The downturn in the price of crude oil has started to take a toll on workers in the industry, with oil giant, BP announcing its plan to cut 200 jobs and 100 contractor roles in the North Sea, following a review of its operations.
Beside BP, there have been a spate of reduction in the number of rigs that are engaged by oil companies across the globe because of the same.
Shell last week announced cutting hundreds of jobs at the firm’s massive Alberta oil sands project. We expect more large-scale layoffs to come.
Similarly, the oil companies’ contractors and service partners have started to reduce headcounts.
More than 40 companies across the globe have cut their 2015 spending budgets since December, according to energy investment bank Tudor Pickering Holt.
More than 10,000 people working at Mexican oil service companies were laid off this week.
Already in Nigeria, there are fears that the same fate may befall oil workers very soon, even though the labour unions are kicking against such moves.
At least 70,000 civil servants in 30 ministries, departments and agencies of the Federal Government had yet to receive up to three months salaries.
While the Federal Government is believed to owe workers of the Ministry of Labour and Productivity salary arrears ranging from one to three months, 11 state governments could not pay December salaries to workers. Three of the states – Benue, Plateau and Osun – have been reported to owe workers three months’ salary arrears.
This has heightened the tension that companies and public institutions were planning to address the downturn in the economy with cost-cutting measures and downsizing.
The Petroleum and Natural Gas Senior Staff Association of Nigeria gave indications to this effect, when it raised an alarm that companies, especially petroleum sector ones, had plans to retrench staff.
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According to the association, non-core employees of oil firms in the country may be asked to quit their jobs if the fall in oil prices persists till April or May.
Similarly, Orimadegun Agboade, the Deputy President (South), National Association of Small Medium Enterprises ,stated that retrenchment had already begun in some sectors.
He said, “We closed for the year earlier than usual. Ordinarily, we take a break close to Christmas. But with the way things are right now, many companies closed two weeks before the normal closing date.
“Based on recent events, federal, state and local governments still owe salaries of up to three months. It is an indication that things are not right at all. In fact, many of us are afraid of what will happen.”
Agboade stated that the current foreign exchange rate is the harbinger of the gale of retrenchments that would sweep workers out of the manufacturing sector.
“For instance, I am a manufacturer of medicine; I received a notice from my bank two weeks ago that the Federal Government had placed an embargo on all letters of credit. The implication of this is that immediately we run out of the raw materials we have now, the hope of getting more will be slim, or it won’t come on time.
“In the pharmaceutical industry, where I belong, close to 98 per cent of our raw materials are imported. A lot of companies are already cutting salaries,” Agboade added.
The NASME Deputy President further said the scale of retrenchment could be as high as 25 per cent. He warned that if things were not resolved quickly, it could reach 50 per cent.
Similarly, Segun Kuti-George, Chairman, National Association of Small Scale Industrialists, Lagos State chapter, said the fact that naira had lost much value against the dollar was a sign that mass retrenchment might be closer than expected.
“We have more naira chasing fewer dollars now. Also, the monetary policy is moving from 12 per cent to 13 per cent higher interest rate. We now have a higher rate of exchange, which inherently means inflation.
“It means that prices of imported and locally-made goods will go up, which would mean lower demand and therefore less profits for companies. This may then lead to layoffs,” he explained.
Muda Yusuf, the Director-General, Lagos Chamber of Commerce and Industry, predicted that the year would be challenging for businesses, as the cost of production would increase, while purchasing power would decline.
He explained that businesses would have to look at all possible options for survival, including cost reduction in other areas. The process of reducing costs, according to him, may result in cutting the number of employees.
