Det Norske Oljeselskap

155 jobs
Number of planned job losses

Announcement Date

13 April 2015

Employment effect (start)

1 May 2015

Foreseen end date

Description

Oil Company Det Norske Oljeselskap is cutting its staff by 120 consultants and 35 permanent employees. The permanent employees affected will be offered severance packages. The restructuring is a response to the tumbling crude oil prices, and the comany is aiming to reduce costs by 100 million dollars in 2015. Employees were informed of the downsizing plans in paralell meetings in Stavanger and Trondheim on April 10. All of the company's offices will be affected, as jobs will be cut in Harstad, Oslo, Stavanger and Trondheim.

The 120 consultant affected are classified as hired labour, formally employed in employment agencies. This is a very common type of employment in the Norwegian petroleum industry, as the demand for labour varies with the start or completion of big projects and the volatile nature of the market. This form of employment is permitted whenever the criteria for regular temporary employment are satisfied. Highly qualified consultants are often employed on relatively long-term contracts, often 12 months or linked to the completion of specific projects. Hiring of labour is regulated by the EU Temporary Agency Work Directive, which guarantees equal pay and conditions with regular employees. Consultants are usually treated similarly to permanent employees, and it is not uncommon that they work in core areas of the business, for example as project managers.

As in this case, hired labour is usually where companies make the first or biggest cuts in restructuring processes. The Norwegian petroleum sector is in a slump due to the fall in crude prices and reduced investment, and several oil companies and their suppliers are undertaking significant restructuring efforts. Hired workers are most affected. An analysis conducted by employer organization NHO in February 2015 estimates that as much as 40.000 jobs had disappeared in the petroleum sector and supplier companies. Only about 9.000 regular positions had been cut, as the rest is due to reduced hiring of labour.

Highly qualified consultants such as engineers are now to some degree being transferred to other sectors. Hired workers in the supplier industry are to a large extent labour migrants, who leave the country if their contracts are not renewed. The economic downturn in the petroleum sector has therefore not affected the national unemployment rate dramatically, so far.

The market for consultants and hired workers in the petroleum sector has previously enabled labour to transfer between companies depending on the project situation in the individual company. The falling crude prices now affect the whole industry, thus making it more difficult to employ them elsewhere. Previous periods of downsizing in the petroleum sector have been followed by periods with significant job creation, but according to Klaus Mohn, professor of petroleum economy at the University of Stavanger, this is unlikely this time as the changes in the industry in response to the lower crude prices are of a more fundamental character. 

Sources

• 13 April 2015: Dagens Næringsliv
• 13 April 2015: Stavanger Aftenblad
• 25 February 2015: E24
• 11 April 2015: Bergens Tidende