Oil, Gas Salary Adjustments Amid Oil Price Decline
As many energy industry companies revise their capital expenditures downward for 2015 amid the steep drop in crude oil values, they are making a variety of decisions with regard to worker compensation, according to Aon Hewitt, a global human resource company that tracks corporate performance, reward and talent.
The slide in crude oil prices picked up speed late in 2014, about the time that financial decisions for 2015 were being made. As prices continued to dip, many companies within the industry revisited the budgeting process early in the new year in light of the current reality of sub-$50/barrel crude oil.
While the downturn in prices has touched all sectors of the oil and gas industry, the effects of the downturn are not being felt equally by all companies, and they are therefore responding in different ways regarding their budget decisions, Joshua Ross, associate partner with Aon Hewitt, told Rigzone.
The good news for workers in the industry, Ross said, is that 58 percent, or almost six out of ten of the companies surveyed plan to keep salary increases unchanged from their initial budgets, despite the slump in crude oil prices.
The industry had originally budgeted for pay increases averaging 3.7 percent, Ross said. However, following budget revisions at some companies following the drop in crude oil prices, the salary increases now average about 3 percent, which is still as much as those in most other industries.
Ross noted that while small companies had been less likely to lower the original budget increases, they were more likely to “shed head count.”
Regarding the companies that changed their original budgets, the data on budget revisions was driven in large part by oilfield equipment and services organizations, which are strongly feel the effects of rig shutdowns. And while most companies in the industry were still planning to increase salaries, the size of the increases was somewhat less than originally budgeted for.
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