As the current generation of oil workers is retiring, having completed their careers, many of them are unable to pass on their expertise, as younger generations show more interests in other industries like software, media, and hospitality, which sometimes offer higher income with much less effort. The oil sector still carries a lot and is still the king of GCC economics, so how can you find qualified and trained oil and gas workers for your scaling-up enterprises? And how can you attract new generations to keep the production wheel afloat in the long term? Let’s find out.
- Hire oil workers through specialized recruiting companies
Companies specializing in manpowering, such as the Saudi Manpower Solutions Company (SMASCO), have access to trained oil workers and gas workers of diverse nationalities; workers who are interested in working in the oil and gas sector, have qualifications, and look for job opportunities in this promising sector.
On the other hand, it is necessary for oil companies to develop competitive and attractive compensation packages for their employees, especially for those with unique skills that can drive productivity and efficiency. Additionally, implementing a robust strategy for retaining top talent is essential. These measures are necessary to prevent the migration of skilled professionals and experienced staff to other industries that may offer more lucrative salaries, quicker career advancement, and a more favorable work-life balance.
- Implement effective strategies for attracting new generations to the oil sector
Oil prices are expected to remain high in 2024, with the average price of a barrel of Brent crude potentially reaching $95. This will lead to an increase in Saudi Arabia’s revenues from oil exports, which constitute the primary source of government income. Oil revenues are projected to reach 1.2 trillion Saudi Riyals in 2024, marking a 20% increase compared to 2023. Additionally, Saudi Arabia plans to increase its oil production to 13 million barrels per day in 2024.
As oil prices rise, wages, benefits, and job opportunities increase, and when they fall, workers are laid off as demand decreases and required productivity drops. Consequently, companies reduce the number of offshore oil rig workers, exploration workers, transportation workers, and other workers. Historically, this leads to less interest in the academic studies related to the oil and gas sector (such as petroleum engineering) among students, shifting with the fluctuations in oil prices due to the potential impact of these changes on oil and gas workers.
Oil prices have been high since the beginning of 2024, and the industry is expected to have a promising year on the level of productivity and on the level of workforce retention as well—making this currently seem like a very manageable situation. However, despite the high salaries, the new generations are not inclined to pursue careers in the oil and gas sector, particularly Gen Z and those that follow. One reason for this is that the younger workforce is becoming more aware of climate change and job security concerns.
Attracting young talents is crucial for sustaining the ongoing success of the oil and gas sector. As such, oil and gas companies must find effective ways to appeal to new talent to fill the nearly 1.9 million direct jobs that will be needed globally in the sector by 2035. Here are some strategies to attract the next generation of workers.
- The term “Climate Quit” describes oil and gas workers quitting their jobs due to environmental concerns associated with the industry. To address this, oil and gas companies need to outline their strategies for improving environmental stewardship, such as implementing carbon capture and storage (CCS) techniques, enhancing processes to reduce emissions, and diversifying investments into clean energy technologies. These efforts are crucial for attracting talent from the new generation that has high environmental responsibility values.
On the other hand, oil and gas companies can remind potential employees that this industry is essential to people’s daily lives around the world. Even with alternative energy sources, fossil fuels will continue to account for 80% of the world’s major energy sources.
- Provide other competitive wages, benefits, and incentives; provide more flexible working arrangements; or improve work-life balance policies. Coronavirus quarantine has strongly highlighted the importance of this flexibility.
- Opening the door for recruitment of diverse candidates from other parallel sectors, with compatible or convertible skills. Such may demonstrate their interests in shifting to the oil and gas sector, providing a valuable alternative to the lengthy search for candidates with the exact qualifications required. Therefore, consider identifying other industries that may have employment with compatible or convertible skills, and be ready to offer opportunities for these new talents.
- The oil and gas sector also needs to focus on training and developing mentoring programmes that can effectively transfer the required knowledge from experienced oil workers to new ones.
- Participation in seminars, workshops, conferences and other peer-building events that could lead to future staff referrals. Also, employee referral programs using incentives or bonuses may lead to successful hiring; employees often recommend people who are in line with the company’s culture and will work well with the team.
