Cheap oil binges on job cuts
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Cheap oil binges on job cuts

Cheap oil binges on job cuts

The oil price rout since mid-2014 has cost many their jobs in the oil and gas industry worldwide. The latest figures from a lobby group in the UK reveals that the country’s industry will shed 120,000 jobs by end of the year.

 

Oil & Gas U.K., in a report released on June 10, projects that a little more than 330,000 jobs in the UK will be supported by oil and gas production in the UK this year, whereas it was 450,000 in 2014. The numbers include all of the jobs directly or indirectly provided for by the sector’s spending in the wider economy, such as in hotels, catering and taxis.

 

Brent, the global benchmark, is currently trading at approximately $50 a barrel, after nosediving from as high as $115 a barrel two years ago. Last year, the industry axed an estimated 84,000 jobs, causing the total number of supported employment figures to reach roughly 370,000.

 

Globally, a total of 351,410 jobs have been slashed by oil and gas production companies, with the oilfield services sector bearing much of this burden, oilprice.com reported on May 12, citing statistical data from Houston-based Graves & Co. The number of jobs lost in the oilfield services sector since mid-2014 stood at 152,015, at the time of publishing the figures in May.

 

The major economies in the oil-hit Middle East region also have seen mass lay-offs.

 

Most recently, Reuters reported that Abu Dhabi’s National Oil Co (ADNOC), with roughly 55,000 staff, has cut hundreds of jobs in the past few months and will have reduced its workforce by at least 5,000 by the end of 2016.

 

The reduction will occur across most of its 17 subsidiaries, as part of a restructuring following a reshuffle of the firm’s leadership this month, the agency reported on May 22.

 

In January, the top executive of Abu Dhabi-listed Dana Gas told media that the company was aiming to slash its head-office workforce by 40 per cent and cut general and administrative costs by half between 2015 and early 2016.

 

Several local and international banks in the UAE also collectively slashed 1,100 jobs since November last year.

 

In Qatar, state-controlled firms such as Qatar Petroleum and Qatar Rail have laid off staff. The Doha-based Al Jazeera media network announced in March that it was cutting 500 jobs.

 

Reduced government spending and slowing economic growth with a grim outlook have forced both governmental agencies and private firms to undertake several cost-optimisation, measures including a reduction in headcount.

 

However, experts say this is not the time to fire employees despite hardships and fiscal challenges.

 

Dr Yasar Jarrar, vice-chair, Global Agenda council on the Future of Government, World Economic Forum, says that the easiest way for both governments and the private sector to achieve cost-cutting is to get rid of people and, in many cases, this is based on budget discussions, not business needs or strategic plans. But, he adds, “This might be a strategic mistake.”

 

“This is not the time for them to slash and burn; we are not in a  period of major shock and crisis; we are undergoing structural adjustments. It is exactly the time when firms need to invest more in people and get a more creative workforce on board,” Dr Jarrar writes in AMEinfo’s special report, titled 7 Strategies to Survive the Rest of 2016, released in late May.

 

“Only those who invest more in people – by hiring the best talent and training them – will win in the coming five year,” he adds.

 

The AMEinfo report serves as a survival guide for businesses operating in the region, highlighting the main areas they need to focus on to survive and thrive during the rest of the year and beyond.

 

The seven strategies explored in the report are: Innovation, Diversification, Collaboration, Optimisation, Transparency, Talent Management and Agility. These survival tips are further strengthened through insights from the MENA region’s leading business players, thinkers and analysts.

 

You can download 7 Strategies to Survive the Rest of 2016 for free on the AMEinfo website here.
Author
AMEinfo Staff

AMEinfo staff members report business news and views from across the Middle East and North Africa region, and analyse global events impacting the region today.

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