Energy transition clashes with full-blown employment rights revolution
The UK's offshore energy industry has played a fundamental part in powering the nation for over five decades.
Robert Gordon University's Energy Transition Institute (ETI) estimates that 154,000 UK jobs are supported by the offshore energy sector, with 120,000 of those in the oil and gas industry.
As the country races to meet its net zero commitments, the offshore energy sector is in a position of unprecedented change and uncertainty. The ETI estimates that even a well-managed transition to renewable energy will see oil and gas workforce numbers decline to around 87,000 by 2030.
As jobs in oil and gas decrease, the National Grid estimates that, in turn, 400,000 roles will need to be filled to build the workforce required to sustain net zero targets – 260,000 of which will be newly created for the purposes of the transition.
The ETI also suggests that 90% of the existing offshore workforce has transferable skills applicable to clean energy roles. This gives cause for optimism. However, employers within the offshore energy sector face some challenges. The energy profits levy (the so called 'windfall tax'), which applies a 78% headline rate of tax to oil and gas companies, is causing many internationally mobile companies to divert their investment overseas.
A further challenge is ensuring that the clean energy jobs of the future are available at the same time as traditional roles decline. That can only be achieved through significant public and private sector investment, combined with a fast and efficient planning regime.
Terms and conditions will also be crucial: oil and gas jobs are traditionally very well paid.
Clean energy jobs will need to offer an attractive combination of pay, benefits and working arrangements, otherwise talent will be lost overseas.
To underpin all of this, an employment rights regime that is stable and incentivises employers to invest in training and skills development is essential. The crucial question is does the government's Employment Rights Bill (ERB) achieve this? The ERB proposes to significantly enhance rights and protections for employees.
Key features of the bill include: day one unfair dismissal rights; greater trade union access; the end of fire and rehire; and offers of guaranteed hours to zero hours workers.
From the point of view of the worker, these appear a cause for celebration. But there may be unintended consequences. The new rights may cause employers to take a more conservative approach to recruitment.
At a time when recruitment and training to fulfil the needs of the energy transition is critical, this may be less than helpful for those in the offshore industry.
With potentially increased union membership across the workforce, employers will need to recognise that if salaries are not consistent with those historically offered in the oil and gas industry, disagreements over pay packages may cause significant disruption.
These changes may simply make it harder for employers in the sector to adjust to the needs of the energy transition.
The government has identified the autumn of 2026 for the implementation of the majority of rights under the ERB. With this in mind, employers in the offshore industry may feel it is beneficial to accelerate investment and workforce planning decisions related to the energy transition.
Time will tell if the government's plans for energy transition and an employment rights revolution can sit in harmony with one another.
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