As many as 5,000 workers may have lost their jobs since the fourth quarter of 2015, the Central Bank estimates. In its March 2016 Economic Bulletin, the bank is forecasting a slackening of domestic labour market conditions due to declining economic activity.
It said early indicators suggest a worsening of conditions in the sectors of the economy directly affected by the downturn in the energy industry.
“Anecdotal evidence from newspaper reports and public notices suggests that between September 2015 and March 2016, 29 companies announced job cuts which displaced close to 3,000 workers, but some industry specialists indicate that the figure could be as high as 5,000 persons,” the Central Bank said.
Hardest hit was the manufacturing sector where 1,124 were thrown on the breadline. These include 644 workers from ArcelorMittal and 200 employees each from Centrin and TMS International Corporation. In the energy sector, 294 workers have been retrenched so far and one major player in the local industry, BHP Billiton, is warning that employee reductions may become necessary in a “softening oil price environment.”
The Central Bank said: “At the same time, there have been reports of labour shortages by local manufacturing companies and fast food retail chain outlets which present some opportunities for labour reallocation to take place.
“A ten-point plan developed by the Ministry of Labour and Small Enterprise Development to assist retrenched persons and to stave off further job shedding may help to mitigate worsening employment conditions.”
The bank expects the unemployment rate to increase marginally to 4.1 per cent this year and said depressed oil prices and global growth uncertainties will continue to weigh on the economy. Domestic real GDP is expected to contract by close to two per cent due to declines in the energy and non-energy sectors. The forecast is for year-on-year inflation to settle around the ten-year average of six per cent due the impact of the widening of the VAT base on food prices.