They already earn the equivalent of nearly USD 100,000 a year for working far less hours than most land-based employees, but offshore workers on the Norwegian Continental Shelf were nonetheless threatening to strike from midnight Tuesday. At issue are their lucrative contracts and benefits for working on offshore installations, at a time when their industry is in crisis.
“For someone like me who comes from Sweden, I can see very well how good we have it,” admitted drilling rig worker Johan Hellkvist to newspaper Dagens Næringsliv (DN) on Monday. “In Sweden you can get as much as seven weeks of (paid) holiday, but we get eight months off a year. You can’t have it better.”
Hellkvist, age 31, was referring mostly to the shift schedules that he and his colleagues at Mærsk Drilling work under, along with most other “roughnecks” in the North Sea. After two weeks of 12-hour shifts on offshore installations, workers are flown home for four weeks off duty. Base pay varies from NOK 618,216 for drilling deck workers and service personnel (cleaning and catering) to NOK 679,000 for oil firm workers on the so-called “2/4 rotation,” according to labour union Industri Energi. In addition comes overtime, various forms of extra pay and bonuses that have prompted state statistics bureau SSB (Statistics Norway) to put offshore workers’ average annual pay at more than NOK 800,000 (USD 96,000 at current exchange rates with the currently weak krone).
That’s in return for a total of around 1,460 hours of work a year, compared to the 1,750 hours most land-based employees in Norway work every year excluding 21 days of paid holiday. For someone like Hellkvist, who told DN he has no formal education, it’s a “dream job.” He told DN he worked as a “ski bum” and inside a warehouse before he took a course in offshore work at his own expense and landed his job with Mærsk in 2012, when the oil industry was still booming.
Two years later, the bottom all but fell out of the market when oil prices took a dive, and roughly 40,000 people have lost their jobs in Norway’s oil industry since. Hellkvist realizes his job is also at stake, with oil companies cutting back sharply on oil exploration, for example, but he told DN he’s determined to hang on and defends his relatively high pay and benefits.
“We have to work really hard and perform at top level all the time,” he told DN. Even if they “only” work a 12-hour shift, personal lives are sacrificed when they’re on duty far from home in the North Sea, and there are high-risk factors tied to their work. He noted that Mærsk cut 70 offshore jobs in April and another 150 last year, so his own job security is under pressure, but he’s keen to retain the pay and benefits he has now.
Employers need to cut costs
DN reported that employers, faced with having to lay off thousands of workers since oil prices began to fall two years ago, want to reduce benefits like the “2/4 rotation” and freeze pay growth. They want to stop having to pay overtime after an offshore worker’s hours exceed 1,460 in a given year. They no longer want to pay eight hours of automatic overtime when a worker attends a work-related course during his or her “free period” onshore. They want to stop having to offer compensation for changes in shift schedules.
Neither the employers’ organizations Norsk Rederiforbundet nor Norsk olje og gass will comment on the demands in the conflict that went into mediation on Monday after negotiations with labour organizations broke down. The shipowners association (Rederforbundet), though, claims that thousands of jobs remain at risk in the industry, not least because of high labour costs agreed to when business was booming.
“The number of rigs laid up is now at 15 and will increase to 25 by the end of the year,” negotiations leader Pål Tangen told DN, noting how that will mean more layoffs and furloughs over the next several months. “Since the fall of 2014 we have lost nearly 40,000 jobs in the business and it’s estimated that another 15,000 will disappear before activity levels increase again.
‘Worked hard’ for good terms
Leif Sande, leader of the powerful labour organization Industri Energi, responds that he has little to offer the employers. He believes the offshore workers “står på” (deliver good and reliable work) that tops international standards. He also doesn’t think their pay levels are excessive. He’s glad workers like Hellkvist are satisfied with their pay and benefits. “I have worked hard to negotiate them,” he told DN.
Sande also claims there’s a direct link between offshore workers’ pay and benefits on Norwegian oil fields and results from the North Sea, in terms of safety and productivity. He believes the employers are under pressure from international colleagues who “don’t understand” Norwegian working conditions. He wants the same roughly 2.4 percent pay raise secured by other industrial groups this year for offshore workers.
Researchers who have studied pay and working conditions on the Norwegian Continental Shelf are critical. “The reality here is that (offshore workers) basically work part-time but get paid more than many others,” Torstein Ulserød of the conservative think tank Civita told DN. He claims oil industry workers have used their power to achieve terms and conditions that are excessive compared to other workers in Norway.
Hangover from a boom gone bust
That’s creating problems now, when oil prices are half what they were two years ago and several old oil fields are beginning to outlive their profitability. Ulserød noted how a state-appointed commission also sharply criticized the offshore workers’ 2/4 rotation, arguing that it results in a “considerably lower” number of work hours than those demanded of workers on land.
Now it’s up to a state mediator to try to get the organizations involved (Rederiforbund on the one side and labour organizations Industri Energi, SAFE and DSO on the other) to come to terms in mediation sessions Monday and Tuesday. At stake are the pay and benefits for around 7,000 workers on both permanent and portable offshore installations in the North Sea. In addition to the employers’ desire to cut the costs of existing work conditions, the labour organizations also have various demands.
If mediation fails, 280 workers were due to be called off the job from midnight Tuesday on installations including Statfjord B, FSU Heidrun, FSU Navion Saga, SAFE Scandinavia, Roway Viking and Rowan Gorill VI. Employers (rig- and vessel owners) affected in the first phase include Archer, Knutsen OAS, OSM Offshore, Prosafe, Rowan, Sodexo and Teekay Offshore.
UPDATE: Negotiations in overtime later averted a strike in the sector. Workers retained their benefits but settled for pay raises of around 0.5 percent.