A downturn in energy investment is driving North Sea workers to seek jobs overseas and could impact on the economy for the next 25 years, according to new research.
New analysis from the Fraser of Allander Institute finds that the UK’s energy sector is at a “critical turning point”, with a deteriorating investment environment putting jobs, tax revenues and regional economies at risk.
Internationally mobile workers are increasingly moving overseas to work on projects in more favourable regimes, says the research.
It finds “that it could have implications for the economy for as long as the next 25 years”, adding that this “quiet” displacement of activity “risks being largely invisible to policymakers. Rather than a visible rise in unemployment, skilled energy workers are finding work abroad or exiting the industry altogether”.
The institute says this further risks a gradual downturn in UK-based economic activity, particularly in high-value supply chain roles, and a likely erosion of high-wage tax revenues.
The research finds that an “accelerated” rather than “managed” decline of oil & gas could see a loss of £13 billion from the economy in 2035 – equivalent to around 0.5% of projected UK GDP.
For Scotland, it is about £4 billion, or 1.8% of the Scottish economy – similar in scale to the entire spirits and wines industry. North East Scotland would lose about £1 billion, or roughly 5% of the regional economy.
The report’s author, Professor Mairi Spowage, said: “Right now, the UK is not doing enough to keep investment, supply chains and high-value jobs here at home.
“The industry is at a crossroads: decisions taken in the next couple of years will shape what the economy of 2030 – and even 2050 – looks like for Scotland, the North East and the UK as a whole.
“If governments want growth, they will need to focus not just on new industries, but on creating the conditions for a managed, orderly transition from our existing energy base.”
Professor Paul de Leeuw, head of the energy transition institute at Robert Gordon University, said: “If we get this right, and we get the activity in the UK with a UK workforce, we can end up with 40% more people working in the offshore energy industry than today and get to net zero much quicker.
“If we don’t make the right decisions now, we might end up with 20% fewer people in the industry. We need to make the right investment decisions and make the right choices to grab this opportunity.”
Hayley Strachan, global employer services leader in Scotland for Deloitte, said: “Workforce deployment is central to Scotland’s ability to grasp energy transition opportunities, yet it’s a very complex area. Projects often require rapid staffing, demanding employers respond swiftly.
“This can necessitate cross-border movement, which brings its own challenges. Agility and creative problem-solving are therefore essential to matching the best workforce to a project.”
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