Wood Group PSN to Reduce UK Contractor Pay by 9%

Wood Group PSN (WGPSN) announced Friday that it plans to reduce the pay of around a third of its UK contractor workforce by an average of nine percent, in response to continuing cost and efficiency challenges affecting the UK North Sea oil and gas sector.

The latest adjustment to contractors’ rates follows a 10-percent decrease in UK onshore contractors’ rates made in May 2014 and a further reduction, which could rise up to 10 percent, which was made in December 2014. More than 7,500 people work for WGPSN in the UK, including approximately 600 contractors.

James Crawford, managing director of WGPSN in the UK and Africa, commented in a company statement:

“This is not a decision we have taken lightly, but we believe it is the right one to proactively meet the continuing cost and resourcing challenges affecting the UK North Sea oil and gas sector. Our focus and commitment remains on contributing to the industry’s long-term sustainability.

“This adjustment to the rates we pay our UK contractors ensures we continue to be competitive within the marketplace. We highly value our contractors and this measure will allow us to sustain our relationship with these talented people, whilst taking appropriate measures to improve efficiency and reduce cost for our customers.”

Unite Union Regional Officer John Boland condemned Wood Group’s latest wave of pay cuts and told Rigzone that it could lead to more reductions across the industry:

“This is another blow for our members in the Wood Group who have already suffered cuts to their rates of up to 20 percent, in the worst case examples, over the last two years. Our big fear is that this latest cut will spark another domino effect across offshore contractor firms, intensifying the pace of a race to the bottom on jobs, pay, skills and working-time.
 
“The consequences for employment standards in the offshore sector could be dire where the future outlook is fewer employees working longer and harder for increasingly less. Time and again we have warned government about the seriousness of what is happening in our oil and gas sector but the responses so far have amounted to sticking a plaster on a gaping wound. How much longer must the offshore work force, which is eroding by the day, need to wait for a meaningful intervention?”

WGPSN’s decision to cut the salary of its workforce comes after Aker Solutions ASA’s announcement earlier this month that it would be temporarily lowering the pay of its Norwegian MMO (maintenance, modifications and operations) employees from March.

Aker’s senior management will see their pay lowered by 10 percent while the remainder of the staff will see reductions of five percent. These adjustments, which will be reviewed after 12 months according to a company statement, are deemed necessary to raise competitiveness and win more work for the company’s Norwegian MMO business. Aker previously announced that it will streamline its MMO segment to one regional unit, from four, in a move that could see the company shed 900 permanent positions.

A graduate in journalism from Cardiff University, Andreas has eight years of experience as a business journalist. Email Andreas at andreas.exarheas@rigzone.com

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