{"id":7853,"date":"2016-02-24T13:22:44","date_gmt":"2016-02-24T13:22:44","guid":{"rendered":"http:\/\/unitelive.org\/?p=7853"},"modified":"2016-02-24T15:19:00","modified_gmt":"2016-02-24T15:19:00","slug":"on-the-brink-of-collapse","status":"publish","type":"post","link":"https:\/\/unitelive.test.igniteamt.com\/?p=7853","title":{"rendered":"On the \u00e2\u20ac\u0098brink of collapse\u00e2\u20ac\u2122?"},"content":{"rendered":"
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More bad news for the oil industry hit the headlines late last week (February 19), as the Aberdeen-based oil services firm Wood Group slashed contractor wages for the third time since the downturn in oil prices.<\/p>\n

 
\nAbout 600 of the company\u00e2\u20ac\u2122s total workforce of 7,500 will be affected by the pay cuts \u00e2\u20ac\u201d they\u00e2\u20ac\u2122ll see their wages plummet by 9 per cent.<\/p>\n

 
\nWood Group previously cut contractor wages by 10 per cent in May 2014 when oil prices first began to tumble and then again by another 10 per cent in December of the same year.<\/p>\n

 
\nWood Group\u00e2\u20ac\u2122s workforce too, has been decimated over the last two years \u00e2\u20ac\u201d as the firm reported its results yesterday (February 23), it highlighted that it had slashed 8,000 jobs since December 2014, with 2,000 of these posts gone in the UK alone.<\/p>\n

 
\nUnite regional officer in Aberdeen John Boland criticised Wood Group\u00e2\u20ac\u2122s relentless cost cutting measures that, he explained, would be bad for the industry as a whole.<\/p>\n

 
\n\u00e2\u20ac\u015bOur big fear is that this latest cut will spark another domino effect across the offshore contractor firms, intensifying the pace of a race to the bottom on jobs, pay, skills and working-time,\u00e2\u20ac\u0165 he said.<\/p>\n

 
\n\u00e2\u20ac\u015bThe consequences for employment standards in the offshore sector could be dire where the future outlook is fewer employees working longer and harder for less,\u00e2\u20ac\u0165 Boland added. \u00e2\u20ac\u015bTime and again we have warned government about the seriousness of what is happening in our oil and gas sector but the responses so far have amounted to sticking on plaster on a gaping wound.\u00e2\u20ac\u0165<\/p>\n

 
\nOne oil industry veteran also warned that knee-jerk cost-cutting at times of crisis will be devastating for the long-term future of North Sea oil.<\/p>\n

 
\nThe UK manager of Brunel International, a company which provides specialist knowledge on oil and gas, told The National that there would be a gaping skills gap once the price of oil recovers \u00e2\u20ac\u201d a concern that Unite has long expressed.<\/p>\n

 
\nJo McIntosh noted that this was the third downturn she\u00e2\u20ac\u2122s seen in her time in the industry.<\/p>\n

 
\nCutting far deeper<\/strong><\/em>
\n\u00e2\u20ac\u015bIt\u00e2\u20ac\u2122s certainly cutting far deeper than anything I\u00e2\u20ac\u2122ve seen,\u00e2\u20ac\u0165 she said.<\/p>\n

 
\n\u00e2\u20ac\u015bUnfortunately, we are going to see further redundancies and further cuts,\u00e2\u20ac\u0165 she added. \u00e2\u20ac\u015bWe suffered from big knowledge gaps from the last downturns \u00e2\u20ac\u201d in times like this, companies aren\u00e2\u20ac\u2122t spending and invariably that means graduate programmes and training will take a back seat \u00e2\u20ac\u201d so we were already suffering from that when this crisis happened.\u00e2\u20ac\u0165<\/p>\n

 
\nCoupled with an ageing workforce, McIntosh argued, the skills gap will only continue to widen.<\/p>\n

 
\n\u00e2\u20ac\u015bThere\u00e2\u20ac\u2122s a real risk that the knowledge and expertise will leave the industry and the gap will be unfilled,\u00e2\u20ac\u0165 she warned.<\/p>\n

 
\nWood Group\u00e2\u20ac\u2122s slashing of jobs and pay is being reflected across the entire UK offshore sector, and a new report<\/a> by trade body Oil and Gas UK published yesterday (February 23) shows that the industry is on the brink of collapse if action isn\u00e2\u20ac\u2122t taken quickly.<\/p>\n

 
\nThe report highlighted that, despite aggressive cost-cutting, exploration was at an all-time low.
\nWhile \u00c2\u01418bn was spent each year in new projects over the last five years, only \u00c2\u01411bn was expected to be spent this year.<\/p>\n

