Macau’s casino workers are not happy, and that’s a problem for the casinos and for a government fearful of any public display of discontent.
As the Chinese territory races to build six huge new resorts in the next three years, labor strains are intensifying. Croupiers and pit staff are demanding higher pay and threatening strikes at a time when the market faces the most severe labor shortage in its history.
Las Vegas Sands and Wynn Resorts reported combined costs of US$50 million last quarter for labor-related compensation at their Hong Kong-traded Macau subsidiaries, and industry analysts expect the other four operators in the world’s largest gambling market—Galaxy Entertainment, MGM Resorts, SJM Holdings and Melco Crown Entertainment—to announce similar cost pressures when they post earnings this month.
LVS’ Sands China and Galaxy both have been targeted by demonstrations led by a labor group called Forefront of Macau Gaming, which accuses the companies of arbitrary and unfair wage practices and has staged sizable demonstrations outside Sands’ flagship Venetian Macao on Cotai and at Galaxy’s offices and outside its StarWorld casino on the Macau peninsula.
“For both Galaxy and Sands we are not ruling out a strike,” said Ieong Man Teng, a baccarat dealer and Forefront’s president.
Local media have reported the Venetian’s seven-year anniversary on August 28 as a potential strike date.
Home to a population of just over 500,000, the former Portuguese colony’s 35 casinos recorded US$45 billion in casino revenue last year, seven times the take of the Las Vegas Strip, and the government relies on gaming taxes for more than 80 percent of its revenues. The gaming boom also has resulted in one of the world’s lowest jobless rates at 1.7 percent. Dealers are the city’s highest-paid non-managerial workers, earning an average of 17,000-18,000 patacas (US$2,125-$2,250) a month, and rigid regulations that prohibit foreigners from working at the gaming tables mean casino operators have little choice but to raise wages to attract and retain staff.
Morgan Stanley said in a July report that labor competition will intensify in the near term, pressuring margins and increasing start-up losses for the new resorts on Cotai, which the bank estimates will be short 13,800 employees by 2017, a figure unlikely to be met solely relying on local supply.
The casinos, acutely aware of the labor shortage, are competing for workers with bonuses, raises and other incentives. Wynn Macau recently gave 1,000 shares of stock to each of its 7,500 employees on top of annual bonuses. Melco said it would offer management courses to existing employees and scholarships to their children.
“We think the bargaining power of casino employees will keep rising in the coming few years amid labor shortages and demand of labor,” Morgan Stanley said.
The troubles also come just weeks ahead of the expected re-election of Chief Executive Chui Sai On at the end of this month. Although it’s a select committee of elites that will return Chui to office, the government is highly sensitive to public protests and is anxious to avoid any more of them. Secretary for Economy and Finance Francis Tam said officials are focusing on gaming workers’ demands, according to a statement that was published last month on the government web site just days before government representatives met behind closed doors with workers from Sands China and the leaders of Forefront.
Sands China responded to last month’s demonstration by adding a second annual bonus equivalent to a month’s pay for all employees below senior management level. This is after dispensing across-the-board pay increases of 5 percent in March. In addition, the company said all assistant pit managers were recently promoted to pit manager positions, a sore point with the Forefront group, and said qualified dealers will be promoted to pit supervisors.
Galaxy responded to the protests by announcing a “Special Reward Program” that will see all full-time employees below the senior manager level receive stock equal to three times their current salaries and an extra month’s salary as a bonus.
