News / End of boom reveals economic weaknesses
THERE ARE clear signs that Shetland’s buoyant economy is finally cooling off after decades of strong resilience against national economic trends.
With the completion of the Shetland Gas Plant and EnQuest’s ongoing re-evaluation of work at Sullom Voe Terminal, it looks as though the unprecedented boom of recent years has come to a grinding halt and that Shetland’s underlying economic weaknesses are re-appearing clearer than ever before.
Shetland has lost almost five per cent of its full-time equivalent jobs since 2011, including more than 600 public sector jobs.
While this trend was initially masked by the construction boom at the gas plant, Shetland’s population is now shrinking as well as rapidly ageing according to the latest population statistics published last month.
The situation is further exacerbated by the near collapse of the private accommodation sector for oil and gas workers, resulting in some people in the north mainland suddenly finding themselves out of a job for the first time in decades.
All this is not made any easier by the financial constraints of a local government unable to stimulate the economy with new capital projects. Once the new Eric Gray Centre is completed later this year there is no major project on the council’s books.
Despite all of this, local employers continue to find it near impossible to recruit to professional and skilled jobs, not just in teaching and the health services, but also in construction.
Chairman of the council’s development committee, councillor Alastair Cooper, said that while the large seafood sector was continuing to do very well, there was no doubt that the overall economic outlook was bleaker than what it had been in a long time.
Suitable housing is key
Head of the development department Neil Grant added that efforts were ongoing in support of the local economy, mainly by focusing on housing and employment.
“We are still not able to recruit to a whole load of jobs in Shetland, not just in the public sector. In health and education we have really serious issues with recruitment, but there are also a lot of businesses that have similar issues,” Grant said.
“What underlies that, we think, is the lack of suitable and affordable accommodation, that’s one of the main components.”
Grant added that the continuing uncertainties surrounding Brexit created additional worries as to whether Shetland would be able to hold on to the estimated 1,000 EU citizens working and living in the isles.
Referring to the oil and gas companies, Grant said: “Our focus with Total and EnQuest is to get as much of their core workforce to live in Shetland. The key again is access to suitable housing.”
EnQuest meanwhile confirmed that some former BP contracts at the terminal are being renegotiated “to optimise work programme and cost efficiencies.”
The new operator, whose main focus is to make the terminal fit for future business, had always been expected to make some radical changes in the way the facility is operated. And some of these changes will be painful for the local business community.
However, the company said the number directly employed by EnQuest at the terminal and the Magnus field had not changed since the takeover from BP in December last year. There are also no plans to permanently relocate terminal management to Aberdeen, the company added.
Changes not unexpected
Meanwhile, across the fence at the Total operated Shetland Gas Plant, the frantic construction period which saw as many as 2,500 people working on site has come to an end.
Terminal manager Dave Wink said the workforce was now down to 150 people who are operating the plant and finishing off the construction works.
“This number frequently changes depending on whether there is project work ongoing or other periods such as shut-down for maintenance, which is a very busy time for the plant,” he said.
“About 30 per cent of jobs at the plant are filled by people living in Shetland.”
The private accommodation sector has become the first victim of these radical, yet not entirely unexpected, changes. With the construction workers gone and the oil companies tightening their belts hotels, guesthouses and private houses for rent are standing empty.
With most of the remaining business currently going to the Sella Ness accommodation camp, there is a lot of ill feeling within the islands’ hospitality sector directed at the camp, although operator Shetland FM said their own occupancy numbers were down as well.
No one from the accommodation sector Shetland News has spoken to was willing to go on the record.
Local councillor Cooper said it was a fact that there were significantly fewer people passing through as the oil industry had stopped buying accommodation space.
“The planning permission for the accommodation camp only runs until 2020 when they will have to re-apply,” he said.
“The issue at that point will be: ‘what is the accommodation requirement and what is the capacity in the community’? If the one can match the other then there will be an issue about the extension of the planning permission for the camp.
“I am not on the planning board, so I cannot presume what their view will be, but I would like to believe that we would match the industry need to the local community first and then consider the accommodation camp secondly.”
Meanwhile, there is hope that at least some of the lost business can be recouped through tourism.
Cooper said the council has already been talking to Highlands and Islands Enterprise as well as the Scottish Government to stress that the hotel trade in the isles “needs to secure fresh opportunities”.
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