CALGARY – Shrinking budgets in the oil and gas industry could lead to as many as 185,000 direct and indirect job losses this year in Canada, according to a new study by an industry group.
The report, released Tuesday by the labour market division of Enform, says the potential losses would represent a 25 per cent drop in the number of jobs the sector supports and are the result of major budget cuts in the oilpatch.
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The industry is expected to spend $94 billion this year, down from $125 billion last year, the study said.
While Alberta would be the hardest hit by any cuts, the pain will extend across Canada, says Carol Howes, director of Enform’s labour market division.
“Certainly the impact is fairly significant in terms of various provinces and various industries feeling the oil price downturn,” Howes said.
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The expected cutbacks are similar in scale to what happened in the 2009 downturn, but back then the industry recovered fairly quickly as the global economy rebounded. She says the current downturn is more directly tied to the drop in the oil price.
The study says engineering construction firms are the most vulnerable, with roughly 75,000 jobs on the line, while exploration and development drilling could account for the second-highest number of job losses – as many as 26,000.
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Howes says oil and gas companies are increasingly looking at creative ways to avoid cutting staff including job sharing, shorter work weeks and reduced pay.
“Companies are really trying to balance that long-term objective of maintaining workforces and the short-term reduction in oil prices,” she said.
The study is based on spending patterns from previous years and what oil and gas companies have already committed to spend in 2015.
Howes says the study’s findings are similar to others done recently but it looks at all of Canada and at more job categories.
The job figures include anyone employed by an oil and gas company as well as anyone who sells directly to those in the industry.
“It may be the helicopter pilot who’s flying for the industry,” says Howes. “But it might not necessarily be the person who works down the road in a restaurant.”
The study was also based on January oil prices, which averaged US$47 a barrel, while oil has recently been trading closer to US$60 a barrel.
Jim Fearon, vice-president for Central Canada at recruitment firm Hays, says the bump in the oil price has given companies some breathing room.
“It’s given companies time to pause and gather their thoughts and plan, without having to make too many knee-jerk reactions,” he said.
“Maybe we’ll see some companies starting to look at where they can spend money, get business-critical projects over the line,” said Fearon. “That could restrict or reduce the number of jobs that get lost.”
Last week, drilling firm Trican Well Services announced 2,000 job cuts across North America. The move followed job cuts at many major oil and gas companies in recent months.
Alberta’s unemployment rate was 5.5 per cent in April, the highest since mid-2011 but still far lower than the 7.3 per cent unemployment rate in the midst of the recession in late 2009.
Oil was trading at around US$57 a barrel Tuesday, a far cry from the over US$100 a barrel it fetched in May of last year.
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