Net zero transition can reduce megatrend shocks and deliver sustainable European jobsEuropean Corporate Leaders Group (CLG Europe)
On the eve of the release of the EU’s recovery strategy, CLG Europe calls on European leaders to deliver a green and just recovery that places jobs and skills at the heart of a longer-term plan to deliver climate neutrality by 2050.
Working towards a climate neutral Europe: Jobs and skills in a changing world has modelled the impact of major megatrends on the Europe’s labour market and examined them in the context of the continent’s transition to a low-carbon economy. The findings indicate that effective, tailored decarbonisation policies can help build a European labour market that is more resilient to the future economic impacts expected from the specific megatrends of technological change, globalisation, demographic change and resource scarcity.
Modelling indicates that in a best-case scenario combined with 1.5 degree compatible decarbonisation policies, employment projections are positive – leading to a scenario of around 1 per cent growth in employment, compared to a baseline.
Director of CLG Europe, Eliot Whittington, said:
“This report shows that in a changing world, a well-designed transition to a net zero economy can help the jobs market cope with the damaging effects from megatrends like technology development and globalisation that threaten to destroy jobs. This should inform governments on the design and implementation of their stimulus and recovery plans to address the economic impacts of Covid-19.”
European societies will be impacted by transformative megatrends that will occur regardless of policy intervention, and their potential impacts on the scale, competitiveness and stability of the European economy and labour markets over the next 30 years are likely to be substantial.
However, a proactive and well-designed policy framework that supports climate action can help to mitigate the most disruptive impacts of these megatrends and enable the harnessing of coordination between the megatrends and the transition to a climate neutral economy. To manage multiple transitions, policymakers have a critical role to play in supporting companies, workers and communities to respond to the changing nature and structure of the labour markets through redeployment, reskilling, redesigning of existing business models, and economic diversification.
Head of Global Public & Government Affairs, Signify, and Chair of CLG Europe, Harry Verhaar said:
“I believe this report is a great help in enabling us to respond to current job challenges as well as anticipate and act upon future work and skills challenges.
“While we are currently focused on supporting the health and well-being of our employees and have taken a number of job preservation measures, this report rightly looks at very comparable challenges related to the broader context of a climate neutral Europe. It is vital we collectively follow up on the report’s recommendations so we create the jobs that are needed for the future health of our citizens and economy in a timely manner.”
The report calls on policymakers to:
- Commit to the European Green Deal and a clear and managed transition to a climate neutral economy;
- Develop a comprehensive vision to scale up skills and adaptability;
- Define a shared European agenda for the future of work;
- Implement green and equitable Covid-19 recovery plans, while urgently addressing which skills will be needed for the future.
Case study highlights
The report features five case studies examining the impact of selected megatrends on sectors that will play a key role in achieving climate neutrality by 2050 and demonstrating the potential impact of national and regional policy on jobs and skills in relation to each sector.
- UK offshore wind: the sector is shown to have significant future employment potential (including as alternative employment for offshore oil and gas workers), with skills required across engineering, science and offshore specific skills.
- German automotive sector: the shift to electric vehicles implies significant changes in supply chains across Europe, including significant losses of jobs. However, this change can also lead to net employment gains in the electricity, infrastructure development, services and manufacturing sectors. Adapting to new technologies including electrification will be essential to maintain the overall competitiveness of the industry.
- Romanian power industry: the renewable sectors can provide a partial solution for highly skilled engineers and technicians from the coal workforce (and more employment opportunities than gas), but this would need to be bolstered by a focus on labour-intensive energy-efficiency interventions.
- Swedish decarbonised steel production: potential to generate a high demand for STEM graduates, and a shift towards digital skills and competences in new production methods. It takes place in the context of a shift towards the circular economy that will imply a shift of competences in resource efficiency, material reutilisation and recycling.
- Agriculture in Spain: to successfully exploit the solutions offered by technologies, farmers will need a multidisciplinary skillset, including the ability to control machinery as well as knowledge of informatics, robotics, meteorology, chemistry and biology. In an ageing and shifting workforce this will be challenging and require particular attention.
- AI and automation: modelling indicates that employment and economic impacts associated with technological change, primarily developments in AI and automation could lead to substantial job losses, reduced household income, and decreased consumption but at the same time improving productivity. These effects have the potential to polarise the labour force, driving inequality between workers.
- Globalisation: impacts are on a smaller scale than technological changes, but it is also likely to drive significant economic inequality and polarisation within domestic labour markets – supporting job creation and benefitting some workers, while disadvantaging others.
- Demographics: the complexity and challenge of coping with other trends is compounded as the European workforce shrinks and ages, making it less flexible and putting pressure on public resources. The impacts associated with globalisation and resource scarcity are relatively minor in comparison.
- Resource security and environmental sustainability: creating a source of volatility and change, both creating pressures that will undermine existing industries but also opportunities for new approaches.