Job satisfaction and quit intentions of offshore workers in the UK North Sea oil and gas industry
| Author | Verity Watson,Alexandros Zangelidis,Heather Dickey |
| DOI | http://doi.org/10.1111/j.1467-9485.2011.00561.x |
| Date | 01 November 2011 |
| Published date | 01 November 2011 |
JOB SATISFACTION AND QUIT
INTENTIONS OF OFFSHORE
WORKERS IN THE UK NORTH SEA
OIL AND GAS INDUSTRY
Heather Dickey*, Verity Watson** and Alexandros Zangelidis*
ABSTRACT
The North Sea oil and gas industry currently faces recruitment and retention dif-
ficulties because of a shortage of skilled workers. One means of retaining exist-
ing employees is to improve workers’ job satisfaction. In this paper, we
investigate the determinants of job satisfaction and intentions to quit within this
industry sector. We find that individuals in good financial situations, those whose
skills are closely related to their job and those who received training reported
higher levels of job satisfaction. Furthermore, we establish the importance of
job satisfaction, promotion prospects and training opportunities in determining
workers’ intentions to quit their job.
II
NTRODUCTION
The oil and gas industry makes a vital contribution to UK’s economy. In
2006, the industry provided 96% of UK’s oil needs and 92% of its gas needs.
The industry is United Kingdom’s largest industrial investor, and has spent
around £12.3 billion on exploration, development and production operations.
Furthermore, the oil and gas industry plays a considerable role in UK’s
labour market, employing around 450,000 individuals, of which 18,000 work
offshore on a regular basis. These labour market effects are particularly
important in one regional economy, the north-east of Scotland. Approxi-
mately 45% of all UK oil and gas sector jobs are based in Scotland, and 38%
of all offshore jobs are based in the Grampian area in the north-east of Scot-
land. Overall, the industry has a substantial regional economic impact upon
the Scottish economy.
One of the most pressing problems currently facing the UK North Sea
sector is the shortage of skilled personnel (Offshore Technology, 2007).
Companies involved in oil and gas production in United Kingdom continue
*Business School, University of Aberdeen
**Health Economics Research Unit, University of Aberdeen
Scottish Journal of Political Economy, Vol. 58,No. 5, November 2011
©2011 The Authors. Scottish Journal of Political Economy ©2011 Scottish Economic Society. Published by Blackwell
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607
to suffer from a significant skills shortage. This skills shortage has its origins
in the period of low oil prices during the 1980s and 1990s, which resulted in
a slump in North Sea exploration and less recruitment of new workers into
the offshore industry (Dow Jones Newswires, 2007). As a result, the industry
faces an ageing workforce and a lack of new recruits, which constrains the
industry’s ability to react to favourable economic conditions, such as
increased demand and rising oil and gas prices. The shortage of skilled
workers has had other consequences as well. First, labour demand exceeded
supply and average wages rose by 7.2% in 2007, contributing to cost infla-
tion, which, when combined with rapid inflation in the cost of raw materials
and equipment, has slowed new oil and gas exploration and production
activity in the North Sea (Dow Jones Newswires, 2007). Second, the lack of
new recruits into the industry has resulted in companies simultaneously
recruiting from the same (limited) pool of skilled workers (DTI Oil and Gas
Industry Development Directorate, 2001). As a result of the ageing work-
force and the lack of qualified new entrants into the labour market, the
shortage of skilled workers is likely to persist in future years (DTI Oil and
Gas Industry Development Directorate, 2003). This will constrain the indus-
try’s ability to grow, and how these issues are resolved in the short term will
impact substantially on how productive the offshore industry is in the future
(Offshore Technology, 2007).
The failure to attract sufficient numbers of skilled workers into the sector,
and the problems of retaining these new recruits, as well as existing offshore
workers, has implications for oil companies’ recruitment and retention poli-
cies. Competition from other industries for skilled workers and the less attrac-
tive aspects of offshore work (e.g. long working hours and time away from
home) contribute to the offshore industry no longer being attractive to youn-
ger individuals. The aim of this paper is to focus on the retention problem
faced by the offshore industry and to investigate the factors that determine
offshore workers’ intentions to quit. Job satisfaction is found to be a good
predictor of quit intentions and therefore a close examination of job satisfac-
tion may provide some useful instruments to human resource managers and
related policy makers.
To the authors’ knowledge, this is the first detailed analysis of quit inten-
tions and job satisfaction of offshore workers in the North Sea oil and gas
industry within the economic literature. This cross-sectional study uses a
unique dataset that was specifically designed to collect detailed information
on offshore workers’ personal and job characteristics that is not available
from existing published secondary data. Understanding what factors influence
workers’ intentions to quit their job will help companies to retain existing
employees by lowering the probability of workers leaving the company. While
this study focuses on employees within the North Sea oil and gas industry, its
findings add to the wider literature on quit intentions and job satisfaction,
and has policy implications that will help companies to retain high-quality
individuals within the UK North Sea offshore sector.
608 H. DICKEY, V. WATSON AND A. ZANGELIDIS
Scottish Journal of Political Economy
©2011 The Authors. Scottish Journal of Political Economy ©2011 Scottish Economic Society
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