Oil & Gas UK Economic Report 2014

Employment

Skills

The industry has a major influence on employment in Scotland, where about 45 per cent of the jobs it supports are located. Although the employment the sector creates is spread across the whole of the United Kingdom, with some notable areas where it is concentrated: Aberdeen and north east Scotland, London and its environs, East Anglia, and north east England. Furthermore, many of these jobs are highly skilled and well paid, with the resultant revenues for the Exchequer from both payroll taxes and VAT on employees’ expenditure. In total, the industry supports some 450,000 jobs throughout the whole economy, with: • 36,000 employed by operating companies • 200,000 employed in the supply chain • 112,000 in jobs induced by the economic activity of the above employees • 100,000 in the export of goods and services Following on from the two pieces of work above, Oil & Gas UK has further commissioned EY to examine in greater detail the employment which the industry supports in this country, with a view to shedding more light on the economic influence of what is arguably Britain’s greatest – andmost unsung – post-war industrial success story.

Operators and contractors alike continue to cite shortages of adequately skilled people as the foremost challenge facing the industry. The intensity of activity on the UKCS, international competition for talent and current immigration policies have combined to exacerbate these shortages. Inevitably, this has resulted in rising labour costs, particularly with regard to day-rate contractors, thus contributing to increased operating costs (see Section 4). The critical area of shortage remains in mid-career personnel in a number of onshore roles, including project management, design, subsea and drilling engineering, and geosciences. Technicians and skilled tradesmen are also in short supply due to the high volume of activity. Indeed, the UKCS Offshore Workforce Demographics Report 2014 15 , published in May, shows that the number of offshore workers continues to rise on the back of new capital investment, despite falling production. In 2013, the core offshore workforce (those who spent more than 100 nights a year offshore) rose to 27,749, a 7.7 per cent increase over the previous year, while the total number of people who travelled offshore reached 61,892, an 8.6 per cent increase. The Upstream Oil and Gas Industry Technician Training Scheme again attracted a very large number of applicants and company graduate schemes continue to be oversubscribed, indicating that the industry is attracting sufficient new entrants straight from school and university to meet current training capacity. However, the industry remains keen to explore how the annual intake of

15 The report can be downloaded at www.oilandgasuk.co.uk/publications/viewpub.cfm?frmPubID=807

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ECONOMIC REPORT 2014