NagaWorld Casino Initiates Mass Layoffs in Cambodia
Up to 600 workers received termination letters this week as Cambodia-based NagaWorld deals with the financial blowback of the COVID lockdown period. The situation has been particularly volatile at the firm throughout the opening quarter and there has been a major need to trim down the weight of the balance sheet. But tensions are high following the decision to lay-off so many workers since the Hong Kong based parent company of the firm has reported record-level profits for the period.
The pandemic has dealt a myriad of financial difficulties to the gambling industry in Cambodia. Despite recovering well over the previous 6 months, NagaCorp has opted for mass layoffs as a means to balance its budget and break up a union that was close to securing 50% of the entire workforce in its collective actions. ©jewhisperer/Pixabay
NagaWorld casino which operates as a subsidiary of parent organization NagaCorp has removed a substantial number of workers from its payroll as the firm enters a harsh cost-cutting period following a reduction in revenues. Most of the staff that has been let go thus far are from the hospitality division servicing the hotel side of the business. These jobs typically are low-paid roles such as cleaning services, receptionists, security, and maintenance.
The situation remains precarious because most of the workers are dealing with huge financial hardships of their own. Cambodia’s economy was dealt some serious blows throughout the pandemic and the local labor market is reeling following a tough period of low employment rates. The mass firings are even more baffling considering the highly profitable financial performance of the parent company over the period.
With over 600 staff already receiving notification that their jobs are no longer tenable, there is expected to be the second round of terminations of about the same quantity. This will amount to approximately 1,300 of the original 8,000 being laid off. This huge number of sackings is unprecedented and signals the huge management challenge the pandemic has created for those in charge at the casino.
Already there have been heartbreaking reports of husband-wife couples both losing their jobs whilst having children to support. This information is certainly not unknown to NagaCorp which keeps meticulous family records of all its employees. The news comes at a time when NagaCorp reported net profits of $100 million for the year ending December 31st 2020, on top of this the firm had even been planning to distribute some of these profits via a dividend to its shareholders, and build a new $350 million resort in Angkorian
Workers Unions Furious with the Mass Layoffs
A company that is making profits and preparing to pay a dividend to shareholders seems like an unlikely candidate for mass-layoffs, but that is exactly what is happening now at NagaCorp. It does raise the questions of the verifiability and reliability of financial statements to give the complete health of a business, as, despite all the positive accounting metrics, the firm still feels it is necessary to cut a quarter of its workforce. This is even more surprising considering the average salary of these workers is a little over a few hundred dollars a month. All of this has infuriated workers’ unions in the region.
The layoffs will be catastrophic for many of these workers since NagaWorld is the only casino in the region. Moreover, as required by Cambodian labor law companies are required to pay a substantial redundancy package to workers who are made redundant, but reports thus far reveal the casino has manipulated the average earnings of these workers and conveniently engineered a way to pay a far lower overall compensation.
Union leaders at the casino are also said to have been targeted in the round of firings, this was a repeat of actions taken by the firm following the 2008 financial crisis. Key organizers of workers’ rights groups have been made redundant at a far higher rate than the non-unionized employees. The union-busting bosses clearly had an objective with these sackings beyond tightening their budget for the coming months and years.
The workers union at NagaCorp had just recently last year conducted a wage strike which mobilized over 3,000 staff to stop working as they demanded better salaries. The success of this strike had galvanized staff who feared the power of the company and many more had joined. Union membership had been approaching the 4,000 mark, half of the companies employees, a major milestone that would have given the union a far stronger position to bargain from. Unfortunately, with this round of firings, the union has been decimated and key leaders removed with just a click.
Strong Post-Covid Recovery for NagaCorp
In light of the tumultuous working environment currently embroiling NagaCorp, it is worth paying attention to the fact that the company is posted a fantastic set of financial results for the year ended December 31st 2021, following COVID fatigue. Gross gaming revenue (GGR) for the year soared to almost $900 million, approximately half of the $1.8 billion generated in 2018. Most of this income was generated via its VIP services and gaming activities across its owned and operated platforms, according to the annual report.
Conditions for the company were far from optimal throughout 2020, and the obvious impact of COVID on casinos around the world reached its worst between March and July. Considering all the difficulties the firm encountered through reduced footfall, it’s even more surprising how financial performance was so positive.
