Freelance oil workers forced to take pay cut

HUNDREDS of workers in the oil industry were forced to take a 10 per cent cut in their wages yesterday because of demands by the oil companies for offshore contractors to cut costs.

The cuts, for freelances who find work through agencies, hit workers on the design and maintenance side of the industry. But they are being seen by many as the start of a pay squeeze that could move into all areas on and offshore.

Self-employed workers form between 60 per cent and 70 per cent of the design side of the industry, which is responsible for maintenance and modifications of platforms. They range from chartered engineers, who can demand up to pounds 350 a day, to clerks, who command about pounds 8 an hour.

The Manufacturing, Science, Finance union, which has several thousand members in offshore oil, estimated that up to 75 per cent of the 30,000 employees in the industry would eventually be affected by the calls for cuts. But an Aberdeen-based agent said only 600 faced an immediate drop in pay.

Jimmy Inglis, Aberdeen regional officer for MSF, said talks had been taking place between the oil companies - primarily Shell Expro and BP Exploration - and contractors such as Brown and Root, Amec Engineering, John Brown Engineering, and others, aimed at cutting costs in a market where production has fallen from 117 million tonnes in 1987 to 83.1 million last year.

'At the moment, agency workers are the ones being affected, but inevitably, the contractors' own employees may be hit,' Mr Inglis said. 'The oil companies are pushing for 10 per cent cuts in return for the promise of longer contracts, from two years to five.'

The agent, who asked not to be named, said only 600 workers from design specialist companies were likely to be affected, but he added: 'The oil companies are looking for ways and means to cut costs. It could well be that other people are in line for wage cuts.'

Shell confirmed that it was holding discussions about 'the cost-effectiveness of services' provided by the contractors, but refused to discuss cuts. BP said it had told several dozen freelance chartered engineers last Friday that it intended to drop their rates from pounds 350 to pounds 325 a day, but it denied pressing contractors for 10 per cent cuts in costs.

However, one oil company said: 'We expect sacrifices in the bad times just as we are happy to see them prosper in the good times.

One affected freelance said: 'I was told by my agent that my rates would be reduced by 10 per cent from 2 August.' He said the cut came after two consecutive years when rates were frozen.