Aberdeen lost 18,000 jobs during oil turbulence

Aberdeen has been the UK’s oil and gas capital since the 1970s, but the boom-and-bust nature of the industry has affected the region.

Cutbacks in the oil and gas market are having a far-reaching impact in the Granite City with those working offshore for operators and for contractors facing job losses.

Supply chain companies in the Northeast are also affected by market trends as well as political and tax changes.

However, there are a number of jobs across Aberdeen which are seemingly unrelated to the oil and gas sector and which are also hit when it comes time to push the North Sea.

The EY ITEM Club’s latest Scottish Autumn Forecast report outlined: “Aberdeen is one of the few local authority districts in Scotland to have fewer jobs in 2023 than in 2010.

“During this time it has lost nearly 18,000 jobs, equivalent to 10% of its 2010 workforce, largely due to the ongoing decline in the locally important oil and gas industry.”

It has been well documented how the hydrocarbon industry has benefited Aberdeen, the city’s population was in decline before oil and there was an unemployment problem across the country, both issues the hydrocarbon industry reversed in the Granite City.

High-paying jobs came to Aberdeen as oil and gas companies moved in, benefiting not only the people working in the industry but also the local economy.

However, oil and gas is a boom-and-bust industry, and as a result, Granite City experienced its fair share of problems when the industry declined.

House prices in the north-east have fluctuated as oil prices have risen and fallen over the years.

Chris Comfort, the Aberdein Considine partner, is an expert in property law and he explained how housing has been affected by activity in the North Sea.

“I have been studying house prices and the last one I did was in 2019 and I explored all the way back to the previous oil recession in the late 80s in Aberdeen,” he explained.

“This has been a prolonged downturn, whereas in the past we have seen what I would call peaks and troughs and what has been seen is a significant fall in Aberdeen house prices.”

At the end of 2010, Brent oil was trades for around $95 per barrel and fell to around $25 per barrel in 2020 as COVID lockdowns were rolled out across the UK.

The Northeast is expected to continue to struggle

In 2023, research carried out at the University of Aberdeen described both the positives and the negatives of Aberdeen’s ties to oil and gas.

The work done by Daria Shapovalova, Tavis Potts, John Bone and Keith A. Bender pointed to the aforementioned benefits for the city but also the impact of the city’s former industries.

Between 1977 and 1981, Aberdeen lost a quarter of its jobs in food processing and a fifth of its engineering, shipbuilding and textiles jobs.

While new jobs were created by oil and gas, the University of Aberdeen’s research showed that many of these positions went to newcomers to the city.

But in 1982, the entire North East was removed from regional political aid due to low unemployment. Despite traditional industries experiencing a downturn, overall unemployment was low and no targeted measures were adopted at the time.

Between 1975 and 1991, around 15,000 new houses were built in Aberdeen, with even more being built in the North East region.

Since then, oil and gas has been a pillar of Aberdeen’s economy, so much so that energy companies lean on the industry for work.

Earlier this year, Zoe Ogilvie, director of PR firm BIG Partnership, shared concerns that firms like hers would be hit if oil and gas companies were to cut UK investment.

Ogilvie claimed that industry estimates warning that close to 35,000 jobs would be at risk between 2025 and 2029 fell short, and there would be “much more” among industries on the “periphery of oil and gas”, such as her own business.

She said energy companies account for 75% of Big Partnership’s Aberdeen office, as she argued this would be the same for many service companies.

Throughout the time frame used in EY’s latest report, the industry suffered mass job losses in the middle of the last decade, was buffeted by uncertainty throughout the COVID-19 pandemic and has recently struggled with policy and tax changes.

According to EY: “Aberdeen City and neighboring Aberdeenshire are expected to continue to struggle.”

House prices across the North East

But when comparing the state of housing in Edinburgh, Comfort said Aberdeen has historically seen success while other Scottish cities have declined.

“We created a chart plotting Aberdeen versus Edinburgh because from 2010 5 to 2014 Edinburgh was relatively stagnant, having gone through a depression as a result of the global economic crash of 2008, while Aberdeen had a marked upward trend,” commented the property law expert.

“Aberdeen went from an average property price went from 2008 to £201,000 to 2014 when it was £251,000.”

But since that period “there has been a significant decline” as Edinburgh has “really accelerated,” Comfort explained.

He said that as well as being the capital, demand for housing in Edinburgh has outstripped supply, which has also driven up prices.

Aberdeen and Aberdeenshire going forward

As Aberdeen saw 18,000 jobs disappear, employment in Aberdeenshire grew by 7%, lagging slightly behind the Scotland-wide average of 8%.

In addition to this, post-COVID pandemic “Aberdeenshire saw a significant increase” in housing interest “as a result of people wanting to have that open space,” Comfort commented.

Despite the increase in jobs, the region also faces tough times as employment is not expected to grow in the back half of the decade, EY claimed.

The report outlined: “Aberdeenshire has a large manufacturing sector which is expected to decline in the future and, on the back of relatively weak average GVA (gross value added) growth of just 1.0%, employment is not expected to grow in the district over the period 2025 until 2029.”

Looking ahead to the next five years, Aberdeen is set to see GVA growth of 0.8%, but investment in the city could affect this.

“The outlook can improve if the investment in Aberdeen is substantial and effectively targeted,” EY wrote.

“In support of this view, the city has been chosen to host the headquarters of Great British Energy, the UK Government’s new company to invest in clean, UK-derived energy and backed by £8.3bn of government funding over this Parliament.

“The move is part of the Government’s plans to support clean energy in the North Sea and promote Aberdeen as Scotland’s clean energy capital.”

GB Energy and the transition to support Granite City

With the announcement that Britain’s state-owned energy company is to base its headquarters in Aberdeen, renewable energy could prove to provide a boost to the north east of Scotland.

Comfort pointed to the recent Scottish Government Budget, which revealed plans for £150m of capital funding for the offshore wind sector as Aberdeen prepares to work on renewables.

Chancellor of the Exchequer Shona Robison announced plans to triple its investment in offshore wind throughout 2025 in the Scottish Government’s December Budget.

The property law expert commented: “I think Aberdeen is in a strong position for growth, you just need a good wind and I will talk about that.”

As well as initiatives from both the Scottish and UK Governments, Aberdeen has also attracted significant interest from overseas.

Recently, heavy lifting company Sarens PSG presented plans to create 25 jobs in Granit City with the establishment of a “center of excellence” for its crane fleet.

The firm, a joint venture between Belgium’s Sarens and PSG Marine and Logistics in Invergordon, said the £1.6m investment was spurred by plans to set up Great British Energy in the town.

EY wrote in its forecast: “In addition to Great British Energy, Aberdeen was among the top 10 UK cities for FDI (Foreign Direct Investment) in 2023, attracting 13 FDI projects according to the EY Attractiveness survey.”

The report added that “almost 41,000 jobs by 2023 in Aberdeen were in foreign-owned businesses,” this equates to around a third of the city’s employment.

The report concluded: “Aberdeen also had a slightly higher proportion of high growth businesses than the Scottish average.

“And with favorable demographics, the risks to Aberdeen’s outlook are weighted to the upside.”