Growing offshore sector pushes salaries higher

JULY 19, 2012—Salaries are on the rise in the growing offshore energy sector, putting wage pressure on other industry segments such as classification societies and port state administrations, employment consultant Spinnaker Consulting says.

“With demand for personnel continuing to grow in the offshore sector, the wage gap has widened with other parts of the industry, who may in some cases only be able to offer salaries that are fixed by government employers,” says Spinnaker Chairman Phil Parry. “We are seeing far greater demand for specialists in offshore roles and, rather like the demand surge in the bulk markets in the middle of the last decade, it is beginning to suck staff from other types of employer.”

An International Labour Organisation (ILO) report on Working Conditions of contract workers in the oil and gas industries published in 2010 says annual pay in 2009 in the Norwegian offshore industry was NOK 634,000 for operator employees offshore and NOK 530,000 for contractor employees. At November 19, 2009 values, the Norwegian annual offshore pay rates would have been worth about $112,730 (operator employees) and $94,300 (contractor
employees).

SHORTAGE OF EXPERTISE
Parry warns that expertise in the European offshore sector may itself be in short supply if more is not done in the future to provide a level playing field for offshore industry workers.

“While the offshore sector may be paying higher salaries for certain personnel, which means they may be less attracted to, for example, working as surveyors in classification societies, the offshore sector faces its own challenges as EU nationals’ salaries are being undercut by entrants from outside the European Union,” he explains.

The availability of crews who are more cost-competitive, for example to man the expanding offshore supply vessel fleet, could lead to EU participants in the offshore market being priced out.

“We are obviously in favor of an international workforce,” says Spinnaker Business Development Director Teresa Peacock.  “Shipping is after all an international industry, but some of our clients have raised concerns that a plentiful supply of lower cost crew may jeopardize the EU’s ability to provide skilled personnel for the offshore sector in the future.  Again, it’s starting to sound very much like the story in the bulk markets.”

“This is an issue, not only of supporting the industry as a whole, but ensuring that individual countries, wherever they are based geographically, have a stable skills base to rely on.  It requires employers with the finances and the foresight to play the long game.”

“With the expansion of deep drilling on an international basis, the ability of EU employees to compete in a demanding international environment will be key to the EU’s ability to maintain an experienced workforce for this sector going forward,” Parry says.