Global energy labour market thriving, report finds

Ben McKinley and Sarah Munro of Pinsent Masons were commenting after the International Energy Agency (IEA) published the World Energy Employment (WEE) report, which gives a detailed overview of global energy employment. The IEA works with governments and industry to shape the global transition to sustainable energy and, according to McKinley and Munro, its report will be of interest to energy sector employers globally.

According to the report, the global energy employment market outperformed broader labour market trends in 2023, with employment in global energy rising by 3.8%, compared to the economy-wide average of 2.2%. Whilst most jobs were added in the clean energy sector rather than the fossil fuel sector, there was some disparity across regions. In China, clean energy made up over 90% of energy job growth, while in the Middle East fossil fuels accounted for 80% of growth. Overall, global employment in oil and gas is still increasing.

Energy jobs per capita are highest in Australia and New Zealand compared to all other surveyed countries. Whilst coal mining is declining globally, exploration of lithium resulted in an increased workforce in the critical minerals industry in Australia, where a 6% increase in workforce year of year from 2022 to 2023 was identified.

Melbourne-based McKinley said: “Given the uniqueness of the Australian landscape, whilst there is a significant focus on creating clean energy sources, the mining industry remains strong and continues to attract workers. With the recent changes to Australian industrial relations laws, which were designed to increase union membership and collective bargaining to fuel wage growth, particularly in the mining sector, the mining industry will continue to be a significant source of employment for workers”.

Edinburgh-based Munro added: “Buoyancy in the global energy labour market is yet another reason why governments across the globe should be nurturing this sector. Political attention on this sector often focusses on national energy security and environmental objectives, but governments’ national labour market strategies have much to gain from encouraging this sector’s job producing momentum.”

In this regard, the UK government is leaning into growth in the clean energy market. One of its five priorities for government, set out in a ‘plan for change’ launched on 5 December, is clean energy. The UK government has pledged to deliver 95% clean power by 2030, stating that it plans to “ accelerate to net zero across the economy, seizing one of the economic opportunities of the 21st century – creating hundreds of thousands of good jobs and driving investment into all parts of the UK, while protecting the planet for our children”.

Job growth has also led to what the report described as intense competition for talent in clean energy sectors, which is prompting firms to “hire aggressively” in anticipation of future growth. The report also pointed to the increase in energy wage levels, which reflects increasing competition for skilled workers.

Munro said: “Elements of the energy labour market are highly global and mobile. What employers are able to pay may only be part of a worker’s decision-making. Laws around immigration, employment status and taxation influence a globally mobile employee’s choice of where and who to work for. Employers may be somewhat constrained by local regulations, but they can also look at strategies to maximise the benefits that can be extracted from flexibility in the local regulatory environment. This may include being prepared to consider alternative labour supply models.”

While wage premiums are sufficient to attract skilled workers from outside the energy sector, they may not always be competitive within the energy sector, the IEA report found. The average worker in the oil and gas sector, for example, earns around 15% more than a worker in clean energy sectors such as wind. Facilitating recruitment into clean energy is an industry and government focus in many countries.

Australia was also referenced in the report as facing skills shortages for installation and maintenance with welders, plumbers, mechanics and electricians the top of the list in terms of skills gaps and workforce numbers.

McKinley said: “Half of the skilled workers in Australia are expected to retire in the next decade. Coupled with a 75% decrease in mining engineering graduates in the last eight years, apprenticeship completion at its lowest for two decades, and post-secondary education being required for about 60% of new clean energy roles, there must be doubt about how Australian employers will plug the gaps. If it is by re-training or attracting workers from traditional energy sources, it will bring other challenges such as increased wage expectations, likely increase in union activity in the workplace, and potential cost and time associated with upskilling and re-training workers.”

Addressing skill shortages in the UK, Munro added: “The UK government is working with Offshore Energies UK to support the introduction of energy skills passports to boost the offshore wind labour market. The scheme will be launched in January 2025 to help workers and employers easily identify which qualifications and training standards, such as health and safety, are needed for specific roles in offshore wind. An interactive tool will also provide clarity on which qualifications are mutually recognised across the sector to avoid duplication of training courses, as well as mapping out potential career pathways. Future versions of the passport may include other parts of the energy sector.”

The IEA said the transition to clean energy for workers in the global energy sector should be a “just” one. Munro said: “This is relevant to employers’ environmental, social and governance (ESG) strategies. Most large employers now have an ESG strategy and they increasingly take workforce issues into account. This means looking at how employer behaviour can maximise positive impacts, and minimise negative impacts, on directly engaged workers and workers in the supply chain.”

ESG is also increasingly needed as part of regulatory compliance. Some large employers will start publicly reporting for the first time in 2025 under the EU Corporate Sustainability Reporting Directive, which contains reporting standards on workforce matters.  

A positive impact arising from the energy transition is greater gender equity in the sector. The IEA’s report pointed to the energy transition giving new opportunities to improve the gender balance of the energy workforce, with some clean energy sectors already having higher shares of women than fossil fuel sectors. Pinsent Masons analysis published in October highlighted how there have been improvements in the UK energy sector gender pay gap.

McKinley said: “With offices across the globe, we are already working with multiple energy sector employers on industry themes highlighted in this report. Its detailed analysis may be of interest to employers wanting to add a global context to regional energy sector challenges and opportunities.”