The steep climb in upstream oil and gas salaries around the world appears to have gone into reverse with the latest analysis by Hays, teamed with Oil & Gas Job Search, recording a 1% drop to $81,184 for 2013.
Contractor day rates broadly fell too and the analysis suggests that this is probably “a necessary correction” after two consecutive years of significant growth to the point that they had started to threaten the financial performance of some companies and assets.
Despite the decrease in salaries and day rates, there still exist skills shortages in certain areas and in certain disciplines, most pronounced for engineers and technical professionals with 10 or more years of industry experience.
And the 1% drop may be but a short respite for employers as a 5% average rise is on the cards for this year.
Overall, the latest Hay’s/Oil & Gas Job Search report paints a positive outlook for the industry for the current year, with more than 70% of the 7,200 employers in 53 countries surveyed planning to expand their workforce.
“This view is supported by a general consensus of industry and economic analysts, who anticipate growth in capital spending in the order of 5% in 2014, says Hays Oil & Gas MD John Faraguna.
Given this scenario, we would expect the war for experienced talent to remain fierce, and skills shortages to remain the most pressing concern facing the industry.
While the headline decline is significant, the individual country figures portray the numerous forces shaping remuneration in the industry.
Regional highlights
Whether they are successes or issues stemming from geology, politics, the environment, the economy or in some cases armed conflict, each region’s salary tells a story, says the study of more than 24,000 individuals across 24 disciplines.
- Australia saw flat to slightly declining average salaries after a number of years of unsustainable growth in wages had started to threaten the financial viability of some projects.
- Southeast Asia saw declines in China, Indonesia and Malaysia due to downward pressure on expat salaries, while Singapore remained relatively strong.
- The Middle East was flat to slightly declining except for Qatar due to its increased upstream and downstream activity.
- Russia and CIS were flat to lower due to less reliance on expats as was most of Africa.
- Continental Europe was flat to declining as supply and demand of workers was largely in equilibrium, but in places like Poland there was a reduced need for expats. UK and North Sea salaries were also flat to slightly declining year-over-year.
- Brazil had a second consecutive decline after several years of upwardly spiralling salaries, as further delays in activity reduced the demand for workers. Argentina and Venezuela also saw salaries decline, whereas Colombia was a bright spot.
- Canada saw relatively flat salaries as transportation bottlenecks to the US caused jitters in prices and shook investor confidence. US salaries decreased to 2010 levels as low natural gas prices depressed onshore drilling.
Looking forward
While oil prices have been comfortable for three years or so, Hays and Oil & Gas jobs Search have picked up on the sentiment that they may fall due to “tepid” global demand and the impact of increased production from countries such as the US, Iran, Iraq and Libya.
“If so, it will be interesting to see whether Opec takes steps to prop up prices to their desired benchmark by curtailing their production,” says the report.
“However, the consensus view is that the US will continue to experience good economic growth and the economies of the UK and other parts of Europe are poised to have improved years.
“Australia may also have hit its bottom as China’s manufacturing output and therefore demand for coal and metals rebounds.”
The thought is that, with this scenario, energy prices should continue within a relatively narrow band between $90-110, perhaps with upside that could drive increased spending in 2014, maybe in the order of 5% over 2013 levels.
Assuming this happens in 2014, the report’s authors expect salaries to rise in the 5% range, but with a wide variation between disciplines and countries.
Great crew change well advanced
The Hays/Oil & Gas Job Search study tackles the Great Crew Change and says that a new generation has arrived and is now embedded in the world of work.
Generation Y (Gen Y) – those born between 1983 and 1995 -now represent a significant and increasing percentage of the global labour market.
As the Baby Boomers and Gen X start to leave the workforce, this generation will take over the reins and be responsible for leading the worldwide economy.
Hays says recent research sheds some light on Gen Y’s attitudes to issues surrounding their work and careers: what attracts them to a potential employer and what makes them stay, such as reward, training and work/life balance; what they look for in an ideal boss; what they regard as key indicators of career success; and how they relate to social media and emerging technology.
“It’s probably not surprising that our research shows that Gen Y across the globe differs from prior generations in terms of their needs and aspirations in the workplace,” says Hays.
“By and large, they look for a more engaging employee value proposition than prior generations, and value flexibility in when and where they work.
“However, our research also shows that Gen Y differs considerably from region to region and from country to country.”
For instance, while all Gen Y’s want to be compensated appropriately, wealth creation is much more important to those in China than Gen Y in the UK or US where work/life balance and job satisfaction are equally important.
Gen Y in the US are more motivated by making a difference to society than any other country surveyed, whereas Gen Y UK are the most motivated by interesting work and coming up with solutions, and workers in China value public recognition.
Gen Y workers will play an increasingly important role in solving the industry’s skill shortages, warns Hays.
“Therefore it is critical for companies and their HR departments to understand what motivates Gen Y so that they can most effectively attract, motivate and retain them.”
