A new system that could see employees loaned out to rival companies could slow down the rate of job losses in the region, Sam Wright reports
With jobs continuing to be shed across the North Sea, the UK is looking at innovative ways to retain expertise and reduce redundancies. One interesting new approach is a loan system that is modelled on that used by professional football clubs.
Last month, Royal Dutch Shell said it intended to cut 90 jobs at its base in Aberdeen. Since the collapse in oil prices, announcements such as this have become commonplace. Overall, it is estimated that 120,000 jobs have been lost across the supply chain.
With a significant number of workers also approaching retirement age, fears that UK North Sea sector faces a brain drain are growing. Despite the region’s impressive resilience, which has seen many firms stay afloat by trimming costs and increasing efficiency, Deidre Michie, head of industry body Oil & Gas UK, told the organisation’s annual conference on June 6 that the overall market would remain challenging for the foreseeable future.
“In trying to come to terms with the fundamental collapse in activity and job losses we have had to move from hoping that the oil price would help us out of it to knowing that it needs to be our own actions that will play a key part in getting us through this lower for longer reality,” she said.
Part of this approach has seen the establishment of Scottish government’s GBP12 million (US$15.5 million) Transition Training Fund, which so far has worked with more than 2,000 oil and gas workers facing redundancy. But the scale of the challenge has also prompted new ways of addressing the issue. One such innovation could be the football-style loan system currently being explored by the Energy Jobs Taskforce (EJT) and Skills Development Scotland (SDS).
Setting goals Speaking to NewsBase Intelligence (NBI), SDS’ Heather Milne said that the Loan Scheme was officially launched at an event on the May 20 last year, “and continues to be promoted through the work and membership of the Energy Jobs Taskforce”.
Under the plan, employers are able to nominate members of staff that are risk of redundancy, similar to how football clubs list players as being available for loan. Wages would then be paid by the hiring company, saving the employer a significant outlay in redundancy fees and associated employment charges.
So far though, the project remains very much in its initial stages. However, hopes are high that it can have a significant on an industry that is undergoing rapid change.
“So many jobs are being lost, and there is a lot of experience that is at risk of disappearing altogether,” Milne said. “Through the loan system, there is the option of keeping expertise in the industry and reducing redundancies.” To date, attempts at addressing this problem have struggled. Shortly after the loan programme was announced, the UK government unveiled its Oil and Gas Workforce Plan, a scheme focused on retraining and creating new opportunities in the engineering sector. But concerns over reduced pay and conditions has provoked fierce criticism from some quarters, in particular the Unite union.
Similarly, schemes to encourage oil and gas workers to retrain as teachers in a bid to help fill the gap in STEM (science, technology, engineering and mathematics) subjects have also yet to have been embraced fully.
Kicking on With this in mind, it is clear that new and innovative approaches are needed. “We’ve identified a number of potential areas,” Milne continued. “The first is supply chain engagement, where an employee is seconded into a valued supplier for a period of time. The next is a broadening assignment, where the individual would be seconded into a substantive role in an external organisation where the two organisations may or may not have any connection with each other.
“There is also a Third Sector and charity assignment. Finally, the employee could be taken on as a consultant, with the aim of tackling a specific, short-term task or project.”
In terms of administrative challenges too, the handling of issues such as insurance and health and safety look to be relatively straightforward.
Milne continued: “The premise of the scheme is that although the nature of the secondment will vary between, in all cases ‘employment’ remains with the sending organisation with the secondee being bound by the codes of conduct (or similar) of both their sending and receiving organisations.”
Clearly, given the enormous scale of job losses in the North Sea region, this scheme is far from being a complete solution. And to date, no loan placements have been carried out, although there has been significant interest from businesses that are eager to receive experienced workers.
Yet, in a market that is cyclical as the North Sea oil and gas sector, it is clear that this approach has some potential. The scheme has received the backing of unions such as Unite, the National Union of Rail, Maritime and Transport Workers (RMT) and the Scottish Trades Union Congress, and anecdotally, it has been greeted warmly by many workers.
Collaboration and the sharing of expertise was one area singled out by the Wood Review in 2014 as being key to helping maximise recovery from the UK Continental Shelf (UKCS). Anything that encourages this can only be a positive step.