PETALING JAYA: Petronas announced last week a phased reduction of over 5,000 jobs over the next twelve months, sparking concerns over regional employment stability, economic resilience and investor confidence in the country’s crucial oil and gas sector.
Although most of those affected will be contract staff, experts caution that the economic ripple of the layoffs could be significant, impacting not only workers but also communities and industries tied to Petronas operations.
Universiti Malaysia Kelantan entrepreneurship and business professor Datuk Dr Nik Maheran Nik Muhammad said the immediate consequence would be a rise in unemployment, particularly in areas where Petronas has a strong operational presence.
“In the long run, continued downsizing and automation may lead to underemployment and skills mismatch in
the sector.”
Nik Maheran also said with the abrupt displacement of contract workers, the gig and freelance economy is expected to see an uptick.
“Many may turn to ride-hailing services, digital platforms or small-scale entrepreneurship to sustain themselves.”
She added that while these roles offer flexibility, they often come with limited income security and little to no social protection.
She said although permanent positions remain intact for now, uncertainty is growing within the organisation.
“Morale could drop and highly skilled professionals might begin seeking opportunities abroad or shifting to other industries unless leadership provides clear reassurance.”
Nik Maheran said given the extensive links of Petronas to local vendors, logistics providers and support services, the impact of the layoffs would not be confined to the company alone.
She said SMEs that rely on Petronas contracts, support staff such as canteen workers and cleaners as well as Bumiputera entrepreneurs who constitute a significant portion of its vendor network, may be disproportionately affected.
She pointed out that the hardest-hit regions are expected to be Kerteh (Terengganu), Miri and Bintulu (Sarawak), and Pengerang (Johor), areas where Petronas has a strong economic footprint.
“Households dependent on Petronas-related income may reduce spending, which could trigger declines in retail, real estate and other local business revenues.
“Reskilling initiatives through HRD Corp and TVET programmes may need to be accelerated.”
She stressed that the issue goes beyond numbers.
“These job cuts aren’t just statistics, they represent families and communities. It’s time for government, industry and society to work together to build a more resilient and inclusive economy.”
Universiti Sains Islam Malaysia human resource management assoc prof Dr Abdul Rahim Zumrah emphasised the importance of clear and empathetic communication during such periods of uncertainty.
“Companies should hold assemblies or town halls to explain the reasons behind the layoffs, backed by data and long-term plans. When employees understand the rationale, it helps maintain morale and trust.
“Management should create space for employees to voice concerns and receive honest answers. This helps reduce anxiety and prevent speculation.
“Recognition, through formal letters or public appreciation, goes a long way. Companies should also consider former contract workers for future roles.”
He said laid-off workers still hold
valuable potential.
“Many have solid industry experience. With support from agencies like Mara and the National Entrepreneurial Group Economic Fund, they could transition into roles as consultants, trainers or entrepreneurs.”
Abdul Rahim said staff reductions could become unavoidable in times of crisis – whether economic, political or due to currency fluctuations.
“It’s natural to seek job security, but we also need resilience and realism, both from employers and employees.”
Petronas on Tuesday reaffirmed its commitment to employee welfare amid a restructuring that would cut around 10% of its workforce, offering competitive separation packages.
The company said a comprehensive transition programme is in place to support affected staff, ensuring fair, respectful and professional decisions.
