The European Commission has today adopted a Communication outlining the employment challenges and opportunities of the current transition towards a green, low carbon, energy and resource-efficient economy (see IP/14/765).
Why is the 'green growth' model essential for the European economy and labour market?
The inefficient use of resources, the unsustainable pressure on the environment, and climate change, as well as social exclusion and inequalities pose challenges to long-term economic growth. The green growth model outlines a structural economic change which is mainly driven by scarcity of resources, technological change and innovation, new markets, and changes in industrial and consumer demand patterns. Prices of resources, raw materials and energy are already impacting the cost structure of companies, and global demand for those resources will continue to rise due to increasing consumption in emerging economies.
The Europe 2020 Strategy identifies the transition towards a green, low carbon, energy and resource-efficient economy as essential to achieve smart, sustainable and inclusive growth. The EU has implemented a number of policies and strategies aimed at supporting the shift towards a resource efficient and low carbon economy, while strengthening the EU's competitiveness. One of the most significant initiatives is the 2020 Climate and Energy Package which sets targets to be reached by 2020 for greenhouse gas emission reductions, renewable energy sources and improved energy efficiency. A gradual shift towards an energy and resource-efficient circular economy will increase competitiveness and boost economic growth, while creating more and better jobs in the EU. Saving, re-using and recycling materials will support the future competitiveness of successful companies (see IP/14/763 and MEMO/14/450 on the Commission Communication on the Circular Economy).
Industry already recognises the strong business case for improving resource productivity. It is estimated that resource efficiency improvements all along the value chains could reduce material input needs by 17%-24% by 2030 and a better use of resources could represent an overall savings potential of €630 billion per year for European industry.
Why a Green Employment Initiative?
The structural shift of our economic model towards green growth is inevitable and also predictable. It is both a challenge and an opportunity for the labour market which, in turn, is a key factor for enabling green growth. It should therefore be anticipated in order to reap the full benefits of this economic transformation for workers and employers1.
The transition will bring about fundamental transformations across the entire economy and across a wide range of sectors: additional employment will be created, some jobs will be replaced and others redefined. Understanding the labour market implications is therefore necessary to better anticipate and manage structural adjustments.
In this context, better targeting and coordination of labour market measures and tools – through an integrated framework - are essential to create the necessary conditions to support green employment.
In which sectors will jobs be created?
It is widely acknowledged that a successful transition towards a green and resource and energy efficient economy will reshape labour markets.
There is significant potential for creating new jobs in the production of energy from renewable sources, energy efficiency, waste and water management, air quality, restoring and preserving biodiversity, climate change adaptation and the development of green infrastructure. The following estimates can be made:
- improving waste prevention and management in the EU could create more than 400,000 new jobs, and the review of the waste legislation now proposed by the Commission could create an estimated further 180 000 jobs
- a 1% increase in the rate of growth of the water industry in Europe can create between 10,000 and 20,000 new jobs
- internal transformation and redefinition of jobs will affect sectors with a high share of emissions (energy power, transport, agriculture, building which are responsible for respectively 33%, 20%, 12% and 12% of EU greenhouse gas emissions)
- the construction sector could create 400,000 new jobs from making buildings more energy efficient to meet the requirements of the Energy Efficiency Directive (see also IP/14/764 and MEMO/14/451 on new proposals to reduce the environmental impact of new and renovated buildings).
- For energy intensive industries (e.g. chemicals, iron and steel), the picture is more complex, as they face both challenges and opportunities resulting from the need to mitigate emissions and the development of new sectors and goods. In order to address the competitiveness of the industries which are at risk of relocation due to the impact of climate policies, the Commission has put in place measures to prevent “carbon leakage”. In the chemical sector, a greener chemical industry is estimated to create more jobs than in the petroleum industry and the current chemical industry. In the steel industry, use of recycled material, such as scrap steel, results in major energy savings and therefore has a positive impact on the competitiveness of the sector.
- As for the wider economy, by increasing the efficiency of production processes, adopting innovative solutions to save resources, developing new business models, or offering more sustainable products and services, companies can expand their markets and create new jobs, while transforming existing ones. Resource productivity in the EU grew by 20% in the period 2000-2011. Maintaining this rate would lead to a further increase by 30% by 2030, and could boost GDP by nearly 1%, while creating more than 2 million jobs.
What integrated framework for employment policies in the transition towards a green economy?
The Green Employment Initiative calls for an integrated approach by setting out policy actions to be taken at European and national levels, including:
- bridging existing skills gaps by fostering skills developments and better forecasting skills needs across sectors and industries
- anticipating change and securing transitions by assessing and developing sectoral initiatives on anticipation and managing restructuring; by supporting peer reviews on adequate labour market policies in the framework of the European Semester; by working with the European Public Employment Services Network to support occupational mobility to meet specific labour market needs in the green economy
- boosting job creation by making efficient use of EU funding (see below); by shifting taxes away from labour towards pollution as stressed in the framework of the European Semester; promoting green public procurement; entrepreneurship and social entreprises.
