Moderately improved commodity prices have resulted in drilling activity picking up, particularly in tight oil and liquids-rich natural gas plays in North America.
With the news of increased development spending has come reports of some companies experiencing challenges accessing enough workers to ramp up with demand.
The boom-bust cycle can be difficult for workers, but Hays Specialist Recruitment vice-president Jim Fearon says that by and large the oil and gas community—both employers and employees—accepts it.
JWN spoke with Fearon this week about the evolving labour market in Canadian oil and gas. Here are five key insights from that discussion.
1. Some companies are struggling to find employees, but this is not widespread.
While contract drilling and completions companies are experiencing difficulty finding workers, Fearon says, recruiters for many corporate office functions such as finance and general administration are still inundated with resumes for their postings.
“There are far fewer disciplines that companies are finding it particularly difficult to recruit for from a skills perspective than where there’s a high volume of candidates,” Fearon says.
"There are some of those, and I think there probably always will be, particularly in the very technical disciplines, [but] on the whole there is a large part of the workforce that is still unemployed.”
2. Oil and gas companies probably can’t offer more certainty to boom-bust leery workers by way of guarantees or long-term contracts.
“I just don’t think it’s possible for them to do it,” Fearon says.
“They have a volume of work to do at the moment, but no one can foresee what’s going to happen with the oil price.”
He says the industry has benefited from a marginally elevated oil price over the last four or five months, but while companies are freeing up cashflow, they don’t have a line of sight into how long it will last.
“They can see maybe at least 12 months worth of elevated business activity, but does that mean it’s going to follow through into the following year? I think there would be a lot of companies that would be very cautious about predicting that. They’ll be reluctant to get themselves tied into expensive, long-term contracts that they’d have to terminate early and bear the cost of.”
Fearon adds that a lack of employment guarantees isn’t unique to oil and gas.
“The oil and gas industry gets bad press around this kind of thing because it can be so boom and so bust, and salaries can get ramped up so quickly when you are going through a boom and then scaled back so quickly when you go through a bust, and I think people are quite cynical about that,” he says.
“I don’t think any company hires people that they don’t need to hire right now—that’s the commerciality of the whole thing—so why oil and gas companies should be expected to do it, I don’t really see.”
3. Workers should negotiate a new job with their value in mind, but respect the challenges employers are facing.
“If you’re currently unemployed and are looking at getting back into work…you don’t want to go in and take a job or accept an offer that significantly undervalues your work in the current market; but I’d caution against those that are going to negotiate hard to try to get themselves the very best deal that they can,” Fearon says, explaining that if there is another dip in activity, these employees would be at risk as the most expensive and most recently hired.
“At the same time, if there isn’t another dip and activity picks up, the people that were easy to bring on board and were respectful of the situation when the companies were trying to slowly ramp up will be first in line for pay raises or promotions, whereas those who negotiated more aggressively could find themselves at the back of the queue when it comes to those sorts of opportunities.
“Negotiate with your position in mind but bear in mind that employers have been through two years of loss. There may be contracts but they are going to be at a very tight margin.”
4. Companies have been navigating the downturn with the ongoing demographic shift in mind.
“What we saw from a lot of oil and gas companies was certainly in some instances an acknowledgement that they couldn’t stop hiring, particularly at the entry level, because there’s such a demographic problem in the market, particularly in North America with so many of the baby boomers progressing toward retirement age and a relative [lack] of people coming through at the intermediate level,” Fearon says.
“I think we saw quite a few of the big oil and gas producers in particular maintain their graduate programs, so they were thinking for the future from that perspective and not getting sucked in too much to the down cycle, albeit they can’t simply maintain employee volumes when the oil price drops so significantly.”
The situation is also different than in the past, he adds, where today oil and gas companies have to compete for employees with a number of other industries.
“If you look at the way technology markets have boomed, with particularly the development of mobile technologies as well as green technologies developing, they’re competing way more aggressively with other high-tech markets. I think they’re all very cognizant of it.”
5. There will probably be fewer oil and gas jobs going forward.
“There’s been improvements in technology, there’s been improvements in process and there’s been improvements in organizational structure, which will probably mean that [companies] will need to ramp headcount back up less than they would have had to a couple of years ago,” Fearon says.