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Article | Beyond Data

Energy and Natural Resources Compensation Trends – United Kingdom

Explore pay trends from 2019 and their implications for 2020

Compensation Strategy & Design
Beyond Data

By David Martinho and Marco Poggetti | May 6, 2020

David Martinho and Marco Poggetti look at the data from our 2019 UK Energy and Natural Resources Compensation Survey, and what you could consider in 2020.

We observed three noteworthy themes from our 2019 UK Energy and Natural Resources Compensation Survey, which you could consider in 2020.

Normalisation of oil demand impacted by COVID-19

The end of 2019 saw a consensus among the industry’s leaders and analysts that demand for oil would bounce back in 2020, however, that has since been negatively impacted by the COVID-19 crisis. Oil prices and stocks now have a long way to go to normalize, which is even further challenged by the oversupply seen in recent years. Long term global demand for oil is however expected to grow, albeit moderately, for at least the next ten years.

50%
expected make up of renewable energy generation by 2035

This potential medium and long-term reinvigoration in the industry renews interest and investment on exploration, extraction and development of oil fields. This in turn has influenced higher demand for talent in job functions related to Oil subsectors where the market value has increased, such as Geosciences (+14%), Fossil Power Generation (+12%) and Exploitation/Operation/Production (+24%). As traditional oil producers ramp up their production, industry players are expected to hire more engineers and technicians. Oil companies are also doubling down on digitising their infrastructure to increase operational efficiency and reduce hazardous situations, which also opens opportunities for onboarding digital talent into the industry.

Industry projections expect demand for oil to peak in the 2030s and taper off in less than a decade, as the climate protection agenda picks up steam within the same timeframe.

Transition to renewables

Renewable Energy production grows thanks to the concerted effort globally to reduce carbon emissions and fossil fuel usage. The Paris Agreement and parallel national policies are helping to influence governments, businesses and consumers towards prioritising renewable sources. By 2035, renewables are expected to make up 50% of energy generation. 

Today, energy production using renewable sources is quickly becoming a lower-cost option. Among the emerging cost-competitive sources, batteries are also declining, which may make it possible within ten years for electric vehicles to be more economical and reliable than petrol/diesel vehicles. Even now, there are major auto brands heavily investing in electric car innovations and production in order to meet the increasing consumer demand for sustainable transport options.

Along with the rise of renewable energy, the sector will become an expanding landscape for skilled workers such as engineers, scientists, technicians, line workers (manufacturing) and various types of digital talent. On average, when considering pay, the renewables sector is 7% above the broader industry practice. Also, we are seeing an increase in demand for specialist roles incurring on a higher salary due a scarcer talent pool.

Pay trends going up for energy sector

According to our research, which was conducted prior to the COVID-19 crisis, the prediction was for the Energy sector in the United Kingdom to expect at least 3% increase in gross salary for 2020 against an inflation rate of 1.4%, placing the real-wage increase at 1.6%. Findings from our 2019 UK Energy and Natural Resources Compensation Survey also show a year-on-year salary movement increase of 2.7% for incumbents without promotions and 20.1% for incumbents with promotions. Higher overall and without promotion pay increases are seen at senior levels, while higher promotion pay increases are seen at junior levels. Given the negative impact of COVID-19 on the Energy Sector, it will be interesting to see how the industry recovers from such a big hit.

Over the next decade, energy systems in the UK may rapidly turn green as its government stays the course towards its climate change goals

Over the next decade, energy systems in the UK may rapidly turn green as its government stays the course towards its climate change goals. As industry leaders forge their path into the future, it will benefit them to take a page from organisations that are on the frontlines of innovation. Investments need to be made not only on energy production infrastructure, but also on the limited human resources that will help build that path.

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Global Energy and Natural Resources Industry Lead,
Data Services

GB Energy and Natural Resources Industry Lead,
Data Services

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