IAG August 2014 - page 8

“Each [Cotai] Phase 2project could start withonly 100-150 tables
in both the first and the second year versus our base [estimate] of
300 tables, implying a 10% to 16% reduction inPhase 2 valuation.”
Even that base estimate of 300 tables is far short of the 500-
700 tables requested at each project by the operators, though the
government’s 3% cap on the annual growth of tables through 2022
precludes the grantingof those requests in full.
Morgan Stanley’s view is echoed by David Bain of brokerage
Sterne Agee, who in a note in late June highlighted the tight labor
market as a continual concern for the sector.
The government has so far insisted that natural growth of the
labor force amounting to 20,000new local andnon-local employees
a year will meet the needs of the new Cotai developments. The
government’s Policy Research Office estimates the city will require
40,000-45,000newworkers across all sectors by 2016.
Through the first quarter of this year, Macau’s total labor force
has increased 16.8% in the past three years to 384,200. Of the new
workers, 17,100were locals, anumber just shyof theMorganStanley
estimate of 18,516 new local employees required to staff the second
waveof Cotai over thenext three years.
Davis Fong Ka Chio, director of the Institute for the Study of
Commercial Gaming at the University of Macau, agrees with the
governmentviewthatthe labor issue is“notasseriousasone imagines”.
Amember of a government-led committee advising on the city’s
economic and human resources policies, he says, “My estimate is
that the new resorts opening in Cotai will need 60,000 workers in
total in the next few years, an amount that the natural growth of our
labor force can supply including immigrants and thousands of new
graduates from theuniversities each year.”
The Morgan Stanley forecast does not account for thousands
of foreigners who become Macau “locals” each year by obtaining
residency. According to the Macau Identification Services Bureau,
21,316 people became non-permanent residents over the past
three years, most of them frommainland China. Among the 13,620
mainland immigrants in the 2011-2013 period, more than two-thirds
were between 21 and 50 years old.
Labor leaders such as Ieong Man Teng, president of a group
called Forefront of Macau Gaming, acknowledge the supply of
local workers “may not be enough” if the new projects get all the
tables they have applied for. But their responsehas been topressure
the government by mobilizing street protests—two in the last
year involving thousands of participants—against the “relentless
expansion” of gaming and the possibility of dealer positions being
opened tonon-residents.
Says Mr Ieong, “The only solution to this problem is for the
government to strictly fulfill its pledge of capping the growth of the
number of tables.”
It’s a position that counts heavily with a political leadership that
desires above all to avoid any overt displays of popular discontent.
As Mr Bain has noted, “While certain options have been
presented internally within the Macau Government to relax certain
labor restrictions—namely to allow for non-Macau residents to
hold certain positions that can only currently be assumed byMacau
residents, such as dealers—pushback from locals has prevented any
truepolitical progress todate.”
In the wake of last year’s protests, Macau Chief Executive Fernando
Chui Sai Onpledgeddealer positionswould remainoff-limit tonon-
residents“as longas I amstill inoffice”.MrChui’sfirst five-year term
will end inDecember, but he isalmost certain tobehandeda second
term by a pro-Beijing electoral committee that is controlled by the
city’s leadingbusiness and commercial interests.
“[Thebanonnon-residentdealers] isnot aboutprotectingcertain
dealers] isnotabout
protecting certain types
ofpeoplebut rather
about safeguarding social
stability. It isabout
particularly themiddle-
agedand the low-skilled—
toobtainamore stable
andhigher-paying job.”
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