Aramco faces losing skilled workers after salary review

27 June 2008
Contractors say key staff are being tempted away by rivals offering better deals.

Contractors have warned that Saudi Aramco is facing the defection of some of its most skilled workers to rivals elsewhere in the Gulf after making changes to its salary structures at one of its key project delivery divisions in 2007.

Aramco terminated contracts for its supplemental manpower (SMP) division in 2007, instead offering new employee benefits including a revised base salary and a fresh set of allowances for accommodation, food and transport, largely based on the nationality of its workers.

The workers in question are paid by Aramco, but work on projects being handled by contractors on behalf of the oil major.

But some contractors have expressed concern about the changes to salaries and benefits packages, with several claiming they have lost staff since the new contracts have been rolled out throughout the kingdom.

One senior manager who contracts out employees to the SMP division says basic salaries for skilled workers have fallen under the new contract.

“I just lost an excellent worker to a project in Qatar because he was given almost three times what he was making at Aramco and the overall contract was better,” he says.

He adds that the base salary, overtime rate and severance bonus package have been cut under the new contract, although the allowances have been improved from the previous deal.

The SMP division was created in the 1970s to enable Aramco to move ahead with some of its largest projects on schedule and within budget, without having to employ new workers on a permanent basis.

While the size of the SMP workforce has fluctuated in the decades since then, the current emphasis on increasing production capacity in the kingdom from 11.3 million barrels-a-day (b/d) to 12.5 million b/d has again raised the profile of the division.

One senior manager at a Dammam-based oil and gas contractor says the difference in the basic salary and changes in housing allowances for some workers are a concern. “Aramco is trying to pay people as to their experience now but some of my people are coming out worse off,” he says. “We have had a handful leave for other national oil companies.”

Sadad al-Husseini, a former head of exploration at Aramco who worked on the original prospecting of some of Saudi Arabia’s largest fields in the 1970s, says the state-run firm has to be careful if it is to retain its most talented staff.

“There is definitely a bidding war for hard-to-find specialisations and cost inflation in the Middle East has been dramatic,” he adds. “It would not be at all surprising if contractors found they could get better deals elsewhere.”

He says the division is particularly important considering the current capacity upgrades.

“I have heard people are leaving but that is also a problem that the whole industry currently faces.”

Aramco says it will not discuss the details of changes in employees’ contracts.

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