This week has been a bad-news week for the mining workforce of West Australia. Woodside have announced that they will be shedding 600 workers inclusive of staff and contractors. Rio is going into round three of their 'rightsizing' with the remainder of the 800 roles to go with most of the remaining personnel under scrutiny being staff. Then, just today, in the West Australian there has been a warning from Chevron to its 4,000-strong workforce that it is going to have to make its operations more lean with up to 600 positions considered for review.
It is highly likely that this will not be the end of the 'rightsizing' exercises undertaken by resource companies in 2015; as the price of resources continue to head towards the floor.
[[Clicking the image above will open a PDF (using Word Online) of the source article from the Business Review section of The Australian. I could not include a direct link to the article due to the pay-wall on The Australian Web site.]]
On the upside the redundancy calculations for the staff of these companies is generally relatively generous. Each company has different redundancy rules, but even someone with just five years continuous employment as a staff member can expect to get something close to 50 percent of their base annual salary as their payout. Someone with 20 years can look forward to a payout in the order of 1.5 times their base annual salary.
Contractors don't get redundancy payouts. The theory is that they are paid enough to put their own insurance away for when they don't have any work.
With budgeting cut-backs like this there is then the flow-on impact to businesses and companies that service these large enterprises. As these enterprises cut back on projects and initiatives the down-stream service providers also have to begin to let people go.
On top of this, with less people earning and paying taxes, there is another impact on state and federal tax incomes.
As I have said before: I think that 2015 is going to be a challenging and interesting year.