Increasing Poverty in Macau

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Thursday, July 27th, 2017 | Written by Stephen Smith

The wealth gap is becoming more and more of an issue in the United States with political figures like Bernie Sanders speaking out about the stark differences in income and savings between the richest and poorest people in America. Although discussions are often focused on the West, the disparity between rich and poor is not isolated there. Conditions in the Asian gambling capital of Macau, for example, are now prompting similar discussions in China.

Prosperous Macau

On the surface, Macau seems like a center for prosperity. In 2016, the casinos located in the gambling district brought in revenues of over $28 billion. While it’s true that revenues have shrunk since the Chinese government cracked down on corruption among high roller players back in 2015, Macau is still prospering. Furthermore, gambling taxes are steep in the country’s only legal gambling resort, with 70 percent of revenues subsequently going back to the government, supposedly to fund social programs.

Every day, wealthy people from across Asia and around the world flock to the glitzy casinos such as the Sands Macao, Venetian Macao and Casino Lisboa. In fact, the island’s gambling industry overtook Las Vegas as the world’s biggest gambling resort in 2006, and since then Macau has grown to boast the third highest gross domestic product per person of any area in the world, suggesting that everyone in the city is prosperous. In reality, that wealth is far from equally distributed, though, and if you stray from the casino areas, you’ll find that the money being accumulated by the gambling industry has not found its way to the people that call Macau home.

Poverty in Macau

Many people in Macau are living in poverty, with one charity report stating that roughly 7 percent of the population of Macau is unable to afford even basic food rations. Many people argue that the casinos create jobs and are beneficial for the poor of Macau; however, casinos simply do not pay high wages in the area. In the Iao Hon district of Macau, for instance, roughly one-third of residents are employed by the casinos, but the housing in the area equates to little more than slums.

Casino goers rarely see conditions where people actually live in Macau. When you’re visiting the casinos, you’re far removed from the neighborhoods that workers return to at the end of the day. And because the casino industry is so vital to the government’s budget, you’re unlikely to see any self-policing or reform that would provide relief for poorly paid workers.

Hope of Reforms

The good news is that around the world, more and more discussions are taking place about the polarity of wealth. Following the horrific high-rise fire in London on June 14, 2017, that cost the lives of 79 people, more people are discussing why the poor are so often forced to live in unsafe conditions and to go without basic necessities and comforts. Although tides of change may be slower to reach Macau than other places, there is hope global calls for corporate reform to benefit workers could make things better for the poor everywhere.

June Revenue Below Forecast

In the meantime, Macau’s casino industry generated revenue of $2.5 billion in June, which despite being a 26.9 percent improvement compared to the same month in 2016, still came in below analyst predictions of between 23-33 percent. Amongst the reasons cited for the lower than expected increase was an imminent visit by Chinese President Xi Jinping, which apparently caused a “virtual lockdown” of the island’s high-end visitation for a week. During his visit at the beginning of July, Xi then took the opportunity to visit the multi billion-dollar bridge that is due to open later this year, and will connect Macau to Hong Kong, in the process reducing the travel times between the two locations from three hours to just 30 minutes.

For the first six months of 2017, Macau has also noted a 5.4 percent increase in tourist numbers, with 15 million visitors visiting the island resort in H1, and 8 million people staying overnight, marking a 13 percent improvement year-over-year. From the tally, 10.3 million visitors hailed from mainland China.