Two days before Christmas a front-page headline in the Business Express claimed that there had been 2,800 “oil job cuts and counting”. The article, by Aleem Khan, went on to explain that jobs in the oil and gas sector declined from 21,700 at the beginning of 2015 to 18,500 by mid-year – a 15% drop.
This sounds extremely alarming and the journalist paints a picture of a crisis in employment brought about by the low price environment. But is this really what the data is telling us? When you take a detailed look at employment in the oil and gas sector you begin to see a rather different picture emerge. Looking back over the past decade you can see that employment in the sector fluctuates significantly between quarters, from a low of 17,300 in September 2010 to as high as 23,400 in September 2013.
To anyone familiar with the energy sector the month September 2013 will be significant; this was the month of the turn-arounds, when bp had a major planned maintenance project on its Cassia B hub and as a consequence gas production was significantly reduced. Atlantic and many plants in Point Lisas knew that they were not going to get the gas that they needed and so they took the opportunity to also shut-down and implemented planned maintenance programmes. These periodic maintenance programmes need a significant labour-force and thousands of people who do not regularly work in the sector took up temporary employment for a few weeks on these many projects.
We saw the influx of new workers into the sector directly in the Energy Chamber, when all of these workers came into our Learning Centre to get their PLEA passes so that they could enter the facilities. We went from processing perhaps forty people a day during normal operations to processing many hundreds of people: the queues to register for assessments were back out of the door.
September 2013 was especially busy, but not unusual. It is important to recognise that employment in the oil and gas sector includes both permanent employees working for the major operators and service companies and thousands of workers who are employed on a temporary basis for a particular project. In general, the permanent employees tend to be the more skilled and better qualified individuals, while the pool of temporary workers often fill the semi-skilled occupations. When they are not working on energy sector projects they will typically work in other sectors, in particular in construction.
This employment pattern means that the numbers employed in the sector shows a big variation over time. The decline between Q2 and Q3 2015 is not out of the ordinary. Indeed, there are four occasions in the past decade where there have been bigger declines between quarters (and no front-page articles in the Business Express that I can recall).
I am not saying that there were not permanent jobs lost in the energy sector in the first half of 2015. We know that is not the case. Some of my good friends and colleagues who have worked closely with in the Energy Chamber have been retrenched or taken separation packages. But the permanent job loss numbers are nowhere near the over three thousand suggested by Aleem Khan.
In these very difficult times for the energy sector it is important that we properly analyse the data that is available. The danger with the analysis offered by Aleem Khan is that we might get future reports where we see a jump in employment in the sector, if the data gathering process happens to coincide with a major maintenance programme. Would we then decide that all is well in the sector? That might be a very dangerous conclusion to draw.
Journalists place a big emphasis on job losses when covering stories about the downturn in the energy sector. This is the number one question that I have received over the past few months. I understand why; journalists are trying to humanise the issues in the sector and bring it down to a level that they think that the ordinary reader will be able to understand. But I also think that this is a mistake. By concentrating on jobs there is a danger that they will miss the true significance of the energy sector for the economy and why the precipitous decline in the volumes and value of our major exports is so dangerous to the economy. The Prime Minister explained this very clearly in his address to the nation on 29th December 2015 and I think journalists need to spend more time understanding and reporting on those issues.
There is also another story that journalists need to cover looking at the employment data. Why is the data so late and why is it not presented in such a way that the ordinary person can draw inferences from what it is saying? Six-month old data on employment is not really very useful from a policy-making point of view. It would be nice to see our journalists spending more time demanding better data and also investing a bit more time and thought into analysing what the available data is really telling us.
Before he wrote the article Aleem Khan approached me asking for my views. I pointed out to him that the data-set needed a bit more analysis and thought and he should be cautious about the conclusions he was drawing. I told him I could look into the data-set but I needed a few days. Unfortunately, it seems the Express was more interested in a sensationalist headline than informing its readers.