- Consider a contract with one of the specialized recruiters for oil and gas workers such as SMASCO, which will carry the full recruitment burdens on your behalf, practically and legally, as well as train and develop employees’ skills.
- Last but not least, regularly analyze skill gaps within your company, identify key roles that require attention from the HR department, and invest in training and development programs. Doing this periodically will help you stay ahead of market changes.
- Prepare a crisis management plan away from laying off oil workers
Several years before COVID-19, massive layoffs in the oil and gas sector had begun in 2016 as a result of the sharp decline in oil prices. Many oil workers were not paid for months, leading to protests and unrest, and even Saudi Arabia saw significant layoffs at then.
The collapse in oil prices had a ripple effect on related sectors, such as construction, where companies laid off around 77,000 employees. These layoffs were part of broader cost-cutting measures across the Kingdom, which faced budget deficits and economic restructuring. Several years later, during the COVID-19 pandemic in 2020, another wave of layoffs occurred, as hundreds of expat oil workers were let go in response to the global decline in oil demand.
Here are the effective alternatives to oil workers layoffs
There are many effective alternatives to layoffs during crises that have been applied and proven by reputable global companies; they were able to reduce costs while maintaining their workforce. Here are some of the alternatives that showed success:
- Reducing salaries and working hours of oil workers
Some companies have reduced working hours, and accordingly, wages, in line with the reduced productivity demands during the crisis. This strategy enabled many companies to retain employees while cutting costs. It has proven effective during past crises, allowing global companies to keep their staff and fully utilize their capabilities once the market recovered.
- Reducing concessions
It’s when companies decide to reduce some of the additional benefits for its employees, such as allowances and bonuses. Instead of reducing salaries or laying off oil workers, this strategy provides the company with some financial liquidity without affecting employees’ satisfaction.
- Redistributing the offshore oil rig workers internally
Some companies have adopted a strategy of reallocating employees to departments with greater demand, such as moving staff from production to the sales department to leverage their skills where they are most needed. This approach helps balance the company’s budget while retaining its qualified employees and talent.
- Freezing recruitment strategy
Freezing strategy includes freezing new recruitment, postponing salary increases, and halting unnecessary investments until the financial situation stabilizes. Global companies implemented similar strategies during the 2008 crisis and the COVID-19 pandemic, and were able to retain employees while gradually improving their financial conditions without resorting to mass layoffs. Such an approach helps foster employee loyalty and avoid the negative consequences of long-term layoffs.
Looking forward to hiring the best oil and gas workers in Saudi Arabia? Leave it on SMASCO
Entrust SMASCO with selecting the right oil and gas workers for your company. SMASCO will handle the search, the selection, and the recruitment of qualified, skilled professionals in your industry. With a proven track record in the oil and gas sector, SMASCO has successfully met the labor needs of well-established companies with big names in Saudi Arabia, consequently increasing productivity, accelerating project timelines, and opening new markets.
SMASCO manages the entire cycle of recruitment on your behalf, starting with bringing offshore oil rig workers into the Kingdom legally and ensuring that all necessary procedures and documentation are completed. Our services also include insurance coverage, workers accommodation when needed, as well as arrivals, returns, and vacation tickets. Additionally, SMASCO handles the end-of-contract procedures, ensuring that each worker safely returns to their home country. Contact SMASCO team today and discuss your company’s workforce needs.
Sources:
- Ten tips for leading companies out of crisis, March, 2014, by: Doug Yakola, Mckinsey.com.
- Layoffs Rarely Pay Off: Here are 15 Alternatives, by: Jim Clemmer, Clemmergroup.com.
- Avoiding Layoffs: Alternatives to Workplace Reductions, by: Stephen King, Growthforce.com.
- 5 Strategies for Hiring and Retaining Workers in the Oil and Gas Industry, Travelers.com.
- Blog: الاقتصاد السعودي في 2024: نظرة إيجابية مدعومة بالأرقام, By: موسى الاشعري, January, 2024, Argaam.com.