ConocoPhillips recently announced that it has laid off 1000 workers globally with 300 of them from the Calgary office. The company has stated the lower oil price and higher taxes as some of the reasons for the job cut. Robert Evans, the spokesperson of the organization declared that the company is shredding out extra flab in Canada as the national market fails to evoke enthusiasm and paints a gloomy picture for the corporate.
Local cost and the higher property tax also contribute to the inefficiency and make the companies noncompetitive as compared to the global market. In the month of February, ConocoPhillips posted heaviest losses in a decade. It also decreased the dividend to the stakeholders along with capital spending.
Todd Hirsch, the chief economist predicts a scenario of doom and gloom for the Canadian economy in the peripheral industries such as construction, manufacturing and professional services. According to him, the country is staring down at recession. People who are losing the job will be devoid of compensation packages as well as unemployment benefits.
The layoff will have a cascading effect on the spending pattern in the retail sector. According to Todd, people will hold back because of the uncertainty in the job market. It will also affect the business of the restaurants, bars and the pubs fueling unemployment all round.
Canadian association of Petroleum products is estimating that oil and gas sector laid-off at least 44,000 workers since the recession. ConocoPhillips is maintaining that cost cutting is essential for the company to remain competitive and expand in the future when the demand improves. A crude oil price of 50$ per barrel is the real culprit as it has reduced by 50% from a high of 100$ last year. Due to various factors, the organizations in Canada will remain in cost-cutting mode in the near future until the global economy turns around.