LONDON, 12 February 2015 - Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE:AON), has new research indicating that 2015 salary increase budgets in the UK oil and gas sector are being revised down as organisations react to falling energy prices and the resulting impact on their bottom line.  Aon Hewitt’s 2015 UK Salary Increase Survey (SIS) – Oil and Gas asked over 20 key organisations about their salary planning intentions for 2015 and found that almost half had already reduced their pay budgets for 2015.

Steve Munday, senior reward consultant at Aon Hewitt, said:
“Given recent headlines on the rapid decline in crude oil prices, it's no surprise that oil and gas companies have decided to take a second look at their 2015 salary budgets and concluded that it is not a case of 'business as usual’. It’s highly likely that hastily arranged conversations have been taking place between HR and senior leadership across many organisations. Our research also indicates that a key response when making 2015 pay decisions has been a more rigorous focus on high performing employees, identified as part of the performance management process.

“While business support roles in this sector can earn significant premiums over and above their peers in other sectors, organisations may focus attention on those in business critical roles, targeting them with a larger slice of the cake in a bid to maximise retention.”

Key findings
- 47.8% of the organisations surveyed had revised their pay budgets down, typically by 0.6% to just over 2.5%,
- a quarter of organisations are now planning to freeze pay altogether,
- 8.6% had made no changes to their planned salary increase budget for 2015,
- 39.1% of organisations had not yet made a decision.

Historically, the UK oil and gas sector has always taken the lead when compared to many other industries, both in terms of the rate of annual increases, and the general levels of pay. Further Aon Hewitt research indicates that in the years before the recession (pre-2008), pay increases in this sector were typically 2.5% above the UK average of 4.6%.  Even over the five years to 2013, pay increases still remained 1.7% above the UK average of 3.1%. In 2014 they appeared to be heading back towards pre-recession levels, before the sudden and dramatic fall in oil prices.

Steve Munday said:
“This is uncharted territory for the UK oil and gas sector, and it remains to be seen what the wider and longer term effects might be. Aberdeen, the number one city for this industry in the UK, has arguably seen full employment for a number of years – and with key skills always in short supply it has been an employee’s market. However, if the recent redundancies seen in this sector continue, the labour market could potentially cool, with the increased supply of skilled workers adding more downward pressure on annual salary increase budgets and levels of pay.

“With UK inflation at its lowest level for a number of years, organisations may find the courage to keep pay pots low in the knowledge that in ‘real terms’ pay increases may still be comparable with previous years."

Media Contact:
Colin Mayes                                           Marina Jane Sanchez
Aon Hewitt                                             CNC
01372 733689                                         020 3219 8811
colin.mayes@aonhewitt.com                   marina.jane-sanchez@cnc-communications.com
 

Notes to Editors
To receive a copy of 2015 UK Salary Increase Survey (SIS) - Oil and Gas, email steve.munday@aonhewitt.com

About Aon Hewitt
Aon Hewitt empowers organisations and individuals to secure a better future through innovative talent, retirement and health solutions. We advise, design and execute a wide range of solutions that enable clients to cultivate talent to drive organisational and personal performance and growth, navigate risk while providing new levels of financial security, and redefine health solutions for greater choice, affordability and wellness.  Aon Hewitt is the global leader in human resource solutions, with over 30,000 professionals in 90 countries serving more than 20,000 clients worldwide.  For more information on Aon Hewitt, please visit www.aonhewitt.com

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About Aon
Aon plc (NYSE:AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 66,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world’s best broker, best insurance intermediary, best reinsurance intermediary, best captives manager, and best employee benefits consulting firm by multiple industry sources. Visit aon.com for more information on Aon and aon.com/manchesterunited to learn about Aon’s global partnership with Manchester United.