Overall Oil, Gas Wages Flat, but Specialty Positions Still Command Top Pay
Overall compensation for global oil and gas industry workers have been flat since 2010, according to data gathered from over 75,000 oil and gas professionals from January 2010 to December 2012 to measure trends in oil and gas worker earnings worldwide. However, compensation levels seen in the industry remain strong, particularly for workers with specialized skills, as global exploration and production is forecast to rise in 2013 and global oil prices to remain strong.
The mean compensation level seen for industry workers in Africa, Australia/Oceania, Asia, Europe, Middle East, North America and South America was $98,023 in 2010. The average compensation level rose slightly in 2011 to $98,862, but slipped to $98,079 last year.
Out of the seven regions, workers in the Australia/Oceania region earned the largest average compensation levels over the past two years with $123,161. Meanwhile, compensation levels of Middle East and North America oil and gas workers average the lowest compensation levels of $94,309 and $94,722 respectively.
In terms of change in average compensation from 2011 to 2012, workers in Africa, Europe and the Middle East saw a significant increase, while oil and gas workers in Asia and North America saw a significant decrease in their average salaries.
Oil and gas workers in Australia/Oceania reported a 7 percent increase in mean compensation levels from 2010 to 2012. Mean pay rose from $114,902 in 2010 to $123,453 in 2011, but declined slightly to $123,161 in 2012.
Workers with more than 20 years of experience enjoyed the highest levels of compensation, reporting a 6 percent increase from $152,048 in 2010 to $155,013 in 2011 to $160,859 in 2012. However, workers with 11 to 15 years of experience saw an approximate 14 percent decline in mean compensation levels from 2011 to 2012, from $128,379 in 2011 to $111,082 in 2012, after reporting an increase from 2010 to 2011 from $113,448 to $128,379. Meanwhile, mean compensation levels for workers with high school level education grew by approximately 11 percent from 2010 to 2012 from $114,934 to $127,156.
North America oil and gas workers saw a significant decrease in average salary levels of over 4 percent from $99,175 in 2011 to $94,722 in 2012. From 2010 to 2012, the mean pay declined 2 percent, as the decline from 2011 to 2012 offset the gain made from 2010 to 2011, when the mean compensation level rose from $96,558 in 2010 to $99,175 in 2011.
In the downturn in average compensation levels, workers with all levels of education showed decreases except those with a master's degree. These workers reported average mean compensation levels of $110,667 in 2012, up from $109,805 in 2011. Workers with associates degrees reported the biggest change in mean compensation with an approximate 8 percent decline from $92,620 in 2011 to $85,500 in 2012. Workers with between 11 and 15 years of experience reported the greatest declines in mean compensation levels from 2010 to 2012, from $106,805 in 2010 to $105,060 in 2011 to $99,652 in 2012.
Mean compensation levels from 2010 to 2012 remained relatively flat for Africa-based oil and gas workers, while the average compensation level grew approximately 5 percent from 2011 to 2012. Mean pay declined from $105,453 in 2010 to $99,894 to 2011, but rebounded $105,107 in 2012.
The increase in average pay in 2012 was concentrated mainly among Africa-based workers with master's degrees; salaries for these workers grew over 8 percent from $107,393 in 2011 to $116,742 in 2012. In terms of experience, the gains in average 2012 salaries for Africa-based workers were concentrated among workers with six to 10 years of experience or more than 20 years of experience. Workers with six to 10 years of work experience saw their average salary level rise from $83,331 in 2011 to $88,890 in 2012. Workers with over 20 years of experience saw their average salary level grow from $131,264 in 2011 to $146,946 in 2012.
Average salary levels for Asia-based oil and gas workers declined by a little more than 3 percent from $101,703 in 2011 to $98,399 in 2012. From 2010 to 2012, mean compensation levels fell by over 2 percent, as the mean compensation level rose from $100,891 in 2010 to $101,703 in 2011.
Unlike other regions where workers with master's degrees typically hold jobs with higher salaries, Asia-based oil and gas workers who only have a high school education out earned workers with college degrees. High school-educated workers' average compensation levels for 2011 and 2012 were both over $10,000 higher than average compensation levels for workers with master's degrees. Overall, workers with between six to 10 years work experience experienced the largest decrease in pay, 6 percent, from $79,328 in 2011 to $74,748 in 2012. Middle-level mangers showed significantly decreased compensation levels in 2012 versus 2011, while staff workers saw their average compensation decline by more than 3 percent from $88,693 in 2011 to $85,647 in 2012. Upper management-level employees reported a 7 percent increase in average compensation levels, from $125,705 in 2011 to $134,352 in 2012.
Europe-based oil and gas workers at all levels of experience reported significant gains in compensation levels for 2012, with the average compensation level increasing almost 7 percent from $93,238 in 2011 to $99,683 in 2012. For the 2010-2012 time period, mean compensation levels for oil and gas workers working in Europe rose nearly 9 percent from $91,685 in 2010 to $99,683 in 2012.
