A recent Economist special report titled “The Search for Talent: Why It’s Getting Harder to Find” argues that “the talent war has gone global — and so have talent shortages.” Severe labor market constraints are now endemic across almost all industry sectors and in few are these more pronounced than the oil and gas industry.

The attractiveness of the industry to graduates, although improving, continues to be very poor. Worldwide layoffs in the 1980s and a persistently negative industry image have seriously impacted the number of graduates entering the oil and gas market in North America and Western Europe over the past decades. The number of petroleum engineering graduates across the United States fell from 1,280 in 1982 to only 272 in 2004. This has increased slightly since 2004 but is still nowhere near the level of the early ’80s.

While the domestic supply of fresh talent in the United States, Canada and Europe has declined, an ever-growing proportion of graduates are emerging from countries such as China, India, Venezuela and Russia. These countries have never been traditional hunting grounds for US-based companies although, with only 70,000 engineering graduates annually in the US and 100,000 in Europe compared with 400,000 in India and a staggering 600,000 in China, western employers will have to challenge their conventional recruitment mindset to ensure the continued supply of talent.

Recruiting from the global labor market is unfortunately very difficult for US-based companies due to the current cap on H1-B visas. The growth of the energy industry in the United States has been largely dependent on a regular supply of qualified labor, including non-resident immigrant labor, which the H-1B Visa Program was created to address. The
H-1B visa quota has been met every year since 1997; the 65,000 annual cap on
H-1B visas for 2007 was reached within 60 days of the start of the filing period.

The H1-B visa is not, however, the only vehicle available. US employers can hire Canadian and Mexican citizens under NAFTA’s TN Work Visa and Australian citizens under the E3 visa category, which allows the hiring of 10,500 Australians per annum into the United States for a 2-year period (but which may be renewed indefinitely).

Like the United States, however, Canada and Australia are desperately in need of labor to support their booming hydrocarbon and natural resource industries; the province of Alberta alone will require an estimated 400,000 new workers by 2014, according to the Alberta Government. Almost all of these workers will come from outside Canada.

Access to foreign labor is much easier in Europe, with one of the main drivers for the establishment of the European Union being the creation of a fluid labor market across member countries.

So, as other countries are actively aiming to attract globally mobile, high-value professionals, the post-9/11 United States has all but cut them off. France has created a “scientist visa,” and China and India are successfully attracting graduate nationals back from the United States with a range of enticements. The already inadequate supply of graduate labor from US universities has been further limited by the post-9/11 visa restrictions facing foreign students, who are frequently ineligible for work and required to return to their home countries upon degree completion.

A recent survey of Indian executives living in the United States found that 68% of them were actively looking for opportunities to return home. This trend is cause for concern for the US economy, as more than half of the people currently employed with PhDs in the country are immigrants.

All of these factors are leading many US-based oil and gas companies to locate international project teams overseas and bolster the size of their non-US operations to ensure they can accommodate talent in the volumes required to manage their global businesses. Companies with purely domestic operations or no option for housing talent overseas must become ever more competitive and innovative in their recruitment strategies.

The prized “Generation X” demographic is the most structurally weak of all but continues to be the focus (often the exclusive focus) of most recruiters. While it remains a central part of any recruitment effort, employers who are willing to hire more experienced workers are having the greatest success. In an August 2, 2006, interview with National Public Radio, Lisa Belkin of The New York Times discussed the need, within the broader US economy, for companies to reform their hiring practices to include senior candidates. As people live longer, the age at which they choose to retire is naturally postponed.

In order to attract more mature workers, returning mothers, retirees and the Generation Xers, companies must be willing to adopt more flexible working practices. The 9/80 working schedule is becoming more prevalent in large companies and is a major attraction; work/life flexibility can be just as compelling a motivator as salary. Job sharing, home working and other adaptable work practices are all becoming necessary elements of the overall offering.
These issues and solutions are complex and subject to long-term discussion.

The market is not static, and companies should always be benchmarking themselves and aiming to improve their competitiveness. We all recognize that the industry will have to perform far better in attracting fresh talent in the future. The pioneering and innovative drive of our industry has overcome seemingly insurmountable technical challenges throughout history and continues to do so. Let’s hope we can begin to apply, with equal energy and success, the same innovation and commitment to recruitment and the ongoing development of the labor market.