The global financial crisis and labour restrictions are starting to hurt Macau

After a period of spectacular growth, things are looking a little gloomy for Macau. "Asia's Las Vegas" is hurting from the global financial crisis, and the central government's travel restrictions slapped on mainland visitors to the city isn't helping matters either.

Asia marveled at Macau's economic boom since it opened its gaming sector to foreign investment in 2002, and the city recorded a stunning growth of 27.3 per cent last year. But, with the world on the brink of a recession, the brakes appear to have been applied to the economy.

A prominent economist, Albano Martins, and the government's Secretary for Economy and Finance, Francis Tam Pak-yuen, have warned that growth is expected to fall to between 10 to 12 per cent this year.

On the employment front, Mr Tam recently announced a freeze on permits for three types of imported labour: construction workers, casino pit supervisors, and security guards and cleaners. Macau has 10,000 unemployed with a primary school education or lower and, for them, there are few jobs to apply for. Mr Martins says these people are "structurally unemployed because they lack the requisite skills needed for Macau's modern service economy. You can't use factory workers and the elderly [for casinos and hotels]".

Much has been said of Macau's labour shortage, but some believe the arguments by those seeking to restrict worker importation are overplayed and disingenuous, particularly now with the financial turmoil.

Robert Kirby, owner of small business Kirby Leadership, is critical of those opposed to imported labour, arguing that there may be a "witch hunt" against foreign workers. He says further restrictions on foreign labour - particularly at the supervisory and middle management levels - puts "business efficiency at risk in the short- to medium-term".

Mr Martins says the problem runs deeper. "You can't get work authorisation for foreigners in the construction sector or to be casino pit supervisors - they must be locals."

He does not believe such policies are prudent because the economy is essentially at full employment.

Mr Martins argues it is not conspiratorial to say "forces are at work locally to keep out foreign workers no matter what". But he believes that when many locals lack the skills, experience and education, yet demand high salaries - which some casino can offer them - it does not bode well for banks and small- and medium-sized enterprises (SMEs) that cannot offer higher wages.

"SMEs are unable to shape public policy - unlike the large casino-resorts, and they will always get the short end of the stick," Mr Brockman says. Henry Brockman, Citic Ka Wah Bank Macau's branch general manager and head of the British Business Association of Macau

"They can't open an institute at UMac [University of Macau] like the casinos. Many of them only have three to four employees and they need to import more workers. They can't afford local workers because they keep flocking to casinos for higher pay."

Mr Martins and Mr Brockman claim it is nonsensical to only allow local residents to become supervisors. "Construction sites, casinos and hotels need labour or they can't survive. We need flexible laws ... labour is not growing at a rate to satisfy the market," Mr Martins says.

Both bemoan the lack of an open labour market and poor local fluency in English. Mr Brockman says the challenge is in managing the expectations of the existing workforce because they have the knowledge, experience and education to be productive.

"The labour protests by less skilled workers this past May were out of hand because many on the lower rungs of the socio-economic ladder feel they are falling behind. We need more foreign [casino] supervisors and extra training and education to pull everyone up," Mr Brockman says.

Mr Coutinho does not agree because he feels Macau has an oversupply of labour with 110,000 foreign workers in the city. "It's a heavy burden for us because young graduates can't get jobs because they lack experience and older workers are not retained because of their age and are harder to retrain," he says.

On the legal front, the biggest events of this year were Ao's trial, and the passage of new electoral and labour laws.

The new labour law comes into effect in January. Mr Coutinho says that "without a trade union law and no collective bargaining, the labour law is useless".

Mr Brockman disagrees, citing Macau's free and open economy and a policy of laissez-faire. "We don't want the government meddling too much, but the new labour law is a huge advance because it meets global standards in defining employee and employer rights. Both know where they now stand."

The original 1984 law was criticised for being vague and for favouring employers. The legal community generally agrees that the new law helps low-skilled, poorly paid workers know their rights.

Carlos Simoes, a partner at law firm DSL, says: "It is a timely move at a time of rapid economic change and our shift to a service economy."

Leonel Alves, a lawyer and executive councilor, says the old law is too conservative and "its replacement was long overdue".

Source: SCMP Oct 30, 2008