A major operator’s recent contractor rate cuts announcement has been heralded as the start of an industry-wide phenomenon and the news has hit the headlines, particularly in Aberdeen, where industry is understandably sensitive to the ups and downs of the oil and gas market.
So what does this mean from the industry recruitment sector’s point of view?
Higher average rates are the result of a higher demand for contractors and in that situation workforce mobility increases for what is often a relatively small wage increase. Of course this means greater activity for the recruitment industry, whereas – contrary to what might be expected – a steady or lower average rate means that far-sighted personnel tend to stay where they are, or are certainly less tempted to think about a career move.
In both situations, oil and gas recruitment agencies will monitor contractor rates closely to ensure they understand and can forecast activity in the oil and gas recruitment market.
Overseas positions will, of course, become more attractive as the domestic contractor rate dips, with potentially higher rates and in some cases, tax benefits. However, contractors should not to respond too quickly to recent developments, especially if that response includes a major lifestyle change, e.g. moving overseas.
The same applies from a domestic perspective. The major operators have set the pattern and other companies will undoubtedly follow suit over the coming months – therefore, a local move right now could eventually result in the same rate cuts. And whilst there is no guarantee, historic evidence suggests that rates will increase again. So the real issue is, rather than switching roles immediately, which technical specialism will be most in demand in the future, thus benefiting from increasing rates?
It is worth bearing in mind that those in possession of specific skills, such as deepwater specialists, are likely to feel the benefits of sustained, increased rates, as North Sea E&P becomes ever more technically challenging. If they haven’t already done so, now is the time for contractors to consider undertaking continued professional development to ensure that they are upskilled, ready and able to meet those more technical demands, and benefit from the rates those skills warrant.
Contractors who currently enjoy their job and feel they are getting the right experience and opportunity to develop whilst in that role, should think twice before seeking an immediate move.
Paul Radcliffe is managing director of Frontier International. He has more than 30 years’ experience in the oil and gas industry, in both well engineering and recruitment.
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