Labour crisis hits Macau as casino-led economy surges
Posted: 27 April 2007 1225 hrs

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MACAU : Financiers backing Macau's casino-led economic boom are warning of dark clouds ahead unless steps are taken to end a labour crisis that has forced wages to double in three years.

Competition to attract workers in the tiny southern Chinese territory is so intense that casinos have been forced to raise their wages to near-unsustainable levels in a bid to attract skilled croupiers and card-dealers, executives warn.

The problem has already forced a number of older casinos to close down gaming tables after their staff were poached by a rash of new establishments that have opened in recent years.

But a proposal by the Beijing-backed government to alleviate the problem by relaxing immigration rules and allowing foreign workers in has been opposed by the city's powerful unions and civil service.

They are already planning to hold what is likely to be Macau's biggest ever street demonstration on May Day to protest the proposal, and officials fear that with civil servants on the unions' side, a punishing strike could follow.

"It's a political hot potato," said Jorge Godinho, a law professor at the University of Macau.

"The government must strike a balance between the needs of foreign investors and the concerns of the local population. The government is under pressure and it is mounting by the day," Godinho told a conference of foreign investors and local businessmen.

The problem has been brought about by Macau's sudden economic surge following the deregulation of its gaming laws in 2001.

The move, which came soon after sovereignty of the former Portuguese enclave reverted to Chinese rule in 1999, brought in a flood of overseas -- mostly American -- capital.

So far, some 25 billion US dollars have been committed to the city, resulting in the development of dozens of American-styled casino-hotels that have regenerated the city's century-old gaming industry and boosted local coffers.

That coincided with a relaxation of travel restrictions on mainland Chinese that brought in a huge wave of tourists -- a record 19 million last year alone.

The combined effect has been to boost economic growth by more than 20 percent per year for the past two years.

It has also seen Macau's gambling earnings surpass those of the casinos on Las Vegas' famous strip.

The crunch has come in the labour market: some 100,000 new jobs are expected to be created in a city with a workforce of only 250,000 and unemployment at just 3 percent.

"It's an important issue from the financing point of view because rising wages makes it hard for new developments to accurately project their costs and pricing," said Jonathan Skadden, partner at law firm Skadden, Arps, Slate Meagher and Flom, which has helped bring investors into some of the giant new casinos and hotels.

Government officials say they are confident that they can find a way around the problem, but financiers say it will take time.

"If your wages had doubled in three years and were looking likely to rise again, would you be wanting the government to do anything about it?" asked Roger Suyama, president director of investment bank Merrill Lynch's Indonesian operations and a keen observer of the gaming industry.

"I think it will be dealt with, but it won't happen quickly." - AFP/ch