- increasing data quality and monitoring of labour market developments by providing support to national statistical offices through financial and training support; building on the framework of employment and environment indicators developed by the EU Employment Committee to support monitoring of policies in the context of the Europe 2020 Strategy and the European Semester.
- promoting social dialogue at cross industry and sectoral levels as a pre-requisite to facilitate the greening of the economy. As recommended by the European Resource Efficiency Platform (EREP), the Commission will support workers’ involvement in matters related to environmental management, energy and resource use and emerging risks at the work place, enhance workers’ rights to information and consultation, and develop sector-wide resource efficiency roadmaps.
- strengthening international cooperation by engaging in the Green Growth Knowledge Platform launched in 2012 by the Global Green Growth Institute, OECD, UNEP and World Bank.
How does the Green Employment Initiative feed into the EU economic governance framework?
Employment and labour market policies are at the core of the European Semester for coordination of economic policy. European employment policy needs to play a more active role in supporting job creation and in matching labour and skills demands related to the transition to the green and resource efficient economy. To this end, the Communication identifies the following priorities:
- improving integration and coordination of existing European and national level policies and initiatives
- further developing governance structures and methodological tools to facilitate the transition towards a green and resource efficient economy, to better coordinate policies and to ensure consistent monitoring of reform measures; and establishing a closer working relationship and dialogue with employee and employer organisations on the employment challenges for greening the economy
- further strengthening the existing skills intelligence tools and networks to better anticipate and monitor developments in sectors and occupations linked to green growth and a resource efficient, circular economy
- ensuring that EU and Member States funding programmes and policies support job creation in the green economy
- monitoring progress related to green employment and assessing it in the context of the European Semester
- building on the recommendations of the European Resource Efficiency Platform (EREP) to develop a broad strategy for greening jobs, skills and education.
How is this Green Employment Initiative linked to the Communication on the Circular Economy and the Green Action Plan for SMEs?
The 2013 and 2014 Annual Growth Surveys stressed the job creation potential of the green economy and the need to develop strategic frameworks in which labour market and skills policies play an active role in supporting job creation. Nevertheless, integrated policy frameworks linking green growth and employment exist in only a small number of Member States (Greece, France, Austria, Portugal and Finland), with the majority having a disjointed and fragmented approach (see Draft Joint Employment Report 2013). Together with the Communication on the Circular economy (see IP/14/763 and MEMO/14/450) and the Green Action Plan for SMEs (see IP/14/766 and MEMO/14/452), the Green Employment Initiative will contribute to developing such an integrated approach. The adoption of the three Communications aims to coordinate targeted policy responses and tools to ensure that the employment and environmental agendas converge and contribute to reaching the Europe 2020 objectives.
What EU funding is available to implement these measures?
EU funding is available to help Member States with the employment opportunities and challenges of the transition to a greener economy.
- The European Social Fund (ESF) co-finances labour market activation measures, measures to smooth the transition into work and the upgrading of knowledge and skills.
- The European Regional Development Fund (ERDF) supports investments in energy and resource efficiency, renewable energy, waste and water management, green infrastructure, biodiversity conservation and protection, eco-innovation, education infrastructure and research, development and innovation in low-carbon technologies.
- The European Agricultural Fund for Rural Development (EAFRD) supports investments in agriculture, forestry, the environment, rural business and infrastructure including investments in renewable energy and energy efficiency, resource management (water, waste, land, etc.), and innovation.
- The programme for the 'Competitiveness of Enterprises and SMEs' (COSME) and 'Horizon 2020' aim to contribute to economic growth and employment by supporting projects dealing with innovation, including renewable energies, energy efficiency ecosystem restoration and re-naturing cities.
- The LIFE programme supports a number of targeted innovative environmental and climate-related projects with an impact on jobs and skills, including through the Natural Capital Financing Facility and the Private Finance for Energy Efficiency instruments.
The Commission also encourages and supports the setting-up and implementation of financial instruments co-financed by the European Structural and Investment Funds through the Financial Instruments – Technical Advisory Platform (FI-TAP) and other joint instruments with the EIB Group. These instruments can leverage additional private investment in the greening of the economy and can help realise the related jobs potential.
What are the next steps for the Communication?
The text will be submitted to the EU's Council of Ministers, the European Parliament, the European Economic and Social Committee and the Committee of the Regions for their endorsement. The Communication is due to be discussed at the first informal Jumbo meeting of Ministers for Employment and Environment in Milan on 17 July.
1 : OECD (2012), The jobs potential of a shift towards a low carbon economy; OECD (2012), OECD Employment Outlook 2012, see chapter 4 'What green growth means for workers and labour market policies: an initial assessment'; ILO (2011), Skills for green jobs, a global view.