Inside Asian Gaming

August 2010 | INSIDE ASIAN GAMING 29 Advertise with Inside Asian Gaming For advertising enquiries, please email: ads@asgam.com or call Domingos at +853 2832 9980 peninsula in 2006 and 2007. But such an approach simply shifts Macau’s structural labour problems down the line to other sectors that find it hard to compete with casino and construction wages. Between 2007 and 2008, median wages in Macau’s construction sector rose 17.6%. In the same period, hotel and restaurant median wages grew by only 10.9%. In Q1 this year the median monthly income in the hotel and restaurant trade was MOP7,000. In the same period, the median construction salary was MOP9,300. The median monthly salary for a casino dealer was MOP13,000. Hiking construction wages this time around could mean a flight of local people from jobs in the restaurant trade, leading to more establishments closing. The surviving restaurant businesses may then be forced to pay better wages to compete with construction, thus helping to drive up the cost of restaurant meals and further fuelling an upward inflationary spiral in the local cost of living that affects everyone. In 2008, inflation in Macau peaked at 8.6% according to DSEC, but fell back to 1.2% in 2009. It is currently creeping up, reaching 1.5% in Q1 2010, compared to 1.2% a year earlier. Inflation has certainly been cited by Macau residents quoted in local media as a cause for concern. In some cases, residents have put the blame on expatriates and their generally above local average salaries for pushing up the cost of living. Perhaps a more relevant point is that the arrival of a new wave of expatriates is a function of economic development. Such development often produces inflationary pressures as a side effect, as has also been seen on the Chinese mainland. So how should Macau tackle its underlying labour market weaknesses? Macau’s first chief executive, Edmund Ho, suggested during his second term the idea of raising the casino entry age to 21, thus creating an immediate incentive for locals to attend tertiary or higher education. He added that those casino workers under 21 at the time a new law was enacted would be allowed to stay on. He was backed at the time by Dr Stanley Ho. Nobody could accuse Dr Ho of being a ‘here today gone tomorrow’ kind of capitalist. Locals can join the police at the age of18, so some fretted that could create a bizarre situation whereby police wouldn’t be able to enter a casino on official duty. That’s clearly a red herring. Dispensations could be made for public security personnel on official duty. Gettingmore people into tertiary and higher education is a question of political will, not technicalities. The Monetary Authority of Macao announced it had foreign exchange reserves of MOP163.7 billion (US$20.42 billion) at the end of June 2010. If Macau can afford to spend US$1 billion on a light rail system to move tourists around, it can certainly afford to pay its young people educational support grants. That would allow students to stay in education beyond 18 without their choice having a short-termnegative impact on their family’s income. And if there aren’t enough places at local educational institutions, then they should be paid to attend courses on the Chinese mainland or Hong Kong. A condition of the support grants could be that the students must return to Macau after graduation—possibly to take up placements with casino operators and other key employers, and thus preventing a brain drain out of Macau by its brightest and best. Educational support grants may be the only answer in the short term. With two new casino resorts due to open on Cotai between 2011 and 2012-13 requiring a possible 22,000 new workers, according to some estimates, there’s virtually no chance of the casino entry age being raised before then for fear of creating a chronic shortage of already scarce local staff. The time may have come, however, when Macau’s lawmakers need to rethink the policy of reserving casino dealing jobs for locals. In theory, it’s a good idea to allow the locals to benefit from the casino boomby reserving for them some of the highest paid entry-level jobs. In practice, it’s in danger of institutionalising the economic rationale for leaving education early. That risks leaving Macau permanent residents permanently at the bottom of the educational achievement ladder, giving highly complex businesses such as casino resorts little choice but to ask to import more highly skilled staff. Back to the drawing board—educational policy rethink for Macau Macau Policy