Issue No. 34, March 2015
Colombia: Local Hiring Requirement for O&G Industry
Some reports analyzing conflicts in Colombia1 indicate that more than half of the social protests are related to the oil industry, and 42% of these protests are related to labor issues.2 One of the main reasons behind the protests is the communities’ perception of limited employment opportunities offered by the sector to those who are directly impacted by oil and gas activities. In order to respond to community unrest, the government passed Decree 2098 in October, 2014 on the hiring of local employees for companies in the oil industry:
The Ministry of Labor and the Ministry of Mines and Energy jointly enacted this Decree and will have responsibility for its enforcement throughout areas of O&G operations. The Ministry of Labor will also be responsible for determining which municipalities are considered to be within the ADI for local content purposes. The Special Administrative Unit of PES is responsible for consolidating the results of the employment advertisement and hiring, and will provide semi-annual reports to the Ministry of Labor to certify operators’ compliance.
Implications for Operators
With this requirement, the government hopes to mitigate social unrest by increasing shared value from O&G activities. According to the Ministry of Labor, the Decree will provide over 47,000 employment opportunities exclusively from O&G operations.4 While some local experts suggest that this Decree merely formalizes existing corporate practices focused on local hiring, the new regulations are likely to pose implementation challenges including:
- Coordination with government institutions - The Ministry of Mines and Energy, the Ministry of Environment, and the Ministry of Labor are all responsible for delineating areas of direct and indirect impact for project activities. While each of these defined areas serves different purposes, the concepts of ADI and Areas of Indirect Influence (AII) are often controversial and frequently create competing expectations among communities for various types of benefits (e.g., restitution, reparation, social investment, local employment, etc.).
- Misalignment between national and local authorities - By assuming responsibilities previously held by local organizations, the government sought to enhance transparency and centralize local O&G employment processes. In doing so, however, many communities (represented through community action boards - Juntas de Acción Comunal - JACs), have expressed opposition to their loss of control over local hiring processes and procedures. In addition, some labor unions (who previously contested JAC authority over certifications and CVs) are now aligning with the JACs in opposition to the centralization of the process (although both institutions generally support the spirit of the decree’s intent to enhance local employment). This situation has led to organized strikes, blockades and other demonstrations related to oil and gas activities (e.g., Acacías, Meta5).
- Implementation timeline - In response to the opposition, the Ministry of Labor has extended deadlines for complying with the requirements in some areas of the country. While this reprieve may alleviate some immediate community pressures, it has also led to confusion over implementation and may add momentum to organized opposition over the longer term.
- Ensure their own compliance with the Decree’s terms and procedures
- Mitigate any residual risk resulting from non-compliance by local authorities
- Manage heightened community expectations for employment stimulated by the implementation challenges associated with the Decree
Given these evolving circumstances, community unrest, and competing influence of key stakeholders, oil and gas companies considering or carrying out activities in Colombia will need to conduct due diligence to:
Developing a Local Content Strategy in Colombia
Host governments have long used local content as a means to drive economic development and operationalize the oft-cited concept of shared value. In the current commodity price downturn, companies are likely to encounter even greater community pressure (in Colombia and elsewhere) to deliver local content as a hedge against falling government revenue and deferral of investments in local economies. As a consequence, it will be important for companies to leverage best practices in local content design and strategy that have emerged within the oil, gas, and mining industries over the past several years. For more on local content in Colombia, as well as on these and other best practices, please visit www.acornintl.net and our Local Content Brochure.
Acorn International LLC delivers social and environmental risk management consulting services to the extractive industries and investors worldwide. We work with local partners in over 80 countries worldwide. Use of these local specialists is paramount, particularly in developing countries, where information is often scarce, second-hand, and unreliable. We look forward to engaging in continuous improvement for the industry and building capacity with our partners.
1 CINEP, Minería, Conflictos Sociales y Violación de Derechos Humanos en Colombia. Informe Especial, Octubre de 2012
2 Arbeláez Ulloa, Natalia. Entre crudo, contestación social y política: Contestación social alrededor del petróleo y gas en Colombia 2010-2012. Graduate Thesis. Universidad del Rosario, Bogotá - Colombia. 2013. Visit: http://repository.urosario.edu.co/bitstream/handle/10336/4842/1020725277-2013.pdf?sequence=1
4 Semana Magazine. “Vuelco en contratación de mano de obra petrolera”. October 24, 2014. Visit: http://www.semana.com/nacion/articulo/vuelco-en-contratacion-de-mano-de-obra-petrolera/406951-3
5 Ministry of Labor. “Se Levanta Paro Petrolero en Acacías, Meta”. February 2014. Visit: http://www.mintrabajo.gov.co/febrero-2014/3051-se-levanta-paro-petrolero-en-acacias-meta.html
Issue 33 -Mature and Frontier Mining Geographies: Where does Greater Risk (and Reward) Reside?
Issue 32 -Local Content in Mining: Increasing Expectations and Potential Solutions
Issue 31 -Fast Money Beware: Non-Technical Risk Due Diligence
Issue 30 -Social and Environmental Performance - Considerations for Difficult Commodity Price Environments
Issue 29 -A Window into the Opposing View - Stakeholder Concerns about Oil and Gas in Mexico
Issue 28 -Why Non-Technical Risks Matter to the Mexican Apertura
Issue 27 -Equator Principles:Drivers of Sustainability in the Oil and Gas Industry?
Issue 26 -The Transparency Tightrope: Examining UNEP’s New Access to Information Policy
Issue 25 -July 2014: Bouston
Issue 24 - July 2014: Land Tenure and Property Rights - Where Legal Compliance May Not Be Enough
Issue 23 - May 2014: 3 Things I Learned in Mexico - Non-technical Risks in the Oil Industry
Issue 22 - April 2014: Capacity Building on Stakeholder Engagement
Issue 21 - March 2014: Above-ground Facilities and Stakeholder Engagement: Deploying the 'CAC'
Issue 20 - March 2014: A Starting Point for Shared Equity
Issue 19 - March 2014: What It Takes to Run a Great Consulting Firm
Issue 18 - February 2014: Considering Human Rights - Trends and Lessons in Oil and Gas Impact Assessments
Issue 17 - June 2013: Managing Environmental Health in International Development Projects
Issue 16 - January 2013: Integrating Environmental and Social Performance throughout the Project Lifecycle
Issue 15 - January 2013: The State of Shale Play in 2013
Issue 14 - August 2012: Building Environmental and Social Governance in Host Countries
Issue 13 - May 2012: Human Rights and Business: A New Era
Issue 12 - February 2012: Extractive Industries Confront Pressure for Greater Transparency
Issue 11 - January 2012: Key Updates to the IFC Sustainability Policy and Performance Standards
Issue 10 - June 2011: Oil & Gas and NGOs: New Rules of Engagement?
Issue 9 - February 2010: Annual Study of Sustainable Development Priorities
Issue 8 - January 2009: Annual Study of Sustainable Development Priorities
Issue 7 - May 2008: Top Ten Lessons Learned About Health Impact Assessment
Issue 6 - January 2008: Annual Study of Sustainable Development Priorities
Issue 5 - September 2007: Results of web forum with our International Partners
Issue 4 - January 2007: Annual Study of Sustainable Development Priorities
Issue 3 - May 2006: Suggestions and tips for safe international travel
Issue 2 - January 2006: Annual Study of Sustainable Development Priorities
Issue 1 - November 2005: The Top 10 “unspoken" criteria for determining the success of EIAs