Building Resilience in Refining and Petrochemicals: Tackling the Skilled Labor Challenge

Building Resilience in Refining and Petrochemicals: Tackling the Skilled Labor Challenge
September 26, 2025 5 mins

Building Resilience in Refining and Petrochemicals: Tackling the Skilled Labor Challenge

Building Resilience in Refining and Petrochemicals: Tackling the Skilled Labor Challenge

Contractor shortages are disrupting refinery operations — delaying projects, slowing recovery after incidents and straining maintenance schedules. An aging workforce, emigration programs and a lack of new talent are driving the gap — but there are steps businesses can take.

Key Takeaways
  1. A labor and skills shortage is disrupting project timelines across the energy and power sectors.
  2. For businesses relying on contractors — and the contractors themselves — the labor shortage demands a new approach to talent hire and retention.
  3. Smarter workforce management and skills-based hiring are vital, as are strategic use of technology and more equitable risk sharing on projects.

In recent years, the global refining industry has been grappling with supply chain issues as well as a shortage of skilled contractors impacting the efficiency, safety and profitability of refinery operations globally. 

Economic volatility is a key driver. During recent economic downturns, some refineries scaled back projects, and in certain cases maintenance activities, leading to layoffs. When  recovery begins, contractor availability often lags behind demand. 

At the same time, a significant portion of the industry’s workforce is nearing retirement. New entrants aren’t replacing this demographic fast enough and training and certification costs are discouraging potential recruits.

Refineries are also often located in remote or less desirable areas, making relocation a challenge for many workers. Competition from other sectors like construction, renewable energy, and manufacturing, adds further pressure, as they offer attractive wages and working conditions. 

Overall, contractor shortages are driving up costs and delaying critical activities — from project delivery and maintenance to post-incident recovery. These disruptions reduce operational efficiency, increase safety risks, and can ultimately impact profitability, reputation and investor confidence.

Insurance Implications of Worker Shortages

Beyond workforce planning, organizations also need to consider how labor shortages may affect their insurance programs and overall risk exposure. Limited contractor availability is potentially pushing up costs and, in some instances, reducing the quality of repair and installation works. 

Insurers are starting to scrutinize workforce capacity and subcontractor experience to assess project delivery risk. This increased attention is especially relevant in sectors facing rapid expansion. For example, electricity transmission projects are a key enabler of renewable electricity. In some cases, transmission system operators must deliver several times the volume of previous builds, placing a huge strain on supply chains and increasing demand for skilled labor to construct, and ultimately operate and maintain, the assets.

Quote icon

Labor shortages are creating real pressure across the refining sector, but there are practical steps organisations can take. By investing in workforce planning, improving talent pipelines, and aligning insurance programmes with labor realities, businesses can strengthen their operational resilience and reduce exposure to project delays.

Henric Gard
Oil & Gas Leader, Natural Resources

Solutions for a Shifting Labor Market

  • Taking a new approach to talent management and planning for worker shortages can help businesses in the energy and power industries build greater operational resilience.
  • Developing comprehensive talent strategies, including benchmarking, assessment, reskilling, and workforce planning, can support refineries in attracting and retaining skilled workers. 
  • Partnerships with educational institutions and government agencies can facilitate a pipeline of qualified workers. While expanding recruitment efforts to a global scale can help source contractors from a broader talent pool, but higher incentives for international workers to relocate are still needed to alleviate geographical disparities.
  • Improved working conditions, wages, housing, relocation assistance and other benefits for contractors have begun to make refinery work more attractive, and some organizations have successfully implemented retention strategies to keep experienced workers in the industry longer with flexible working arrangements, mentorship programs, and phased retirement plans.
  • While the talent market in energy, power and construction has never been more competitive, there are steps organizations can take to minimize the impact of contractor shortages in the long term. These include developing a talent strategy around retaining and attracting talent, which in turn will support a firm’s ability to deliver on projects and energy and green transitions goals. 
  • Exploring a range of Alternative Risk Transfer options or Captives may free up capital for recruitment, training, research & development or other longer-term investments.

Developing a Future-Proofed, Skills-Based Talent Management Process 

  • Benchmarking: Assess the current workforce to understand what skills are in the organization and where they sit.
  • Assessment/design: Understand the skills required now to complete projects and achieve goals. Then determine the skills needed to drive future business strategy. Use this information to create a skills taxonomy.
  • Workforce planning: Determine which skills to buy, build or borrow.
  • Reskilling: Reskill to fill pivotal, in-demand roles rather than hire skills on the open market. Deploy large-scale reskilling initiatives to build capacity across the workforce and deliver on business goals.

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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