Offering unpaid leave, cutting pensions
With revenue down and the cost of labor up, Macau casino operators are undertaking “various cost-cutting measures” to offset the losses, Morgan Stanley Research Asia Pacific said in a report last week. The measures include unpaid leave and cuts to employee pensions, said the investment report.
“Some operators started encouraging employees to take no-pay leaves, which is generally welcomed by the employees?most of them hardly took breaks in the last few years when demand was booming,” the report stated. “The companies could follow the same drill as in 2008/09 to cut pension plans in order to reduce costs.”
But the Macau Daily Times cited information from the Macau Federation of Trade Unions saying some employees are being asked to take unpaid leave for up to a full year. The report added that some workers like the idea, but Choi Kam Fu, director-general of the Macau Gaming Enterprises Staff’s Association, said authorities should regulate such agreements.
“Although unpaid leave is taken on a voluntary basis, the government should intervene and supervise,” he said. “They should regulate the unpaid leave scheme to see whether it will affect the employees’ welfare in the company, including their bonus and salary adjustment.”
Operators are feeling the pinch as they work to retain high rollers still willing to visit Macau, which saw gross gaming revenues drop 2.6 percent in 2014 after a crackdown on corruption by the Chinese government.
An unnamed executive from MGM China Holdings Ltd. told UBS Securities Asia Ltd. it did not expect a big spike in unit labor cost this year. In 2014, wages rose 15 percent to 20 percent in anticipation of new resorts coming to the Cotai Strip. MGM China “expects base wage increase of circa 5 percent, but combined with increases in benefits will mean total unit labor expense could go up (more than) 10 percent year-on-year in 2015,” UBS analysts observed. SJM Holdings Ltd. has already announced a 5 percent raise for its staff in 2015, the first operator to publicly do so.
At the same time, nearly 100 workers recently complained to the Labor Affairs Bureau that they have been working overtime without compensation at Palacio Lisboa, a restaurant at the Hotel Lisboa, an SJM property.
The workers also claim they’re being cheated out of days off by their employer, reported the Macau Business Daily. “We have a regular four days off every month. If they arrange your day off on mandatory holidays, you will only have three days off for the month,” said one worker. “This is an act of exploitation.”
Meanwhile, Morgan Stanley said January will “be the bottom” in terms of GGR in Macau. “With cost management, EBITDA could decline less than revenue,” said Morgan Stanley researchers.
In related news, close to 60 percent of the respondents to a survey conducted in Macau and Singapore said they wish to work in the casino resort industry. The positive view of the sector comes at a time when venues in Asia Pacific are expanding and recruiting new employees.
Singapore opened two large casino resorts in 2010 as a way to boost its economy. Macau has long been focused on casino gaming.
A survey conducted by Shih Chien University in Taiwan shows hat 58.4 percent of respondents from Macau and 61.9 percent of respondents from Singapore said they would like to work in the casino industry.
“When facing a choice of occupation or future career, young people prefer to apply for casino-related job vacancies,” said the study. The preference caused “a shortage of human resources for most non-casino-related companies,” the study added.
According to the study, more than 20 percent of the respondents in Macau and 10 percent of those surveyed in Singapore already worked in a gaming-related business, reported the Macau Business Daily.
The research also showed that 34.1 percent of respondents from Macau and 35.7 percent from Singapore said they “never” gamble in casinos themselves.
