CWS 3.0: February 26, 2014

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Oil & Gas: Rising Contractor Ranks Adds to Skills Shortage

The considerable growth and investment in the global energy and natural resources market has opened up opportunities for skilled talent to consider overseas assignments, according to the “Mobilisation and its impact on the global Oil & Gas market” report from recruitment specialists Progressive GE.

Of the oil & gas workers surveyed across the Americas, Africa, Asia Pacific, Europe, and the Middle East, there was an almost 50/50 split between contractors and permanent staff. Nearly a third (29 percent) of all oil & gas contractors worked in Asia Pacific, compared with only 20 percent of permanent employees. South America was home to the most permanent employees (21 percent), but was also the region with the fewest contractors (6 percent).

The difference between contractors and traditional employees is also apparent when comparing their work locations. Contractors are more likely to accept work outside their country of origin than traditional employees, 47 percent compared with 38 percent. Contractors are also more likely to have greater work experience than their traditional counterparts, with 62 percent of contractors having more than 10 years’ experience, compared with only 40 percent of employees.

According to Progressive GE’s research, many traditional employees are looking to move toward self-employed contracts as demand for contractors grows. Increasing skills gaps and rising contractor salaries are enticing many employees away from the security of a permanent contract to the more lucrative contractor role.

The mass exodus of traditional employees to contractor status is not the only contributing factor to the worsening skills and knowledge gaps within the oil & gas industry, which have persisted since the 1980s. The pending retirement of a generation of industry workers combined with a significant reduction in the number of students studying oil & gas related subjects will further increase pressure on oil & gas companies and recruitment firms trying to source candidates.

There have already been reports from within the industry that staff are being poached from rival firms. The infighting is creating a salary bubble, whereby oil & gas companies are being forced to increase wages and benefits in order to retain and/or attract staff.

The subsequent effect could lead oil & gas companies to start demanding that recruiters source contractors within a certain pay bracket in an attempt to offset rising costs, thereby making it more difficult for recruiters to do their job.

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