 
\nIf the rock-bottom oil price of $30 a barrel that\u00e2\u20ac\u2122s plaguing the industry globally doesn\u00e2\u20ac\u2122t improve this year, UK Oil and Gas estimates that more than 40 per cent of all UK Continental Shelf (UKCS) oil fields will be operating at a loss, which will further slow down exploration and investment.<\/p>\n

 
\nMost shockingly off all, the report found that pain in the form of job losses and pay cuts may actually hit the supply chain harder than the offshore frontline. Revenue in the supply chain fell by about a quarter last year. Engineering, procurement, construction and installation may see a full 50 decline by the end of this year.<\/p>\n

 
\nSupport measures<\/strong><\/em>
\nBoth the industry and offshore trade unions agree that action \u00e2\u20ac\u201d from both the Scottish and Westminster governments \u00e2\u20ac\u201d is urgently needed in the form of tax relief and other measures of support.<\/p>\n

 
\nUK Oil and Gas has called for a significant reduction in headline tax rates for both old and new assets alike in order to drive investment. Last year, the UK government announced tax cuts on older oil and gas fields from 80 per cent to 75 per cent, while newer oil and gas fields saw a tax cut from 60 per cent to 50 per cent.<\/p>\n

 
\nUnite, however, has long emphasised that benefits from any emergency tax relief must be channelled into supporting the workforce and ensuring the oil industry\u00e2\u20ac\u2122s long term future \u00e2\u20ac\u201d and not to line shareholders\u00e2\u20ac\u2122 pockets.<\/p>\n

 
\n\u00e2\u20ac\u015bWe agree emergency tax measures should be implemented so we can give oil and gas production and the workforce a fighting chance for the future,\u00e2\u20ac\u0165 said Unite regional officer Tommy Campbell.<\/p>\n

 
\n\u00e2\u20ac\u015bHowever, the savings generated from these breaks must be focussed as a priority on the defence existing employment, skills retention and standards and to sustain the North Sea as a high-skill, high-wage sector,\u00e2\u20ac\u0165 he added.<\/p>\n

 
\nCampbell pointed to the fact that Wood Group, which has shed thousands of jobs and slashed pay, announced its results yesterday and said it would hike its dividend despite falling profits and cost cutting.<\/p>\n

 
\n\u00e2\u20ac\u015bThis is a clear example of putting profits over people,\u00e2\u20ac\u0165 he said. \u00e2\u20ac\u015bIt is the offshore workers themselves who have helped get the business through this hard time. Instead of valuing their efforts, the company rewards its shareholders who can well afford cuts to their dividends, while mercilessly sacrificing the livelihoods of those who actually keep their business afloat.\u00e2\u20ac\u0165<\/p>\n

 
\n\u00e2\u20ac\u015bThis is precisely why we have to ensure that savings from any tax relief are not merely funnelled into oil companies\u00e2\u20ac\u2122 profits,\u00e2\u20ac\u0165 he added. \u00e2\u20ac\u015bThey must be targeted for the benefit of the workforce.\u00e2\u20ac\u0165<\/p>\n

 
\nAs tens of thousands of jobs have been lost in North Sea, Unite has also warned members to be aware of online scams as the oil slump grips communities dependent on the offshore sector for employment.<\/p>\n

 
\n\u00e2\u20ac\u015bWe are warning our members to be extra vigilant of these scams which prey on the fear and uncertainty across the North Sea because of the oil price crisis,\u00e2\u20ac\u0165 he said.<\/p>\n

 
\nCampbell said that several members have reported seeing fake offers for oil jobs and money online. No one is sure where, precisely, these scams are coming from, but it is clear, Campbell noted, that the scams are a direct result of the oil crisis.<\/p>\n

 
\n\u00e2\u20ac\u015bThe environment could get even more difficult so the industry must clamp down as best it can on exploitative scams.\u00e2\u20ac\u0165<\/p>\n","protected":false},"excerpt":{"rendered":"

More bad news for the oil industry hit the headlines late last week (February 19), as the Aberdeen-based oil services firm Wood Group slashed contractor wages for the third time since the downturn in oil prices.   About 600 of the company\u00e2\u20ac\u2122s total workforce of 7,500 will be affected by the pay cuts \u00e2\u20ac\u201d they\u00e2\u20ac\u2122ll […]<\/p>\n","protected":false},"author":1,"featured_media":7855,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[17],"tags":[357,213,90],"wps_subtitle":"UK oil in cost cutting and wages slash","_links":{"self":[{"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/posts\/7853"}],"collection":[{"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7853"}],"version-history":[{"count":2,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/posts\/7853\/revisions"}],"predecessor-version":[{"id":7856,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/posts\/7853\/revisions\/7856"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/media\/7855"}],"wp:attachment":[{"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7853"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7853"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7853"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}