Understanding Why a Local Workforce Matters in the Energy Sector

Benefits of a local workforce

Before we go much further, it’s worth defining what we mean by a local workforce. In the past, some energy projects have hired a local contingent to satisfy local laws, but in primarily non-technical roles such as security, janitorial or food preparation. The reasons for this can vary from poor hiring policies to a shortage of qualified applicants.

Today, the value of employing skilled and technical workers locally is increasingly recognised. Alongside the macro level of boosting economies and sharing wealth more evenly, there are also tactical benefits.

• Long-term cost savings as the comprehensive development of a local workforce reduces reliance on foreign employees
• Keeping industry-relevant skills in-country rather than losing them at the end of a project
• Local knowledge is more prevalent with local workforces
• Reduced carbon footprint and transport costs
• Supporting the “just transition for all” initiative, which places people at the heart of the energy transition
• Enabling countries to take advantage of incentives for energy transition and support for climate resilience

In addition, local and community stakeholders may be more likely to listen to local leaders and managers. Being represented by people from their own community and tapping into local knowledge and cultures can enhance a workforce’s productivity and effectiveness. Equally, a sense of “ownership’ and seeing benefits of the project to the local community can increase the security of the site, operations, and workforce – particularly for onshore projects.

Local workforce requirements should be of particular interest to companies operating in regions and sectors looking to establish and maintain a social licence to operate, in cooperation with both regulators and local stakeholders. That could mean emerging economies seeking more control over local development or emerging technologies such as the renewables sector. Both have opportunities to set the tone with a fresh look at ESG and employment practices.

The push for a local workforce

There are a variety of reasons to substantiate a push for a local workforce in the energy sector.

• Governments, national companies, and regulators may impose legislation to hire more constituents
• The World Bank Group’s IFC performance standard 2 (labour and working conditions) requires open and fair treatment of workers without discrimination. Project financiers may hold developers and operators accountable to this standard even if it doesn’t directly apply in-country
• The forthcoming EU Corporate Sustainability Reporting Directive includes social and equality standards
• Workforce requirements could be written into contracts and finance agreements

Even where requirements have previously been relaxed, you will likely see them becoming more prescriptive, with short-, medium-, and long-term objectives that may tie into national goals. There will also be a need for tighter evidence and reporting requirements so that you’re ready to show proof of who you employ and in what positions.

Enhancing your local workforce

One key action is completing various forms of audit to understand, document and plan to extend the relevant technical skillsets available locally. This goes hand-in-hand with a second key action: providing competency-based training, to bridge gaps where a lack of qualified people prevents wider local hiring. Developing workers’ skills also grows the pool of future managers from within local teams.

The competency assessment framework

This assessment and documentation process is similar to a ‘gap analysis’. It might explore the skills needed for various types of role, and what relevant training is available locally (and to what standard). It may also cover organisational needs.

Read more about our competency analysis and development and the technical competency framework.

A local workforce development plan

This type of plan is focussed on the make-up of the workforce itself. It’s a robust assessment that takes into account relevant policies and procedures for hiring locals and provides statistics on how each vacancy has been filled. Assessors then explore how jobs that haven’t been filled by local workers could be localised over time, such as with external or on-the-job training.

In some cases, investors or lawmakers will require evidence of why hirers can’t supply a local workforce. This document can help you prove what hiring practices you’ve put in place. More importantly, a workforce development plan can support you in building a structure for a sustainable business. It goes further than simply putting ‘bodies on seats’ to boost the percentage of locals employed. Instead, it forms a competency register that also shows a pathway for the development of your workforce.