Europe-based oil and gas workers with master's degrees enjoyed higher pay increases in 2012 versus workers with lower levels of education, except for those with bachelor's degrees. Workers with a master's degree reported an 8 percent increase in average compensation from $97,059 in 2011 to $105,148 in 2012.
Average salary levels and changes in these levels were significant for workers employed by companies with less than 20 employees and firms with more than 500 employees. Workers at companies with fewer than 20 employees saw their average compensation level rise from $88,250 in 2011 to $101,912 in 2012. Workers at companies with between 500 and 2,000 employees saw average salaries increase from $87,934 in 2011 to $98,459 in 2012. Employees at companies with over 2,000 employees reported mean compensation level increases from $99,030 in 2011 to $104,706 in 2012.
Average compensation for Middle East-based oil and gas workers rose nearly 4 percent from $90,905 in 2011 to $94,309 in 2012. For the 2010-2012 timeframe, mean compensation levels rose by approximately 3 percent, from $91,427 in 2010 to $90,905 in 2011 to $94,309 in 2012.
Overall, the Middle East oil and gas workforce saw a moderate increase in average compensation levels in 2012, but three groups saw significant increases in average compensation. Workers with technical certifications reported a change in mean compensation of over 9 percent from 2011 to 2012 to $86,608 to $94,593, while workers with bachelor's degrees saw a 5 percent increase from $82,029 in 2011 to $86,180 in 2012. Oil and gas workers with a master's degree saw their average compensation level grow from $98,102 in 2011 to $105,646 in 2012.
Workers with between two and five years of experience under their belt and more than 20 years of experience reported an increase in average compensation in 2012. Workers with two to five years' work experience reported a 12 percent increase in average compensation levels from $56,652 in 2011 to $63,615 in 2012. Workers with over 20 years saw their total average compensation levels rise from $126,758 in 2011 to $134,273 in 2012.
Average compensation levels remained stable for South America-based oil and gas workers last year, with a more than 1 percent increase from $103,019 to 2011 to $104,459 in 2012. For the 2010-2012 time period, mean compensation levels grew nearly 2 percent from $102,570 in 2010 to $104,459 in 2012. The proportion of workers who reported stable income grew from 2011 to 2012, while fewer workers reported a pay decrease in 2012.
Oil and gas workers with bachelor's degrees reported the biggest increase in average compensation levels. These workers reported a nearly 7 percent increase in mean compensation levels for 2012 from $94,154 in 2011 to $100,596 in 2012. Workers with 16 to 20 years of oil and gas experience reported the biggest gain compensation gain, with an increase from an average compensation level of $107,472 in 2011 to $124,248 last year.
Workers with Specialized Skills Still Command Higher Compensation
In the North American oil and gas market, onshore and offshore specialists who are either in high demand or few qualified candidates who may fit the bill for certain positions could see an 18 percent to 21 percent increase in total compensation, said Chris Melillo, managing partner and practice leader with Dallas-based executive search firm Kaye/Bassman International Corp.'s energy practice.
Companies are drastically increasing total compensation levels due to companies' very finite qualifications for offshore workers. While there may be several people who feel they could perform in the role, Melillo's clients want "10 out of 10" on the checklist of experience, which has resulted in companies directly recruiting candidates from each other. The number of candidates who are actually qualified for open positions and at least in employed-but-looking mode for a job change is two to seven.
The surge in compensation for specialty roles has been balanced out somewhat by the drastic slowdown for onshore geology positions and a surplus of candidates in that specific area, Melillo commented. This slowdown is occurring as some companies switch their focus from exploration to production. The retirement of older workers who earned higher salaries – leaving behind younger workers making less – may also be behind the flattening of compensation.
To help with overall retention efforts, companies may be employing bumps in compensation of slightly higher than 4 percent. The long-term incentives plans are really the main financial drivers for retention-focused compensation efforts. Melillo notes that candidates on average are seeing a 12 percent to 15 percent increase in salary/compensation to make a lateral move. If it is also a job grade/title jump for that candidate, that number can move to a 22 percent to 25 percent jump.
The perceived skills shortage within the Australia oil and gas market continues, said Marcus Ward, associate director of NES Global Talent Australia, in an interview with Rigzone.
"Despite labor becoming available from other markets experiencing a downturn such as mining, the oil and gas sector within Australia continues to demand talent," Ward commented.
The highest paying salaries within Australia are positions associated with subsea, subsurface and drilling. These roles are in demand as oil exploration companies go into deeper and deeper waters to extract oil and gas resources. Workers with previous experience working on liquefied natural gas projects also can command higher salaries, as these skills are considered niche and the number of people globally who possess these skills limited, Ward noted.
Salary increases for these positions have been seen over the last five years as operator's battle for the talent required to push their project ahead.
"Salaries will continue to rise across the sector unless employers begin to employ alternative methods to paying the highest possible salary to someone currently engaged on another project," Ward commented.
These alternative methods for retention strategies include performance bonuses, flexible working hours, death, disability and medical insurance and salary packaging, allowing individuals to purchase cars and other benefits.
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Senior Editor | Rigzone