Salaries hiked for oil and gas employees in 2014 but unlikely to continue, Hays Oil & Gas reveals

Nearly 75 per cent of global employees received increased benefits of 10 per cent from 2013 and the highest proportion ever seen in the six years, the sixth Oil & Gas Global Salary Guide added.

A survey conducted on 45,000 participants across 25 disciplines from 188 countries revealed that salary was the most important factor when considering a new role in the sector. In addition, 92 per cent of job seekers judged company reputation as a crucial element in their decision making process when evaluating new job opportunities, the guide noted.

However, the timing of the survey does not fully coincide with the fall in global oil prices, Hays Oil & Gas said. The firm added that the effect of the price drop was being seen in businesses across all oil and gas regions like projects being delayed, paused or cancelled, causing companies to re-evaluate hiring plans and this has been expected to continue for the rest of the calendar year.

Hays Oil & Gas managing director said, “Since we collated the data the industry has been through unprecedented times. Projects with attractive economics are likely to continue, but new projects will come under increased scrutiny and, if no longer economically viable under the new oil price regime, could be postponed or cancelled.

“However, teams managing day-to-day operations still require the resources necessary to complete projects on time and within budget. At the other end of the spectrum, smaller businesses are responding to recent changes by focussing on interim hiring, shifting from multi-year contracts to short-term specialist assignments.”

According to the report, skills shortages were the biggest concern for employers at 30 per cent although economic instability was a close second at 24 per cent, reflecting the nervousness that had already crept into the industry when this survey was undertaken. Twenty-nine per cent cited inadequate succession planning for knowledge transfer and skills retention as the key cause of skills shortages within the industry. While potential layoffs could lessen the skills shortage locally, there will continue to be shortages for experienced talent within in-demand skill areas, such as subsea, petroleum engineering and increasingly LNG.

With hiring plans impacted, employers have been faced with difficult decisions like how to reduce costs while still having the right skills to deliver projects.

Furthermore, a decrease in hiring was likely to exacerbate the skills gap and could result in further skills shortages in the future. This year’s survey revealed 22.5 per cent of respondents worldwide are aged 50 and above, which meant that a significant portion of the tenured, skilled workforce would be retiring over the next five years. With the anticipated reduced hiring of Gen Y workers (born between 1983-95) due to market conditions, the future generation of industry leaders, the industry may be creating a future skills gap issue, much like it did in the mid-to-late 1980’s.

The guide went on to say that despite the global salary average stabilising year-on-year, volatile local markets were causing salary changes to vary region by region. Employer confidence continues to remain high as 87 per cent feel positive about the oil and gas industry, compared to 72 per cent in the previous year.

Salaries remained constant throughout the Middle East region with the exception of Saudi Arabia, which showed significant increases in local average salaries. Africa saw an overall increase in average salaries buoyed by the efforts of countries such as Nigeria, implementing schemes to attract expats back from international assignments and this resulted in an average increase of 9.8 per cent.

North America remained relatively stable year-on-year with salaries increasing one per cent overall. Unprecedented levels of onshore drilling and exploration in the USA supported by new LNG projects have offset decreases in other areas. In South America, local talent saw an increase in salaries as a result of efforts to reduce the dependence on expats. In Europe, companies seeking to maximise the remaining reserves in the North Sea coupled with Europe’s pursuit to be less reliant on Russian oil imports led to a demand in talent and an overall increase in average salaries of 3.6 per cent. Australia saw a significant decline in average salaries, as much as 15 per cent in some areas. Employers on projects in Russia have been forced to compete for local talent due to western sanctions and political instabilities, resulting in an increase of 4.8 per cent in local salaries.

Throughout Asia, there was an increase in average local salaries of 9.3 per cent over last year. This could be attributed to governmental incentives in countries such as Malaysia to increase the use of local talent. Similarly, in Singapore the authorities tightened regulations of visa applications, therefore contributing to the increase of salaries for local professionals.

Therefore, In order to attract and retain top talent, 72 per cent of employers felt they had to make improvements to their employee offering in the last year, including training and development, compensation and rewards.

According to the Hays Where People Are report, only three per cent of employers have been utilising social media to promote their employer brand, yet 68 per cent of both passive and active job seekers are utilising social media for personal use.

The report also dealt with gender inequality within the oil and gas industry and said that there has been a push on initiatives from individual companies and policy makers to encourage more women to enter the oil and gas sector. As employers face skills shortages globally, tapping into the female candidate pool could provide the talent needed to help grow the industry. Aside from the obvious rebalancing of the workforce, there are key commercial reasons for employers to engage more women into their businesses. The Women Matter series of reports produced by global management consultants McKinsey & Company indicated that businesses with a higher number of women in executive positions tend to be more successful financially. Getting the right balance of skills, experience and leadership at the top really impacts the whole business, something employers must factor in when looking to hire into executive positions.

A significant portion of the global oil and gas employment market is within the science, technology, engineering and mathematics (STEM) fields, such as geoscientists and engineers and changes within the STEM candidate markets will impact the oil and gas industry. According to research by Hays, there has been an increase in the number of women taking science programmes at undergraduate level.

According to Higher Education Statistics Agency (HESA), in 2013 women made up over half of all science subject undergraduates in the UK. Though this trend would vary in different oil and gas regions, hiring managers should take advantage of this skilled, readily available candidate pool where possible. This year’s guide showed that almost 40 per cent of all female respondents are in their first four years of working in the oil and gas industry. However, the challenge still remains on how best to keep women in the industry. As our age demographics chart shows below, the industry’s workforce is male-dominated, particularly at higher levels of seniority. In part this can be explained by fewer women being hired in the past.

The Hays Oil & Gas report also suggested that there would be an increase in mergers and acquisitions throughout 2015. It said that financially stable companies were looking to maximise on growth opportunities through the acquisition of targets at current, more favourable, prices. Mergers are likely as businesses join forces to help weather the storm.

Taking these changes into consideration, 2015 is likely to see a shift in the active candidate market, therefore this might be a good time for companies to attract and secure the top talent that would be key for future growth, Hays Oil & Gas concluded.