Thursday, May 19, 2022

Counting the cost of labour


Integrated resorts are a people-based business, needing top quality staff to provide guests with an experience that stands out from the crowd, yet as competition increases across Asia operators are seeing costs rise and challenges in finding the right candidates for the job.

The situation in Macau is well documented, where the average monthly wage for a Macau resident employed in the sector was MOP23,740 (US$2,936), as of end December, a 3.5 percent gain on the prior year and that’s excluding bonuses.

A government ban on importing foreign workers as dealers has meant operators there vye for competition in a small labour pool, where unemployment is practically zero.

However, aside from Asia’s benchmark casino market, staffing costs and associated challenges in burgeoning casino jurisdictions across the region are also only travelling in one direction.

Market demand

“The cost of staffing has increased to include a higher basic salary, benefits and in some cases, accommodation, to attract potential candidates,” said Starr Xian, managing partner of Evolution HR, a Macau-based human resources consultancy.

“Cambodia, compared with the Philippines and Vietnam, has experienced rapid growth in the gaming industry. A significant number of Chinese gamblers are visiting Cambodia.

“The salaries they are offering to attract potential candidates might be slightly higher, but not necessarily achieving the results expected due to other factors, such as the living environment.”

Holding the aces

Peter Keijzer, the general manager of the recently opened Corona Resort & Casino in Phu Quoc, Vietnam, agrees  that salary levels have “raised slightly.”

Perhaps more importantly, though, with new casinos springing up, quality casino staff are in demand and therefore hold the aces.

“Staff are getting more educated and, like everywhere, salaries follow economic growth and inflation,” Keijzer adds. “What we notice in the Vietnamese market is that staff are shopping [for better positions and salaries].”

Of course, there is a stark difference between front-line staff, such as croupiers and dealers, and the sought-after casino management, often poached from another venue or even brought in from abroad. The Salary Expert website, which gathers data anonymously from employees and monitors salary trends, predicts a 65 percent increase in casino manager wages in Vietnam over the next five years.

Although members of the Association of Southeast Asian Nations (ASEAN) are gradually attempting to harmonise their labour regulations to ease freedom of movement, at present the mobility of workers is still “significantly restrained across the region”, according to Velocity Global, which provides talent acquisition services.

Employment costs

Importing foreign nationals results in higher employment costs, including work permits and tax equalisations. For example, employment costs that are equivalent to four months’ pay are incurred on average by a Malaysian company hiring a Vietnamese expat, according to the World Bank’s most recent figures.

Therefore, the onus is often on operators to identify, attract and retain local talent. In countries where there has been a significant expansion of the casino market though, it is inevitable that labour costs will increase.

By the end of last year, seven casino projects were either under construction or awaiting licences in Vietnam. Fifty-two licences were granted to casinos in Cambodia in 2018 alone, increasing the number of venues in the country by more than 50 percent.

“As more properties are being developed, it is not only the products on offer that are important, but also the people and the services are making a difference too,” Starr adds. “In order to ensure the properties are establishing and maintaining the right customer base, operators have to be competitive in terms of recruiting essential staff.

“The increase in the cost of staffing does not necessarily imply a higher quality of service level as the quality of service is largely depending on training and management.”

In the Philippines, however, labour costs are “still competitive when compared to other markets like Macau or Singapore,” according to Angel Sueiro, chief operating officer at the Emerald Resort Hotel and Casino in the Filipino province of Cebu.

ETGs

For operators that are seeking to minimise staffing costs, electronic table games (ETGs) are an increasingly sought after option.

According to Union Gaming managing director Grant Govertsen, “it is no coincidence” that Macau – and to a lesser extent, Singapore – are the dominant ETG markets in Asia, given that they “have very high labour costs”.

Of course, there are huge contrasts in terms of spending power and earning potential across the region. The average salary in Malaysia is less than one-sixth of the median income south of the border in Singapore. Singapore’s GDP per head of $55,313 in 2016 dwarfed that of its northern neighbour ($9,504), according to The Economist.

However, ETGs – which range from standalone facilities of between five and 10 players to ‘stadium’ offerings that can host up to 200 punters – are increasingly used by operators across the continent, with some observers expecting the proportion of casino space dedicated to ETGs to triple in Asia from 10 percent to 30 percent in the coming years.

“ETGs have become more popular and, in a way, they do help to reduce the number of front-line staff needed,” Starr says. “However, the need to recruit staff with technical knowledge and expertise has increased.”

Optimal mix

Keijzer believes it will be several years before labour cost considerations have a major influence on the casino floor layout.

“At the moment it does not affect the gaming floor,” he said. “The Asian market is still more table-oriented than slots. We choose the optimal floor and game mix, based on demand and expected customer type and it is not affected by labour cost.

“It will take at least another 10 years before it affects the game mix between tables and electronic options.

“I am not saying that finding the optimum balance between labour costs and the games available is not important though. Of course, you strive for the most efficient balance.”

 

Asia Gaming Brief is a news and intelligence service providing up to date market information for worldwide executives on relevant gaming issues in Asia.

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