Melco Resorts and Entertainment has had a rough time over the past couple of years. It posted strong results for the second quarter of 2019, but that was about the extent of its good news. With much of the casino operator’s revenue coming out of Macau, Melco has had to endure the same difficulties as all other operators in the city and is apparently having a hard time bouncing back. In an apparent effort to stave off further losses, the company has announced several programs that will pay employees to resign or take extended leaves of absence as it tries to get back on track.
Melco to Pay Employees to Leave
According to a press release by Melco, it has launched a program that will pay employees with a Macau ID an incentive if they voluntarily offer to resign. The company calls the program its “New Chapter” scheme and offers 12 months’ pay to those who opt-in. The pay will be equal to the base salary and guaranteed tips, where applicable, and is being billed as an opportunity for those individuals to “reach personal and professional objectives.”
Possibly anticipating that it might need to offer other incentives to those not willing to seek new employment (according to Macau’s Statistics and Census Service, unemployment in the city is less than 3%), Melco has another program available. Called its “Thinking of You” scheme, this one will give employees a monthly stipend that equals 40% of their base salary if they choose to take an extended leave of absence that can last six to 12 months. If they prefer, they can take leave that lasts from 13-18 months, in which case they would be entitled to 55% of their monthly base salary. With this program, they are able to work elsewhere while drawing the money and can return to Melco at the end of the specified period.
Melco in a Post-COVID-19 World
Melco asserts that the programs are specifically for the benefit of the employees, explaining that they were designed to meet the “new needs of local Macau resident colleagues,” and to “help ease the transition as they pursue their new life objectives and priorities.” However, as altruistic as it sounds, there is also a benefit to the company in reducing its workforce through voluntary exits. Melco is coming off a first-quarter loss of $232.9 million following a difficult 2020 and needs to find ways to cut costs.
In addition to its Macau operations, Melco is also active in the Philippines and in Cyprus. In the former, Manila is still suffering from COVID-19 issues that are causing new issues for gaming operators. In the latter, it controls much of the gaming operations, but the Mediterranean island country shut its borders – and its casinos – down last year because of COVID-19. This came as Melco has been injecting a lot of money to build a massive resort in Cyprus, the City of Dreams Mediterranean, which is facing delays due to the global pandemic. It is now expected to open next year, more than 12 months behind schedule, and Melco is going to continue to need to tighten its belt until its gaming operations everywhere pick back up.