Talk of a talent shortage when the oil industry is laying off workers en masse may sound counterintuitive. However, a few years from now, the industry will recover, if its past cyclical boom-and-bust nature is any guide.
And when that happens, the oil industry will have to hire again. But it may not find enough talent to fill in the gap.
U.S. Layoffs Reach 100,000 and Counting
Some of the more than 100,000 workers laid off in the U.S. oil and gas industry in the past few months alone are likely to consider changing their career path - permanently. Tesla, for example, has plans to hire as many as 65,000 workers by the end of this year, and people are scrambling for any open spot in the attractive company.
Others who have been let go in the oil industry have simply retired.
This means that a whole new kind of talent will need to be tapped.
Although it is unlikely that the same number of additional jobs will be needed again in the future, considering the increased automation in the industry, oil and gas companies will have to hire employees among the younger generations to fill the gap.
The young generations, however, are not particularly attracted to work in the fossil fuel industry because they see it as misaligned with their values of working for a social and environmental-conscious employer. Other employers and sectors - like Tesla, for example - don’t have the same problem.
Avoiding the Talent Gap
The current crisis and the tens of thousands of layoffs every month since March are setting the stage for a massive talent shortage in just a few short years - but oil companies are not sitting idling by. Despite cutting jobs en masse, Big Oil is not giving up on internships as it looks to avoid repeating the mistakes it made during the previous downturns when it had to pay retirees to train the new recruits once prices and markets recovered.
Supermajors such as Chevron and BP are keeping their internships and university graduate recruitment efforts even though they are slashing around 15 percent of their respective workforce, HR executives told The Wall Street Journal.
“We don’t want to repeat history,” Chevron’s Chief Human Resources Officer Rhonda Morris told the Journal.
Extraction, Oilfield Services Jobs Hardest Hit
The current crisis will go down as the steepest crash in oil demand and prices in history, which forced production curtailments in the U.S., and resulted in thousands of employees in the sector losing their jobs. The hardest-hit sector? Extraction and oilfield services.
An estimated 118,000 fossil fuel workers lost their jobs between March and July - a 15.5-percent drop in employment, according to research firm BW Research Partnership. Oil lost the most workers of the fossil fuels, shedding 69,400 jobs or 17 percent of pre-crisis employment, with most job losses in extraction activities, BW Research said. Texas leads the number of layoffs, followed by Louisiana and Oklahoma.
The situation in the oilfield services sector is even more dramatic. Employment in the oilfield services and equipment sector fell by more than 9,300 jobs in July, which brings total job losses due to pandemic-related demand destruction to 99,253, the Petroleum Equipment and Services Association (PESA) said in its monthly report in August. Year over year, oilfield services employment dropped by 15.1 percent - from 785,106 jobs in June 2019 to 664,936 in 2020.
When the industry enters the next boom cycle, it may not need all these jobs - some of them could be eliminated due to greater efficiency and automation. But while it might not need all those employees, it will need many.
The question is, will there be enough people interested in working in the industry from which it can choose?
Some who have lost their jobs are considering completely different career paths and are planning never to return to the boom-and-bust job insecurity in the oil and gas sector, even though it can be quite lucrative.
Others, like oil workers in Scotland, for example, are looking to be retrained to use their skillsets in the renewables sector, as actions to tackle climate change could impact careers in oil.
For new hires, oil and gas companies have the tough task of convincing young generations that work in the industry is not necessarily the image of a roughneck spending days on a rig, toiling at a wellhead while polluting the world with dirty oil.
The Conundrum that is Generation Z
While salary is often the biggest draw for working in the industry, many young people would choose other industries with similar pay because of their perception that oil and gas is an industry of the past.
Petroleum Engineering is by far the highest-earning Bachelor’s degree major with median earnings of $120,000, the University of Georgetown said in a 2018 report ‘The Economic Value of College Majors.’
Millennials and Generation Z rank salary as the top motivator in a job, according to a 2017 survey by EY.
But money isn’t everything.
The survey also found that 62 percent of Generation Z respondents consider a career in oil and gas unappealing, and 39 percent rank it as “very unappealing,” compared with just 4 percent of respondents who see it as “very appealing.”
Two out of three teens believe the oil and gas industry causes problems rather than solves them, the survey showed.
It will be very difficult for oil and gas to change these perceptions among Generation Z amid growing calls from investors and the general public for the industry to start tackling climate change and stop greenwashing the problem.
Still, there is one strong sales pitch that the oil and gas can use to reach out to younger generations - the digital transformation.
Increased automation and ubiquitous use of the latest technologies, including machine learning and AI, can be a major attraction for young talent to the industry with roles such as data scientists or software engineers for the digital natives who would rather work with the latest tech than settle for a role in a company of any sector using substandard technology.
By Tsvetana Paraskova for Oilprice.com
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