GENEVA (ILO News) - The size of the workforce in the world's oil and gas industries, buffeted by changing corporate structures and privatization, has slumped dramatically in the past 25 years, according to a report * from the International Labour Office (ILO) released here ahead of a five-day tripartite meeting of industry experts beginning February 25.
The decline in numbers spotlights the vital need for good industrial relations within the industry, the ILO says. Such issues as freedom of association and the right to organize and collective bargaining assume greater importance as they are an often-used argument for restricting the right to strike in the oil and gas industries when they are deemed essential services.
Continuing economic, commercial and political pressure on these industries lends urgency to the upcoming meeting, which will discuss key issues in promoting good industrial relations through social dialogue, the ILO says.
The report, prepared for the meeting, makes grim reading on the job front. In the United States alone, employment in the oil and gas industries slumped in eight years from a peak of 1.65 million workers in 1982 to roughly 640,000. In Canada, 2,250 jobs were lost in 1998 when oil drilling activity fell by 10 per cent.
The situation was equally bleak in other regions, according to the report. In the two years between 1998-2000, employment in the Norwegian oil industry declined by 20 per cent, mainly due to the cancellation or postponement of new development projects as a result of uncertainty over oil prices. The worst hit area was construction and maintenance of offshore platforms and vessels, where the number of jobs plunged from 43,500 to 27,750.
China, which is among the world's top ten oil producers, employs some three million oil and gas workers. One of the two companies that dominate the industry recently shed nearly 14,000 workers in a restructuring process.
The ILO points to a study by the United Kingdom Offshore Contractors' Association that shows a 50 per cent fall in sales to the oil and gas industries would mean almost one-third of supply companies would either go out of business, or have to cut their workforce by as much as 75 per cent. The report notes that, of 382,000 jobs in the U.K. offshore oil sector, 219,000 belong in the contractor sector.
One reason for the large number of layoffs has been due to companies outsourcing tasks and technology in a bid to rationalize operations. Even in 1999, when crude oil prices rose to a historical high, the largest U.S. oil companies eliminated nearly 40,000 jobs and not all could be attributed to mergers, the report says.
As distinct from oil and gas production, however, employment numbers in the refinery sector essentially have remained unchanged since 1990 despite continuous rationalization and workforce reduction in Europe and the United States, according to the ILO report.
This was largely due to the shift in refining predominance to the Asia-Pacific region in particular and to the Middle East. The number of oil refinery workers in Asia-Pacific countries increased from 590,000 in 1990 to 850,000 in 1997 but, in the same period in Western Europe, the number of workers fell from 110,000 to 90,000. The decline was even stronger in Eastern and Central Europe, with employment numbers dropping by 25 per cent between 1990-97.
General improvement in working conditions
The news is not all bad, however, according to Yasuhiko Kamakura, an ILO expert in the oil and gas sector. "These industries are strategic and have special working conditions," he says. "Typical earnings worldwide are reported to be higher on average than those for any other industry and working hours tend to be shorter and more flexible."
In the United States for example, the average weekly earnings of production workers in the petroleum refining sector was about $1,100 in 2000 - nearly twice the average pay of about $600 weekly for all production workers.
Earnings also have increased in the oil production/refining sector throughout the world. In China, monthly wages have doubled in the past seven years. Wages in the oil and gas industries in Turkey have increased by 800 per cent between 1996-2000.
Occupational safety and health also has generally improved. According to CONCAWE, the oil companies' European organization for the environment, the number of injuries per one million hours worked was 4.3 in 1999, slightly down on the average of the past four years. Figures from the American Petroleum Institute (API) show that the number of work-related injuries per 100 workers fell from 1.95 in 1997 to 1.34 in 1998.
Offshore drilling workers, however, are five times more likely to be injured than other offshore workers. According to the report, an average of 60 workers per year have lost their lives in offshore accidents over the past 20 years.
Restrictions on freedom of association in the oil and gas industries
The bad news, according to the ILO report, is that governments in several oil- and gas-producing countries have imposed restrictions on freedom of association. Most of the cases reported concerned limitations of the right to strike.
Following the comments of the ILO's Committee of Experts on the Application of Conventions and Recommendations, the Government of Norway amended its legislation and removed restrictions on the right to strike in the oil industry. The Committee had explicitly judged the petroleum sector not to constitute an essential service, like hospitals, electricity, water supply, telephones and air traffic control.
In Brazil, recommendations of the Committee in connection with a Brazilian oil workers' strike in 1995 have not been fully applied. As a temporary solution in 1998, Brazil's legislators granted an amnesty to oil unions facing massive fines exceeding US$60 million for calling the strike.
Basic issues affecting trade union rights in Nigeria remained unchanged, the report found. Between 1998 and 2001, the ILO Committee of Experts noted a number of complaints regarding violations of workers' basic rights presented against the Government. According to complainants, the Nigerian Trade Union Act did not allow workers to form and join the union of their own choosing but obliged them to join the union specified by law. The Act, by setting at 50 the number of workers required to form a trade union, was obviously intended to prevent workers from organizing their own unions, the report said.
* "The Promotion of Good Industrial Relations in Oil and Gas Production and Oil Refining", a report for discussion at the Tripartite Meeting on the Promotion of Good Industrial Relations in Oil and Gas Production and Oil Refining (25 February - 1 March 2002). Document TMOR/2002. International Labour Office, Geneva 2002. ISBN 92-2-112812-1. Price: 15 Swiss francs.