prospects is already hitting the bottom line, according to a new report by Deutsche Bank Markets Research analyst Karen Tang, who warns that labor costs could nearly double those initially estimated.
“So far, the second-quarter earnings season has been disappointing, with Sands and Wynn missing consensus by 7 and 11 percent. The key reason is higher staff retention costs,” Tang said.
Galaxy Entertainment Group has become the fifth of the territory’s six operators to increase bonuses in order to retain staff, despite which, as many as 1,000 employees recently demonstrated outside the company’s corporate offices and marched to its StarWorld Hotel on the Macau peninsula.
Tang said the Galaxy bonuses will lift the company’s expected increases in labor costs from 5-8 percent a year to 10-15 percent through 2017.
Las Vegas Sands’ Sands China subsidiary has been another prime target of local labor groups, who have staged two protests outside The Venetian Macao on the Cotai Strip.
To date, Sands China, MGM China, SJM and Wynn Macau have all increased monthly salaries by 5 percent. Galaxy and Melco Crown are the only two that haven’t yet announced a pay rise. Melco is also the only company that hasn’t disclosed its bonus levels or whether it is paying them. Galaxy, Wynn and MGM are paying bonuses equal to month’s salary. At SJM they range between 1.2 and 1.7 months. Sands China is paying a month’s salary plus performance bonuses.
Additional benefits at Galaxy include stock awards of three times’ monthly salaries in 2014 plus an additional month of bonus in July for the next two years. Wynn also is awarding stock options.
Data from the Macau Statistics and Census Service Bureau show that at the end of December, the average monthly earnings of full-time casino employees was MOP19,120 (US$2,390), up 6 percent year on year.
