It is hoped that the results of the tender for new gaming licenses will ensure local employment stability. But the business climate is not encouraging: Beijing’s crackdown on the industry and other negative factors continue to weigh. Analysts believe that the scale of the industry will not recover to its pre-Covid level, and that the number of employees and their salary levels will continue to decline
Following the announcement of the results of the new gaming licenses late last month, the SAR Government reiterated that it will strive to ensure local employment stability. Secretary for Economy and Finance Lei Wai Nong said the Government would mandate the six gaming operators to assume their social responsibility, including ensuring job stability, staff training, and upward mobility for their gaming workers.
At the same session of the Legislative Assembly earlier this month, he also said that ensuring local employment is the top priority, adding, “This is what we insist on.”
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MP, Leong Sun Iok, of the Federation of Macau Workers’ Associations (FAOM), the city’s largest labor force, said the results of the tender for the new gaming licenses were conducive to social stability, with less uncertainty in the market.
But it notes, “With fewer and fewer jobs in the gaming industry since the start of the Covid-19 pandemic, many employees in the industry are worried about being laid off, having their pay cut, or being forced to retire early. So we have to pay attention to how [the government] guarantees the employment and labor rights of these employees through different policies and measures.”
Citing official figures, he said that among those who sought new employment in the third quarter of 2022, some 28.6 percent were former gaming workers, and that this result underscores the downward trend in labor demand in the gaming industry and related sectors.
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According to the Statistics and Census Bureau (DSEC), there were 66,400 employees in the gaming industry in the third quarter of this year, plunging 17.1 percent year-on-year, while the number of underemployed in the industry totaled 23,300, tripling from last year (6,200) and increasing fivefold from the previous quarter (4,100).
Moreover, the average salary of these workers was MOP16,000 ($2,000) in the July-September 2022 period, down 20 percent from a year earlier.
REDUCTION IN DEMAND
The sharp drop in demand for labor in the gaming sector is mainly attributed to changes in the industry’s base. In addition to the economic impact of the pandemic and travel restrictions, the closure of gaming promoters since late last year, the revision of the gaming law, and Beijing’s efforts to crack down on cross-border gaming activities have also dampened the outlook for Macau casinos.
Figures from the Gaming Inspection and Coordination Bureau (DICJ) showed that gaming revenue totaled MOP38.72 billion in the first 11 months of 2022, down by 50.9 percent on a year-on-year basis – translating to only 14.4 percent of pre-pandemic figures.
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Zeng Zhonglu, a professor at the Macau Polytechnic University’s Center for Gaming and Tourism Studies, recently noted that there would be a bleak outlook for the local labor market at a public forum. In an interview he said that Macau’s gaming and tourism industry would continue to be sluggish and that the business environment had changed considerably.
Even if the pandemic ends soon, Macau’s economy will be less dependent on the gambling industry, translating into fewer visitors for the purpose of gambling and more visitors for other non-gambling purposes, he said.
“Macau’s gross gaming revenues will only recover to 60-70 percent of the level reached in 2019. Given this climate, the demand for labor in the gambling industry will decline in the future, while the wage level of these workers will also be lower,” he predicted.
SLOW ADAPTATION
“Both the government and gaming operators have been in constant communication to ensure the stability of local employment. If the anti-epidemic measures and quarantine agreements are gradually lifted in the near future, the gaming operators’ turnover will recover, which will be enough to keep the number of employees mostly unchanged,” Billy Song Wai Kit, president of the Macau Responsible Gaming Association, assures PLATAFORMA.
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For the past three years, Macau has strictly followed the zero-case strategy from Mainland China, only having quarantine exemptions for visitors from the Mainland. However, following protests against China’s Covid policy and restrictions in several Mainland cities in recent weeks, there are signs that the relaxation of border prevention measures will be accelerated.
Macau’s Secretary for Social Affairs and Culture, Elsie Ao Ieong U, also noted earlier this month that Macau would follow in the Mainland’s footsteps to study the gradual easing of anti-epidemic measures.
“We cannot close ourselves forever within Macau, and must open up step by step,” he said at the time. However, Song believes that “the overall size of the labor force associated with gambling will slowly and gradually decrease” in the long run.
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For example, gaming operators will move some casino employees to other non-gambling jobs, and will continue to launch voluntary redundancy programs, allowing employees who have reached retirement requirements or have other aspirations to leave on their own initiative.
Regarding the wage level and overall compensation packages for gaming workers in the future, he also believes that the general trend will be downward adjustment.
UNCERTAIN FUTURE FOR SATELLITE CASINOS
While the results of the new gaming license have been announced, there is another major uncertainty affecting the gaming industry’s labor demand that remains unresolved: satellite casinos. Following the implementation of the new gambling law in June, the operating model of these gambling establishments managed and owned by third-party investors under a license from the concessionaires was changed.
The new law prohibits satellite casino companies from sharing gambling revenues with operators. Although there is a three-year adjustment period for satellite casinos to adjust to the new reality, at least two of these venues have already closed by 2022, namely Rio Casino and President Casino.
Official data shows that there are still 18 satellite casinos in Macau, including one under the gaming license of Melco Resorts, one under Galaxy Entertainment Group and the rest in the wing of SJM.
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The Macau Daily News reported earlier this month that despite the possible easing of anti-Covid measures and travel restrictions, several satellite casinos are not optimistic about their future. A real estate industry source was quoted in the article, saying that several of the owners of these casinos have sought to evaluate their properties recently, and one had even expressed interest in selling it. This could affect the stability of local employment.
BETTER PREPARED
Song expects that most of the existing satellite casinos will continue to operate in the near future, and that few will close. Most have already adopted the deal, such as Emperor Palace Casino, Legend Palace Casino, and Babylon Casino, whose gaming operations have already been returned to the operators, he said.
It means that these third-party investors currently only lease their properties to the gaming concessionaires, not getting directly involved in the management of the activity. There are only a few satellite casinos in the market that investors still have direct involvement, such as Ponte 16 Casino, Kam Pek Paradise Casino and Landmark.
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Although some satellite casinos may cease to exist in the near future, Song indicated that these workers are directly employed by the operators, who would allocate them to other positions.
Thus, in his view, the demise of these casinos has a “limited impact” on the local labor market. Meanwhile, MP Leong Sun Iok pointed out that in addition to casino workers, security guards, cleaning staff, and workers in the food and beverage segments of satellite casinos are employed by third-party investors.
Therefore, she is concerned that they may lose their jobs if their satellite casinos close, as FAOM has received some inquiries from these workers. “The government should be prepared and monitor the situation of these workers if some satellite casinos are closed,” he added.
