Petronas, Malaysia’s state-owned energy giant, has announced a sweeping workforce reduction of about 10% as part of a company-wide restructuring. The move, framed as a “rightsizing” exercise to prepare for long-term competitiveness, is expected to affect around 5,000 employees.

While management insists this is a necessary step to future-proof the company, the timing and scale have reignited the debate over workers’ rights, contract security, and equitable treatment in the face of industrial transformation.

During a townhall on 5 June, Petronas laid bare its intentions to carry out the layoffs in stages through to the end of 2025, accompanied by a general hiring and promotion freeze lasting until December 2026. Only “business-critical” positions will be considered for exceptions.

CEO Tengku Muhammad Taufik underscored the need for these decisions, citing a “challenging market environment” and Petronas’ responsibility to remain “future-ready” and agile in the global energy transition.

Taufik was candid about the toll of the restructuring: “We acknowledge that this process may result in difficult but necessary workforce adjustments.” Still, he assured employees that Petronas would manage the process with “transparency, care and respect”.

Tensions rise amid contract-heavy layoffs

News of the job cuts first surfaced via Bloomberg and was later confirmed by Taufik. Petronas, which employs close to 50,000 people globally, faces challenges that necessitate a thorough operational overhaul. This includes reviewing not just people, but also assets, processes and expenditures.

Responding to concerns, Prime Minister Anwar Ibrahim attempted to temper the anxiety by stating that many of the affected positions were contractual. “Many are on contract,” he told reporters, keeping his remarks brief. While technically accurate, this has done little to ease unrest among workers and unions. For many, being on contract doesn’t make the loss of a livelihood any less painful.

A union call for justice and dignity

In the wake of the announcement, the Petronas workers’ union Kapenas in Sarawak has emerged as a key voice advocating for a fair and humane restructuring process. It is calling for a “just transition” – a phrase gaining currency globally in conversations around the shift to greener economies. The union believes workers should not be made to shoulder the cost of change.

“Kapenas Sarawak is committed to ensuring that the current workforce adjustments by Petronas are handled with utmost fairness and that the best possible arrangements are made for all affected employees,” the union stated in a media release quoted by the Borneo Post.

Their plea goes beyond platitudes. The union has highlighted the everyday realities of oil and gas workers: long hours, remote postings, and rising costs of living in hubs like Miri and Bintulu. These aren’t just numbers on a spreadsheet. They are livelihoods – the human engines that keep Malaysia’s energy sector running.

Kapenas has also drawn attention to wage disparities between local and foreign employees and called for greater transparency and dialogue. For the union, the restructuring must be more than an exercise in trimming the fat. It must be an opportunity to reinforce worker protections, boost reskilling programmes, and ensure that compensation and benefits reflect the value these workers bring.

A pivot to the future, but at what cost?

Petronas has framed the shake-up as part of a long-range strategy to reposition itself amid the global pivot to cleaner energy. Taufik described it as a “fundamental shift” to create a “value-centric and agile workforce”. The ambition is to remain competitive and attract targeted investments, all while navigating the bumpy road of the energy transition.

But even as the company charts a new course, critics argue that it risks leaving its people behind. The term “just transition” is a recognition that moving towards sustainability shouldn’t come at the expense of job security, community stability or economic justice.

Kapenas is pushing for a roadmap that respects these principles. Their five-pronged agenda includes:

• Ensuring fair and transparent retrenchment processes
• Safeguarding worker welfare and rights
• Investing in upskilling and career development
• Guaranteeing equitable compensation and benefits
• Promoting inclusive dialogue among all stakeholders

These are not radical demands – they are baseline expectations for any company that claims to value its workforce. In a sector as vital and volatile as energy, retaining the trust and morale of employees isn’t just good ethics – it’s good business.

What’s next for Malaysia’s energy workforce?

The timing of the layoffs – amid softening oil prices and growing global decarbonisation pressure – couldn’t be more delicate. For a company of Petronas’ stature, the way it handles this transition will set a precedent not just for Malaysia but for other state-owned enterprises across Southeast Asia.

As the company undergoes its internal audit of assets and talent, industry watchers and HR leaders alike will be observing closely. Will Petronas follow through on its pledge to act with care and respect? Will it truly engage with worker concerns and provide avenues for redeployment, retraining and dignity in exit?

A successful transition cannot be measured solely by cost savings or leaner headcounts. It must also reflect how the company treats those who helped build it into what it is today.

As Kapenas aptly put it: “The oil and gas industry’s workforce are facing a challenging environment.” In such times, businesses must not just tighten their belts – they must also wear their conscience.