http://www.thestar.com.my/Business/Busines...unge/?style=bizKUALA LUMPUR: Notwithstanding the plunge in oil prices last year, nearly all global oil and gas (O&G) companies expect to pay about the same, if not larger, bonuses this year.
According to a global survey by professional services company Towers Watson, 90% of the O&G firms planned the same bonus payout as the previous year, if not more.
How about Malaysia? Well, all companies surveyed here will be paying out bonuses, with more than half planning to pay higher bonuses compared to the year before.
In Asia-Pacific, 66% of O&G firms are expecting to pay larger bonuses than last year - higher than in Latin America (60%), EMEA (Europe, Middle East and Africa) (50%), and North America (about 30%).How about base salary increments? Towers Watson said when it comes to base salary costs, about two-thirds of O&G companies globally are lowering their merit increment budget for 2015 – one of the top three cost-cutting measures alongside cuts in travel and entertainment spending and hiring freezes and reduction.
“While these are challenging times in the oil and gas industry, and cost-cutting efforts have been relentless, firms are cognisant of the need to still reward for performance achieved last year by way of bonuses and incentives,” said Towers Watson Malaysia talent & reward director Mary Chua.
“That said, more than seven out of 10 global oil and gas firms will continue to set similar, if not higher, financial targets for their senior management and executives for 2015 annual incentive plans, with less than 10% of firms reducing these financial targets by more than 30%.”
She said that although oil prices plunged by half in the last year, surveyed companies were cautiously optimistic that oil prices would recover, with more than half expecting it to recover fully by end of 2016.
This coupled with continued efforts to rationalise costs, companies are expecting comparable financial targets in 2015 from their senior management and executives in order to earn their bonuses and incentives,” she said.
The survey reveals that O&G employees across the Asia-Pacific region can expect the highest merit salary increases across all staff categories at 4% or more, compared to the global average which just falls short of 3%.
Also in Asia-Pacific, the highest merit salary increases are expected for directors and top executives at about 6%, followed by manual staff – i.e. those who perform operational, craft or manual tasks, primarily in exploration and production environments – who can expect a little more than 4%, and all other staff categories averaging about 4%.
O&G employees in Malaysia can expect similar increments for top executives and manual staff, though increments for all other staff categories will be slightly higher at about 4.5%. Overall, this is also much higher than their counterparts in Singapore who can expect only about 3.5% on average this year.
Towers Watson said over the next 24 months, the O&G industry would continue to witness significant workforce reductions.
“Total global oil & gas workforce is predicted to decrease by more than 50%. The majority of reductions are expected in North America (30%), with Asia-Pacific firms expecting the least reductions at about 17%.
“In the next 12 months, close to 30% of global firms will freeze or reduce expatriate deployment, and about one in five companies plan to repatriate expatriates earlier than anticipated to reduce the number of expatriates,” it said.
Jul 6 2015, 06:52 PM
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