There are signs that the Macau government may be backtracking on its recent announcement of a one-for-one policy in the construction industry (i.e. a job for one local for every migrant employed in the sector).
Wong Chi Hong, Director of Macau’s Human Resources Office, the body responsible for vetting and approving permits for non-resident workers, said on Monday: “Reducing the number of foreign workers is no easy task, and the solution of [using] resident human resources is not sufficient.” That’s putting it mildly.
During 2009, a total of 2,500 unemployed locals surveyed by Macau’s Labour Affairs Bureau said they were looking for jobs in construction. The numbers may have fallen a little since then, as the overall unemployment rate fell year on year from 3.8 percent in the first quarter of 2009 to 2.9 percent in the first quarter of 2010.
Last week Las Vegas Sands Corp. said it needed 10,500 building workers in order to recommence its USD4.2 billion Macau project known as Cotai plots five and six.
Mr Wong’s solution for squaring the circle of getting more locals into construction but letting casino operators build their buildings is to improve the training of locals. That way they will take up an ever larger portion of the construction workforce, goes the thinking.
He wanted, he said in comments reported by the Macau Daily Times: “…gradual integration of local manpower in a way it could be suitable to the control measures and, thus, gradually [to] reduce the imported workers and increase employment opportunities.”
One can understand why Mr Wong and his bosses in the Macau government would like to get more locals in construction. It’s the best paid job in Macau relative to educational attainment required on entry. The median monthly wage in construction in Macau in the fourth quarter of 2009 was 9,000 patacas (USD1,120). Restaurant and hotel work paid on average 6,800 patacas, and manufacturing only 5,000 patacas. If Macau’s going to have an economic boom fuelled by high roller baccarat players, let the people at the bottom share some of the spoils, seems to be the thinking.
Mr Wong’s suggested worker training plan may appear admirable at first inspection, but there are some potential difficulties. One is that the timescale involved in developing such a training programme for local construction workers doesn’t correspond to the commercial need to get the casinos up in the next two to three years.
Another potential problem is that construction in Macau is a boom industry, not necessarily a large and integral component of the economy in the long term. To train thousands of locals now for careers in construction, is potentially to set people up for underemployment or unemployment a few years down the track, without necessarily the prospect of those workers being able to export those skills to other markets. Therefore temporary importation of building workers to Macau from mainland China and Hong Kong to sustain a boom could and probably should be seen as the rational solution.
Investors and gaming operators should not assume however that such a rational solution will either be accepted or acted upon by the Macau government. Governments have to make political decisions, and politics is driven as much by public perceptions as by underlying facts. If the Macau public, or at least a vocal minority within it, fear that outsiders are taking their jobs, then that becomes a political reality and a ‘real’ problem, regardless of what economic analysts or the data say.
Those with some background knowledge of Macau will be aware that on May Day in 2006 and 2007 there were noisy and in some cases violent street demonstrations—said in local media reports to be organised by a group of long term unemployed—against importation of migrant workers. The construction sector was singled out for criticism. The Macau government managed to defuse this potential political time bomb with the sweetener of annual cash handouts to residents with a smaller payment to non-residents.
This year the handouts went ahead as before, but this time the unemployed were back on the streets. On 10th April there was a noisy but peaceful protest by about 100 people—said to be a mixture of local construction workers and the unemployed—outside the Labour Affairs Bureau office. Possibly as a tactic to head off trouble on May Day, on 29th April the government made its now infamous ‘one for one’ pledge on construction workers. If the plan was to avoid trouble, it didn’t work. The May Day protests returned and this year more than 40 people were injured according to local newspaper reports.
So now Macau’s government has created for itself possibly the worst case scenario—public commitment to a commercially and economically impractical policy, without the benefit of having actually appeased the aggrieved special interest group.
One solution for the government is to back pedal on the policy, but not to be seen to be doing so too blatantly. That appears to be what’s happening now, but it’s a much tougher call than thinking out a coherent policy in the first place.
Watch this space for further developments.
