Energy sector faces battle for skilled workers

18 February 25 - Price Inflation Analytics - Oil and Gas Module

Currently, an estimated 23 million people are required for the development and operation of global energy
projects. This includes a demand of 13 million for traditional oil and gas jobs and 10 million in the low-carbon
sector. As investments in oil and gas and the green energy transition continue, the energy sector is likely to face
increased competition for skilled laborers and key professionals, such as engineers, from large-scale infrastructure
projects and the booming data center industry. Additionally, as labor demand from the energy sector expands
beyond traditional oil and gas, the job market will continue to become increasingly constrained. Factors such as
the declining number of skilled tradespeople and engineering graduates, aging populations, stricter immigration
policies and recruitment challenges due to competition from other industries could contribute to labor shortages in
the future.

Meeting the demand for engineers for energy projects is set to become more challenging due to overlapping
demand from oil and gas projects, the green energy transition, infrastructure projects and data center
developments. Examples include regions such as Virginia and Texas in the US, areas in India with high data center
expansion, and regions in Northern Europe focused on rapidly advancing the green energy transition.

In the US, the American Society for Engineering Education (ASEE) tracks the graduates of top engineering
disciplines annually. For key disciplines in the energy sector, such as mechanical, civil, electrical and petroleum
engineering, the growth rate has been declining at an annual compound rate of -5.6% since 2018. A similar trend
can be observed in Norway, where the number of engineering graduates at the postgraduate level has declined by
an annual average of 2.4% in the same period. In other Northern European countries, such as Germany, a similar
trend is also being observed among engineering graduates.

Other leading economies, such as China and India, are experiencing a different trend, with the supply of engineers
steadily increasing as more individuals gain the opportunity to pursue higher education. For instance, China has
seen a compound annual growth rate of around 6% between 2018 and 2023. However, even with a rapid increase
in engineering graduates, the market faces challenges associated with graduates’ skill sets. Variations in the
quality of education and a focus on theoretical knowledge have caused many graduates to face difficulties
securing work in a competitive job market, where employers prioritize those with hands-on experience and a more
practical skill set.

Sankaran
Sundaram National
Marine Dredging
1
Company (NMDC)
 The supply of skilled tradespeople has also been increasingly limited despite the growing demand coming from
increased investments. A societal push in a number of countries toward higher education over vocational training
has led to a decrease in apprenticeships and traineeships in key trades such as welding, pipefitting, electrical work
and other technical roles. A rapidly increasing average age in these fields in economies in Europe, the US and
Canada indicates that not enough young people are entering the workforce to replace retiring skilled tradespeople.
This trend is expected to continue in the coming years as the average percentage of the retired population steadily
increases as Generation X approaches retirement age. In the last decade years alone, US census data shows that
the population reaching retirement age grew five times faster than the general population.

Sankaran
Sundaram National
Marine Dredging
2
Company (NMDC)
 Energy projects typically require working in remote areas, while sectors like IT and manufacturing can offer roles in
urban areas. This could be a contributing factor to skilled workers pursuing careers outside of the energy sector.
The booming data center industry is set to cause additional stress to recruiting skilled tradespeople. As data
centers are typically built in regions with access to cheap energy, the job locations can often overlap with where
energy projects are expanding and can create localized labor shortages. Demand for electricians, technicians, and
health, safety and environment (HSE) specialists - who require significant training - is expected to be particularly
high due to their critical roles in oil and gas developments, the data center industry and the green energy
transition. Areas around the upcoming 15-gigawatt (GW) Stargate and 1.8 GW Quantum Loophole projects in the
US, as well as upcoming data center expansions from the likes of Microsoft, Amazon, Google and Meta, are likely to
face significant labor shortages. As tech giants have more substantial financial resources, they can offer more
competitive salaries and benefits, and are likely to create additional challenges for energy projects in recruiting
and retaining skilled workers and engineers.

Foreign labor has been a key resource for developed economies like the US and UK to meet labor demand for
skilled workers. US President Donald Trump has publicly shown his intent to tackle undocumented immigrants and
introduce stricter policies on foreign-worker visas. Construction workers, who are key to the development of
energy projects, are set to face significant immigration challenges. Pew Research Center has reported that as
many as 26% of construction workers in the US are foreign-born, with as many as 13% of those not authorized to
work in the country. In 2025, Rystad Energy estimates that around 51,000 people are employed in the US
construction and installation sector. This means that Trump’s immigration policies could significantly impact the
supply of construction labor, with as many as 6,000 workers at risk of deportation and 14,000 skilled workers at
risk if stricter immigration rules are introduced during his presidential term.

Sankaran
Sundaram National
Marine Dredging
3
Company (NMDC)
 Ultimately, significant new labor demand is expected to come from the green energy transition, in addition to
traditional oil and gas investments over the coming years. Significant labor supply challenges are likely to
materialize, with shortages of engineering labor and skilled workers expected due to aging populations,
preferences for university-level education over vocational training, competition from other growing industries and
political risks. As a result, employers can expect heightened competition to recruit skilled workers and engineers,
likely putting upward pressure on salaries and benefits as companies compete for talent.

Contacts

Selena Remmen, Selena Remmen is a senior analyst on the Supply Chain team, based in Oslo.
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Sankaran
Sundaram National
Marine Dredging
4
Company (NMDC)