THE coronavirus crisis could “hasten the decline” of Scotland’s oil industry, one of the country’s leading economic thinktanks has warned.

Mairi Spowage, deputy director of the Fraser of Allander institute, said the global slump in oil prices caused by the epidemic was already making North Sea production uncompetitive.

The GMB union also warned the sector was “in real danger of being wound up” in the coming years.

The warnings came as it emerged around 30,000 hospitality jobs had been lost in Scotland in the last two weeks as pubs and restaurants closed and the country went into lockdown.

Unions blamed “unscrupulous employers” and confusion over the UK Government’s Jobs Retention Scheme, which should pay 80 per cent of wages of furloughed staff.

The North Sea oil rig workforce has fallen by around 40 per cent in a fortnight as companies try to stem the spread of the virus.

Industry body Oil and Gas UK said around 4000 contractor jobs had been cut, taking the usual rig workforce from 11,500 to a skeleton staff of 7,000.

Earlier this week, the Fraser of Allander warned Scotland’s economy may take “months if not years” to recover from the coronavirus shock.

On BBC Politics Scotland yesterday, Ms Spowage said the country was “absolutely” moving into a recession and the North Sea could be one area particularly badly hit.

She said: “We can expect maybe even a double digit contraction in the economy. There are swathes of the economy shut down and that’s going to have a large impact on the economic output over the course of 2020.

“The economic contraction we’re potentially looking at here will be fairly unprecedented.

“The oil and gas industry is likely to be struggling quite a lot just now and it may be that hastens the decline of that industry in Scotland.”

She said the further slump in oil prices would be a factor in that, given the relatively high production costs for the North Sea basin.

“At the current level of the oil price, a lot of the production in Scotland isn’t terribly viable.” she said.

She also said she would be “worried about rural areas heavily reliant on tourism and hospitality.

“Some of these communities had a difficult outlook for things like demographic change, an ageing population and keeping young people in the area anyway.

“Now we would be worried about the impact on these areas in the long term.”

She said it could take a long time for the country to exit the recession.

“The more optimistic view at the start of the crisis, that we would have a sharp decline and a sharp uptick as the economy got back to normal, is looking more and more unlikely to be honest.

“I think we must accept there will be long term effects of this and the way back to our overall production capacity is going to be a fairly long road.”

GMB Scotland secretary Gary Smith warned the oil industry was in peril.

He told the Sunday Mail: “The North Sea is now in real danger of being wound up in the next few years.

“We’ve probably got, realistically, 15billion barrels of oil left and the danger is we only get six of that out because the collapse in oil prices just makes it uneconomic.

“The significant players don’t want to be in the North Sea any more because they can get a bigger return in Angola or Brazil and this is going to accelerate that process of disinvestment.

“So you’re going to see assets getting sweated – this means deteriorating maintenance and upkeep as profits are squeezed out in the short term.

“Holyrood and Westminster need to see North Sea oil and gas as a national resource rather than ­something exploited for dividends.

“If not, you’ll see smaller ­companies coming in that will take out profit before going bust and leaving decommissioning costs back with the taxpayer.”

Deirdre Michie, Chief Executive of OGUK last week said many of the firms in the industry, especially in the supply chain, were still financially fragile after the previous oil price crash.

She said it was crucial to ensure companies could easily and rapidly access UK Government support, as for many businesses and individuals cash flow was “vital”.

North Sea-related jobs in the wider economy have fallen from a peak of 500,000 to 315,000 since the oil price slump started in 2014.

Unite’s Bryan Simpson, who represents bar, restaurant and catering staff, said: “We’ve been working flat-out to support our members and, in many cases, companies have been convinced to think again about letting people go, in the face of pressure from their workforce and legal action.

“We’re clear that to dismiss your workforce en masse, despite their being a Job Retention Scheme to cover 80% of wages, may be regarded as unfair dismissal and we’ll be supporting our members to get justice.

“A combination of opportunism from unscrupulous employers and a lack of clarity from the Government has cost upwards of 30,000 jobs in the industry in the last fortnight alone.

“It’s great that financial support packages are being put in place but we need to see these rolled out much faster because, with every hour that passes, livelihoods are being lost.”

Scottish Labour leader Richard Leonard said the Scottish Government’s guidance over which businesses should remain open during the lockdown “clearly isn’t working”.

He said ministers had to make clear that companies producing or selling non-essential goods and services must not require workers to work on site.

The Scottish Government advice is that businesses whose activity is not “essential or material to the effort against the virus or to the wellbeing of society”, and which cannot “practise safe social distancing and comply with all other standard health and safety requirements” should cease activity.

He said: “Since the lockdown began, workers and their trade unions have been repeatedly raising concerns about businesses flouting the official guidance.

“The First Minister made clear that if employers cannot ‘ensure that there are safe social distancing practices in place’, then the ‘advice is, you shouldn’t be continuing to operate at this time’.

“Ministers have issued advice, but it clearly isn’t working. We now need the Scottish Government to work with the Health and Safety Executive on a plan to force companies which are putting profits before safety to cease their activities. Workers need a cast iron guarantee, right now, that they will not lose their jobs or their pay if they refuse to work in unsafe conditions and endanger the public at large.”