Centre for Employment Relations, Innovation and Change

Social dialogue: an essential element of effective recruitment and training strategies

in the oil industry?Dr Chris Forde, Dr Robert MacKenzie,

Professor Mark Stuart

Leeds University Business School,

United Kingdom.

Presentation prepared for MarcusEvans conference on Effective Recruitment and Training Policies for the Oil and Gas industry, Hesperia Tower Hotel,

Barcelona, 11th-12th June 2007

Centre for Employment Relations, Innovation and Change

Overview of presentation

•The evolution of employment relations in the UK oil sector

•Social dialogue and ‘partnership’ agreements in the sector

•Key challenges in the industry

•The role of social dialogue in meeting these challenges

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Background

•The research team were commissioned by the International Labour Office (ILO) to undertake a study examining ‘Good Industrial Relations in the UK Oil Sector’

•Published in (2005) as ILO Sectoral Working Paper 230

•Ongoing research in CERIC into: social dialogue; partnership; restructuring; recruitment; and training

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A Tale of Two Sectors? The evolution of employment relations in UK oil

Oil refinery sector•Historically high levels of unionisation

•‘Productivity bargaining’ agreements led to widespread derecognition of unions from the 1970s

•New wave of derecognition from the 1990s has reduced union presence further: union membership levels currently less than 20%

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A Tale of Two Sectors? The evolution of employment relations in UK oil

Offshore oil industry•Historically low levels of unionisation•Collective agreements between unions and employers rare•Some working agreements were finalised between unions and employers from the 1970s, to avoid disruptions to production

- e.g. collective bargaining rights secured during ‘hook ups’ phases of production

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Partnerships in the offshore oil sector

•‘Partnerships’ between unions and offshore oil employers have developed since 1999•This has led to the recognition of trade unions for collective bargaining purposes in some cases

Main examples:

-MSF (since then Amicus and now Unite) and Total Oil Marine (1999)

-UK Offshore Operators Association and the Inter Union Offshore Oil Committee (1999)

-Amalgamated Electrical Engineering Union (AEEU) (now Unite) and the UK Drilling Contractors Association (2000)

-AEEU , the GMB and the Offshore Contractors Association (2000 onwards)

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The principles of partnerships (Involvement and Participation Association, 2000)

A commitment from both employers and unions to:•The success of the enterprise•Building trust•Recognising the legitimate role of partners •Employment security and the need for flexibility•Sharing success through rewards•Informing and consulting staff•Representation of the interest of employees

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Why have partnerships developed in the oil sector? •To promote good industrial relations

•To promote consultation and joint decision making on recruitment and training strategies•To facilitate the development of joint safety initiatives •As a strategic move in the face of statutory union recognition legislation in the UK

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How do offshore oil partnerships measure up?

•Agreements typically stipulate consultation rather than negotiation over safety, recruitment practices and training•No commitment to job security in any of the partnerships•The AEEU partnership agreement with the OCA specifies ‘total non disruption’ of production•These partnerships have resulted in jointly agreed programmes for shop-steward and safety representative training and have led to the development of lifelong learning initiatives

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Social dialogue in the oil sector

•Alongside formal partnerships, social dialogue represents a key mechanism for addressing ongoing issues in the global oil industry •Social dialogue involves joint consultation (and sometimes negotiation) between employers, unions and government over key issues•Employers, unions and government may share common interests in addressing problems facing the industry•Social dialogue can help ensure that the interests of different groups can be represented•It also increases the likelihood that these measures will be perceived as legitimate

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Key challenges facing the offshore oil industry

•Recruitment difficulties

•Skills shortages and training provision

•Internationalisation of the industry and global restructuring

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Recruitment difficulties•Recognised difficulties in recruiting managerial, technical and engineering staff•35000 engineers needed each year in UK oil sector: currently attracting 50% of this•Recruitment difficulties are attributed to: global competition for staff; high use of contract labour; general labour shortages; difficulties in attracting new entrants; working conditions in the sector •An ageing workforce

(Aberdeen and Grampian Chamber of Commerce Survey, 2006)

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Skills shortages and training

•Skills shortages seen as the key business constraint affecting the UK Continental Shelf •Recognition by oil employers of the need to compete on basis of innovation and quality •Importance of providing ongoing training in production skills for staff •But widespread problems of ‘poaching’ of skilled labour •Difficulties of co-ordinating training in industries heavily reliant on contract labour

Aberdeen and Grampian Chamber of Commerce Report, 2007)

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Skills shortages and training

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The role of social dialogue in addressing recruitment difficulties and skills shortages

COGENT•Employer-led skills council for chemicals, oil and gas, petroleum and polymer sectors•Aims

-to improve productivity and business performance through skills development

-Reduce skills gaps and shortages

-Influence skills supply across the sectors•Two seats on the board are occupied by trade union representatives

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The role of social dialogue in addressing recruitment difficulties and skills shortages (2)

•Recent sector-wide training schemes coordinated by COGENT and involving unions have the potential to address key skills shortages and recruitment difficulties in the sector•E.g. the Upstream Oil and Gas Industry Technician scheme, coordinated by COGENT, with the support of employers and trade unions•Scheme will train young technicians through intensive on-site and college based training over three year period

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The role of social dialogue in addressing recruitment difficulties and skills shortages (3)• OPITO is the industry’s skills and training body• 3 seats on the OPITO board are occupied by trade union

representatives• OPITO has recently launched the ‘Accelerate’ initiative• This is a range of products and services providing

information and training for people wanting to find out more about working in the oil and gas industry and fast-track their route into jobs in the oil sector

• In 2007, OPITO announced major change to offshore safety and emergency training

• These represent co-ordinated responses to address long-term skills shortages and show the potential of social dialogue

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Internationalisation and the role of social dialogue

• Recruitment and training challenges faced of oil employers are increasingly global in nature

• Trade unions also mobilising on a global basis• Global framework agreements between multinational

companies and unions offer a means through which global issues/problems can be addressed

• These agreements set basic standards for recruitment, terms and conditions of employment, and health and safety at work

• They may also extend to training agreements

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Internationalisation and the role of social dialogue

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Concluding comments

•Some recent ‘partnerships’ between unions and employers in the UK offshore sector•But the full potential benefits of these partnerships are not currently being achieved•Increasing number of examples of effective social dialogue between unions, employers and governments in the sector•Effective social dialogue important in addressing some of the key recruitment and training challenges facing the sector

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Thank you very much

Questions? Comments?