Alberta oilfield companies switch to variable pay to help weather downturn

Oilfield service companies are turning to hourly and daily payfor workers in order to stay afloat during the downturn, instead of the usual fixed salaries.

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It means daily rates for workers, says CFOBharat Mahajan ofAveda Transportation and Energy Services, which has shrunk its Alberta workforce from130to about 75 during the downturn.

"You might be working as a day-rated employee one day. You might be working as an hourly-rated employee another day," Mahajansaid.

"We've got some employees that have five or six different pay rates now, depending on what they're doing."

Mahajansays reaction from employees is mixed.

"Some people are absolutely thrilled that, 'Hey, you know what, at least I've got a job.'... At the same time some people have been saying, 'You know, I'm not thrilled about having to take a lower rate of pay than what I've been used to.'"

Trying to keep qualified labour

Aveda isn't the only oilfield company adopting a variable pay model. Canyon Services and Trican Well Service are too.

"Their strategy is to keep a qualified labour force for when things do recover," said Jason Zhang, aresearch analyst with Cormark Securities.

Zhangsays contract drillers have always workedunder variable pay structures, but now fracking companies are adopting the modelas well.

It's not clear whether companies will stick with variable pay after the downturn.

Aveda says it anticipates goingback to its regular pay structure for the most part.