...Tomiwa Oladipo Published August 2022
The oil and gas labor shortage poses a severe risk to the industry's efforts to recover from 2020's economic downturn. Some workers are transitioning to renewables, while others leave the industry for more lucrative and stable fields, such as tech and manufacturing.
The world is experiencing what we can call an economic storm – spiking gas prices, supply chain backlogs, and a global labor shortage. Understanding this triple crisis is a complex issue for economists to study for generations.
But one thing is clear; the oil and gas industry is caught in the middle of the storm. A shortage of energy workers means a slow down in energy projects and production. This supply slump can affect retail prices, leisure travel, and transportation costs and raise consumer staples costs.
A global survey of about 17,000 energy industry employees shows that an astonishing 40% of energy workers lost their job due to the Covid-19 pandemic. It’s not surprising that the energy industry has a labor crisis today after sending nearly half its workforce home.
Some laid-off or furloughed workers had relocated from foreign countries, worsening the situation.
When asked about the industry's most significant challenge, 31% of recruiters said the aging workforce and skills shortages, according to Brunel’s Energy Outlook 2021/22 report. They said the leading cause of skills shortages is inadequate succession planning for knowledge transfer and skills retention (39%), followed by the loss of expertise due to an aging workforce (36%), and education & training (34%).
It’d be challenging for any industry to rehire 40% of its workforce, let alone one that demands workers to leave their families and relocate to remote oil fields, faraway mines, and off-shore wind farms.
Today’s energy labor crisis is a domino effect of overemphasizing the importance of a college education while sacrificing workforce training programs in the 1980s. And as the baby boomers retire, there’s a massive gap in legacy knowledge that has moved the energy industry forward for the past few decades.
Digitalization is another factor that has led to the skilled trade gap. It created an industry balancing act between addressing talent shortages and digital adoption in the power sector.
It is high-time energy operators and business owners realize that tech-savviness should enhance and not replace hands-on experience.
Aside from the two factors above, a lack of interest, experience, and hard skills are significant drivers of the skilled trade gap.
Why lack of interest? There’s a perceived stigma against a career in the skilled trades. An average college graduate believes obtaining a college degree means a white-collar job, stability, and steady income.
They don't know the oversaturated job market college students face after a four- or five-year program. We must encourage young high school graduates to pursue skilled trades – where there are several opportunities, training, growth, and employment.
Interestingly, some skilled trade workers earn above-average wages with prospects of starting their own businesses.
Bringing the younger, tech-savvy workforce into blue-collar, skilled trades is challenging. While hyper-specific, bridging this knowledge gap demands translating tribal knowledge once linking previous generations of field workers to formal classroom training programs.
But the question is, can we translate the skills needed to succeed in trade positions to a formal learning environment accurately and effectively?
The oil and gas industry is volatile due to its demand and supply sensitivity. You can have a soaring market today and a plummeting one tomorrow.
The underpinnings for today’s skilled trade gap in the energy industry started during the industry slump that commenced in 2014-2015. During that period, the oil and gas industry slashed its workforce, sacrificing nearly half a million jobs.
Just before that, a volatile global economic environment in the early-to-mid 2010s forced many to leave trade work behind. It also created a skilled workforce deficit and a gap of 444,000 workers in oil and gas; 330,000 workers in construction; 570,000 jobs in manufacturing; 20,000 tower climbers in telecom; and 5.5 million transition-related renewable energy jobs.
Over the years, successive boom and bust cycles have expanded and contracted the industry’s workforce. The pandemic was a crushing blow for some workers, leaving them to seek more stable jobs.
Job insecurity is a significant cause of the skilled trade gap in the energy industry, especially the oil and gas sector. Market fluctuations and evolving demands for clean energy and environmental sustainability led to a cycle of massive layoffs and rehiring surges, making people wary of rejoining the industry.
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Businesses must reinforce the importance of skilled tradespersons by committing to jobs and the up-skilling/re-skilling of their workforce. With the increase in infrastructure, energy projects and expansions, 5G rollouts, etc., there is no deficit of demand for a skilled labor force, and employment must reflect that.
Energy operators and business owners must provide practical hands-on and digital adoption training for new workers.
Industries that once relied on experienced workers and apprenticeships to train new employees must translate that knowledge into online learning platforms and classrooms that adequately capture the skills and information needed to succeed on a worksite.
The idea is to combine digital courses with interactive classroom training to help the new generation gain the necessary experience at their pace.
Perks and high compensation packages alone probably aren't enough to attract and retain workers in the industry, especially young ones. Work-life balance, tectonic shifts in sustainability, inclusion, and worker behavior have cracked our perception of what it takes to recruit, retain and engage outstanding talent.
The energy employers who evolve their hiring process by using talent marketplaces, such as Manup, have a better chance of bridging the labor gap, while those that don’t will likely continue to suffer from understaffing and slow growth.
For employers looking for skilled workers, Manup is a digital platform that connects highly skilled and pre-vetted workers to companies that require their service. Relax and let our robust algorithms connect you with those workers best matched to your unique requirements.