Workforce recruitment is on the rise among oil and gas contractors in the UK Continental Shelf (UKCS) as business confidence reaches its highest level since 2013, according to an industry report released on Wednesday, November 28th.

The findings of the 29th Oil and Gas survey, conducted by Aberdeen & Grampian Chamber of Commerce in partnership with the Fraser of Allander Institute and KPMG, reveal that 21% of firms have increased their total UK-based workforce by more than 10% in the last 12 months, with 33% anticipating this trend will continue in 2019.

Looking further ahead, 34% percent of firms expect their headcount for contract staff to rise over the next three years. Almost two thirds (65%) of firms expect the level of core staff to increase and only 5% expect a fall over the same period.

Indeed the survey shows growing business confidence across the board with 63% of contractors more confident about their current UKCS activities compared to the previous survey, the highest level since 2013. The industry appears to be setting its sights on growth opportunities, with 58% of firms forecasting an increase in profits in 2018 and a net balance of 50% of firms anticipating an increase in the value of production-related activities.

The trend in the value of UKCS exploration-related work amongst contractors had been negative since 2014, dipping to its lowest point in 2016. Since then it has eased steadily though remained negative until Survey 28 in April this year where it rose to a net balance of 3%. This has now risen further to a net balance of 11%, with expectations the positive momentum will continue with a net balance of 28% forecasting a rise in value in the year ahead.

The results do show however that contractors are still not working at full capacity, with 44% at or above optimum levels. While this is the highest figure since 2014, there is still some way to go to get back to peak levels of utilisation – 79% in the spring of 2013.

The survey looked at work in the six months to October 2018, asking firms about their prospects in the year ahead as well as the next three to five years in order to assess trends in exploration and production, decommissioning and other related oil and gas extraction activities both in the UK and international markets. The autumn survey also asks firms what has happened and what they expect to happen to their UK-based workforce.

Companies report a sharp rise in the number of staff moving from contractors to other oil-related companies, up from 27% in 2017 to 47%; while retirement was reported as a reason for loss of staff by 36% of firms, up 32% from 2017, suggesting the demographics still have the potential to be a significant challenge in the years ahead.

Looking at skills requirements, 44% of respondents identified at least one discipline in short supply, with a significant number pinpointing a lack of engineers. Firms also reported a lack of suitable technical staff and those with IT experience, particularly programmers and software engineers; with a number further noting problems attracting sales and management staff.

Salaries in the sector are also recovering. The proportion of firms reporting that they have reduced pay rates fell once again; in the 2016 survey 43% of firms reported reducing salaries, falling to 15% in 2017 and now just 5% in 2018. The share of firms reporting that they had increased pay during this last survey period rose from 16% in 2017 to 38%.