Business Outlook 2020 - Activity and Supply Chain

BUSINESS OUTLOOK 2020: Activity and Supply Chain

Industry Employment

There is a direct relationship between industry activity, expenditure and the level of employment that they support. It is therefore inevitable that the trends currently being seen across industry will, unfortunately, result in a negative impact on jobs. A significant number of supply chain and E&P companies have reported they will need to examine redundancies in the next 3–6 months, alongside the use of the government Coronavirus Job Retention Scheme (also referred to as the employee furlough scheme). At the time of writing there are a number of reports of redundancies in the public domain. Although reductions are expected to be seen across all areas of the industry, OGUK expects that the effect on employment within some supply chain sectors will be more severe than others, with those most exposed to projects that have been cancelled likely to see the largest reductions. Almost one-third of E&P companies and 60 per cent of supply chain companies report having placed employees on furlough. However, more than 40 per cent of E&P companies also note that they may need to make redundancies in the next 3–6 months as business plans are revised, rising to just over half of companies in the case of supply chain companies.

Although there is still a significant degree of uncertainty surrounding how the next 12–18 months will progress, OGUK estimates that the level of direct and indirect jobs supported by the industry could contract by in the region of 25,000–30,000 during this period. The degree of uncertainty around this estimate must be understood. The potential impact will vary depending on the ability of the sector to maintain activity and companies will inevitably make harder cuts if they are not sighted on any future upturn in activity. OGUK will continue to monitor this metric closely. It is imperative that the government works closely with industry to minimise the impact on employment, these are highly skilled roles which will be needed for years to come. OGUK has proposed a number of measures which could help protect jobs and companies now, and ensure that activity can recover more quickly as the industry emerges from this challenging period.

Supply Chain Companies Furlough and Redundancy Plans

E&P Companies Furlough and Redundancy Plans

100%

100%

90%

90%

40%

48%

80%

80%

Yes No

59%

Yes No

70%

70%

68%

60%

60%

50%

50%

40%

40%

60%

52%

30%

30%

ProportionofRespondents

ProportionofRespondents

41%

20%

20%

32%

10%

10%

SignificantlyHigher

Higher

About the same

Worse

Significantlyworse

0%

0%

Redundancy

Furlough

Redundancy

Furlough

Source:OGUK

Source:OGUK

Source:OGUK

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