The ayes have it.
That was the consensus of over 300 teenagers who yesterday unanimously agreed at a public consultation that children should not get married before the age of 18.
In a story last month, the Associated Press wire service began an article on the earnings of global energy companies, some of which operate in T&T, by stating: “Oil companies are cutting investment, slashing jobs and selling off pipelines and other assets as crude prices plunge.”
Reporting last month, London-based BP announced that its replacement cost profit plummeted to US$196 million in the fourth quarter of 2015, a decline of 91 per cent from the comparable period in 2014. BP plans an additional 3,000 job cuts globally by the end of 2017, which is in addition to 4,000 cuts planned in exploration and production.
BP forecast additional asset sales in 2016 of as much as US$5 billion and said it reduced controllable cash costs by US$3.4 billion last year, and estimated future cuts at almost US$3.6 billion.
From London, BP announced that it will cut 3,000 jobs around the world by the end of 2017, on top of 4,000 cuts planned in exploration and production. The company also forecast additional asset sales of up to US$5 billion this year.
BP’s reduction of its controllable staff costs has had and will have a direct impact on T&T.
In a statement on Monday, BP’s local subsidiary said it had on that day started the consultation process with employees who are likely to be affected by group-wide organisational changes.
The company said it anticipated that at the end of this process approximately 2.5 per cent of its national employees will be impacted and over 50 per cent of its expatriate staff in Trinidad will be repatriated.
Now, calculating how many local employees bpTT intends to send home was not straight forward as the company declined to disclose what its staff count was in February 2016.
However, on March 27, 2015, bpTT revealed that “organizational changes have resulted in a 10 per cent decrease in headcount at the company, out of a total workforce of approximately 1,000.”
In a 2014 graphic on its website, bpTT boasted that 92 per cent of its staff was local, which means that if 100 people were sent home 11 months ago, that would have reduced bpTT’s staff count to about 900 in February 2016. That means 23 locals were sent home and as much as 40 expatriate workers repatriated.
Another big player in the local economy is Royal Dutch Shell, which said its fourth-quarter earnings replacement cost profit declined by 44 per cent to $1.83 billion from US$3.26 billion in the same period a year earlier, the Anglo-Dutch company said Thursday.
Shell, which concluded its merger with the BG Group on February 15, announced 7,500 job cuts last fall. In a statement released last month just before its shareholders voted on the BG merger, Shell said that streamlining and integration from the deal and other cost cutting would include the loss of 10,000 staff and contractor positions across both companies in 2015-2016.
Shell has sold more than US$20 billion in assets since the start of 2014 and plans more through 2018. It cut capital investment by US$8 billion, or more than 20 per cent last year.
Shell cut capital investment by US$8.4 billion to US$28.9 billion and slashed operating costs by US$4.1 billion to US$41.1 billion for 2015. The company expects another US$3 billion in cuts this year.
So, it is clear that energy companies faced with the reality of a sharp reduction in their revenue and precipitous declines in their profits, as well as the prospect of a long period of low oil and natural gas prices do several things:
• Reduce their capital expenditure;
• Cut operational costs, including severing staff;
• Sell assets;
Although it is not mentioned above, energy companies have also done the following in attempting to ensure that they survive this period of low prices intact:
• Flatten their organizational structures;
• Drawdown on their retained earnings; and
• Increase their debt.
Energy companies do this because entities that do not reduce their expenditure to more closely match their revenues run the risk of going bankrupt.
It is quite significant, however, that one of the things that neither BP nor Shell has done so far is to cut the dividend they pay their shareholders.
So, if Dr Rowley were to run T&T in the way that Bob Dudley and Ben van Beurden run BP and Shell, respectively, T&T would implement the structural adjustments and reforms that both companies have been forced by circumstances to introduce.
How has the administration led by Dr Rowley done?
1) In delivering the 2016 budget, Finance Minister Colm Imbert announced that T&T’s capital investment programme for the 2016 fiscal year had been reduced by 14.2 per cent from fiscal 2015 to $7.0 billion “in the exercise of our commitment to fiscal prudence.”
2) In terms of operational expenditure, Prime Minister Rowley himself announced in his December 29 address to the nation that he had instructed Mr Imbert “to direct the management of every state enterprise, statutory body and each ministry and the Tobago House of Assembly to review their operations and make identifiable adjustments of 7 per cent reduction in proposed operating expenses (eliminating waste and/or inefficiencies) not relating to job cuts at this instance.”
On several occasions, the prime minister has emphasized that he wants to avoid job cuts—although it is noteworthy that the reduction in operational expenditure was not “at this instance.”
Also, it is important to note that for a country, the population is the main stakeholder, whereas for a company the main stakeholders are shareholders.
In the same way that
3) With regard to the sale of assets, Mr Imbert, in the budget speech said the Government needed to mobilise additional revenue equivalent to $18.6 billion or $11.4 per cent of GDP by a number of measures, including by a sale of assets programme as a result of the partial repayment by Clico relating to the Government’s financial support;
4) Re: the drawdown of savings, in the address to the nation, the prime minister spoke about some measures that the Government intended to implement “in the shortest possible time to mitigate the effects of the expected downturn in economic activity.” Among these measures was bringing legislation to Parliament to separate the Heritage and Stabilisation Fund into two distinct Funds.
Said Rowley: “We intend to leave the bulk of the existing fund in the Heritage component and allocate the remainder to the Stabilisation Fund. We intend to use approximately US$1.0 billion (TT$6.5 billion) for stabilization purposes in fiscal year 2016 and perhaps another US$0.5 billion (TT$3.25 billion) in fiscal year 2017.
5) In December, Minister Imbert took legislation to Parliament aimed at increasing T&T’s debt ceiling by $50 billion to $120 billion. He said: “In the context of prudent economic debt and fiscal management, the Government would limit its outstanding debt to a maximum of 65 per cent of GDP” from its current level of 46.3 per cent of GDP in 2015.
It would be fair to say, therefore, that many of the measures that the energy companies have implemented are being replicated in T&T.
The main difference is that the Government here is steadfast that it wants to avoid job losses at this time...but the administration has not as yet opined on whether it will go the route of freezing salaries and compensation for the entire public sector.
Or indeed, if things get bad enough, whether the Government is prepared to implement the ten per cent wage cut and the freeze of COLA that was implemented in 1987 by then Prime Minister ANR Robinson.
The main difference between a company and a country is that the country has the ability to levy taxes on its population—as this Government has done by implementing the changes in the Value-Added Tax regime and reintroducing the property tax.
A sovereign nation also has the ability to go after people who evade taxes, which the Government has also indicated it is serious in doing.
Finally, a government has the ability to slow down projects, delay payment of legitimate invoices and tell public servants that they have to wait for their backpay. None of these things would be acceptable in a business