North Sea oil industry faces strike threat over pay cuts

Published on Wednesday 1 July 2009 21:59

FEARS of damaging industrial action sweeping across the North Sea were raised yesterday after oil giant BP moved to impose swingeing pay cuts of up to 20 per cent on contract staff working on the company's offshore platforms.

Furious union leaders accused the multinational of tearing up long-standing agreements on terms and conditions negotiations by planning to scrap guaranteed overtime payments, as well as night-shift allowances and other bonuses.

And they claimed that BP, after years of record-breaking profits, was using a drop in the oil price to mount a direct attack on workers' wages.

The cuts, due to come into force in October, will affect an estimated 800 contract workers on BP platforms.

Jake Molloy, the regional organiser of the OILC branch of the RMT union in Aberdeen, said the proposed changes would mean a cut in earnings of between 10 and 20 per cent for contract company personnel.

He said: "This marks the death knell of the Offshore Contractors Association (OCA), which has traditionally negotiated terms and conditions for their own staff. You have now got the oil companies themselves dictating terms and conditions for staff employed by contracting companies.

"The workers are absolutely furious and they are determined to fight. The question now is how."

Mr Molloy – who refused to rule out a "summer of discontent" in the North Sea – stressed that the timetable announced by BP allowed a breathing space for negotiations.

And the union, he added, was considering a legal challenge against BP for an alleged breach of contract as a first step in blocking the proposed cuts.

Wullie Wallace, the regional officer of the Unite union, said: "I haven't seen the workforce in these areas as angry as they are just now.

"The feedback I have had already is that people are not accepting these proposals and are not going to sit down and accept it lightly. The membership want these cuts withdrawn."

Mr Wallace added: "BP are looking to make significant savings in the North Sea and they are asking our members to bear the brunt of the cost savings.

"The oil companies have conveniently forgotten the record profits they made last year on the back of high oil prices, and now that the oil price has fallen, they want to attack our members' well-earned wages."

A spokeswoman for BP defended the company's decision. She said: "We will honour the OCA wage agreement to ensure sustainable wage levels. However, over the years we have paid discretionary payments, such as built-in overtime to the day rate and automatic night-shift payments.

"These changes will simply mean that we pay for overtime and night shifts on an 'as worked' basis, rather than incorporating it as an automatic payment. We will only pay overtime when it is actually worked."

Bill Murray, the chief executive of the OCA, also said the changes represented a move to a fairer system.

He said: "All that is being removed is the guaranteed payment, which we have argued, in some cases, is unnecessary. There is no erosion of terms under the agreement."

He added: "The oil and gas sector isn't immune to the current economic downturn, where 50 per cent of wage settlements involve a level of pay freezes or cuts. What we're seeing is companies trimming back on enhancements that were added when the market was overheated last summer."

STAFF SUPPORT

THE Offshore Contractors' Association, based in Aberdeen, is the leading representative body for oil service and contracting companies operating in the North Sea oil and gas industry.

The association represents more than 70 companies involved in a range of activities from mechanical, electrical and allied services to construction and maintenance contracts, design and project engineering, and fabrication and platform decommissioning.

The member companies have an annual turnover of more than 3 billion and employ a combined workforce of more than 20,000 employees on virtually every installation in the UK continental shelf.