This one's been accepted. Coming up in Macau Business

This article has been accepted for publishing the Macau Business; a monthly magazine here in Macau. This is the final version after to-ing and fro-ing with the editor (lovely chap).

So hard to find good help these days.... at the right price.

The various interest groups in Macau’s new economy, the foreign investors, the gaming industry and those who are effected – workers and small businesses – repeatedly anguish over labour issues in popular discourse: labour shortage, labour mobility, cost increases, the lack of promotional opportunities and youth being lured away from pursuing higher education and opting for entry into the gambling sector. These are all related to each other and affect different segments of the community in a variety of ways – no one seems to be immune from the effects as they permeate our society. As in any case of demand exceeding supply, the labour shortage, particularly in the rapidly developing casino industry, is putting upwards pressure on labour costs. With each new casino opening, more pressure is placed on the market. This is not new. Indeed, this writer could be accused of stating the obvious but it needs to be repeated because this is at the very core of a number of the territory’s most urgent problems.

Any industry requiring semi-skilled staff which is developing at the breakneck speed of the local casino sector would be hard pressed to remain adequately staffed. In this city, the problem is exacerbated by legal restrictions placed on the industry which prevent non-resident workers from being hired as dealers in casinos. The rationale appears to be in the protection of jobs for local residents. If this is so, then it is a law of a bygone era. Placing such an impediment on an economy which has an exponential need for labour can only cause undue damage. It creates bottlenecks for growth as newcomers to the market cannot readily obtain sufficient staffing for their needs unless they poach from others by offering incentives – usually higher salaries – to encourage defection from incumbent employers. Unfortunately, such poaching is much to the chagrin of established local enterprises and bureaucrats. For example, where will the Immigration Department find the additional 1,500 staff which it recently announced it will hire? Combined with the 12,268 jobs vacant across multiple economic sectors at the end of last March – which outstrips the 9,300 unemployed – this restriction and its unabated, deleterious effects can only undermine investor confidence in Macau’s ability to deal with this and other pending constraints. Labour is needed to drive the growth which surely is aimed at improving the living standards of Macau residents. Why impose such bottlenecks on development when they need not exist?

There are other more direct negative effects of this restriction which are somewhat easier to grasp. A common complaint heard from gambling industry staff is the ‘lack of opportunities’ for promotion. With the foreign dealer restriction in place, this lack of opportunity will continue to exist. Counter intuitive? There is a high demand for dealing staff which can only be met by local residents – a finite pool. We are already seeing the effect of this demand on higher salaries and job vacancies in other industries. Thinking to the future, these dealers are unlikely to be promoted off the casino floor if there is no one to replace them. It is not just a matter of skill level and experience but also of high demand and low local staffing supply. Open up the doors a little for foreign dealers and casinos would then able to promote local staff through the ranks from within as merit warrants. A number of mechanisms such as socio-linguistic ability, experience or qualifications can be used to control the percentage of foreign dealers if that is a political necessity. The government’s recent suggestion to introduce licensing for gaming staff could be used in this manner.

There is another indirect consequence of this restriction which impacts resident workers’ opportunities of being promoted. Due to the high dealer salaries, high school graduates are encouraged to forgo further education for the immediate financial benefits of a relatively well paid job straight out of school. Unfortunately, this leaves them poorly placed to compete for future managerial roles against others who have experience, skills and education. One might go so far as to suggest that the restriction on foreign labour manning the gaming floor is causing a ‘dumbing down’ of Macau’s labour force. The government’s initiative to raise the legal age of casino access to 21 years will stem this flow somewhat but it will also further shrink the pool of labour available.

The view here is that the consequences of opening up all roles in the gaming industry to controlled entry of foreign labour would be mostly beneficial in the medium-to-long term. Salaries would stabilize, thus offering fewer incentives to bypass higher studies and reduce the flow of staff from government and other industries to the gaming sector. It would also slow down ‘job hopping’ within the industry which is rumoured to be dealt with by yet more imposed restrictions on the non-resident labour force with a six-month forced “cooling down period” between jobs. This would merely put more power in the hands of employers, a greater burden on immigration authorities and an incentive to hire foreign labour that does not know Macau (a story for another day!) Removing restrictions on dealers – thus dampening the bidding war for staff and encouraging loyalty and commitment to one workplace – would also give the casinos the opportunity to support and encourage their employees with training and career development, something they are now loath to invest in due to the current level of labour mobility.

Without amendments to the foreign worker restrictions on dealing positions, the SAR’s long-term denizens are destined to deal and never to manage. Put another way: Macau’s residents will be dealt their destiny and not be able to choose for themselves.