Shaping a greener future through skills intelligence
The need to act on climate change is pressing. A reduction in greenhouse gas emissions globally is required to achieve carbon neutrality and prevent the steady rise in global average temperatures. Public policies aiming to foster the transition to a cleaner economy and reduce the adverse human impact on the climate and ecosystems are critical in driving the green transition and the pathway to a net-zero economy. At the same time, as individual consumer demands change and businesses take action to lower their emissions, the green transition will have profound economic and social implications. Job losses are likely to occur in high-emission and polluting sectors, while new jobs will be created in cleaner industries. The green transition will also bring about potentially large changes in the demand for skills.
To better disentangle the diverse consequences of climate change and mitigation efforts on the labour market, the OECD recently put forward a conceptual framework for analysing the drivers and outcomes of the green transition, as well as the most important policy levers that can maximise opportunities and mitigate negative impact on jobs and income from the green transition (Keese and Marcolin, 2023). In this framework, the drivers of the green transition include climate change and all policies that are put in place to mitigate the impact of climate change, but also preferences of households and firms over the production and consumption ahead of price effects that are determined by climate change or mitigation policies (Figure 1). These phenomena drive changes in the patterns of production and consumption, as mediated by factors such as the inter-sectoral linkages or market frictions.
Source: Keese & Marcolin (2023)
Figure 1 also traces out the outcomes of these changes in supply and demand for goods and services on jobs, incomes and health. Both climate change and mitigation policies engender flows of workers across sectors, occupations or regions, spur the creation of new jobs, and change the nature of a number of jobs. Some groups of individuals are affected more than others, with potentially sizeable impacts on household budgets and inequality. As labour reallocates, so does capital, and resources are flowing to firms that are best positioned to embrace the transition, whether incumbents or new entrants. The last section of Figure 1 flags the areas of employment, social and health policy action that can underpin and accelerate the transition to a greener economy. These policies aim to support the transition while ensuring that it is fair and inclusive. Policies that reinforce existing inequalities, or create new ones, can hamper the transition by eroding public support for mitigation measures and the shift to a more environment-friendly lifestyle.
This conceptual framework recognises skills gaps and shortages as bottlenecks in green sectors, constraining innovation and technology adoption. In this context, governments can take action to promote the development of skills for which the demand is rising due to the green transition, to prepare adult learning and training systems, and to facilitate job transitions.
The OECD (2023b) assesses the effects of the EU’s Fit for 55 policy package on employment with a view to drawing insights on skills needed to foster a green transition and on how to adapt education and training policies accordingly. Thanks to technological adoption and diffusion, OECD projections indicate that climate change mitigation policies can be achieved while still promoting sectoral and employment growth. Successfully achieving decarbonisation, as well as economic and job growth, depends on ensuring the adoption of digital technologies and on improvements in labour productivity related to technology use. Many of the skills projected to increase in demand between 2019 and 2030 relate to the development and use of digital tools and applications as well as interpersonal communication, management and leadership. By contrast, many of the skills projected to decline in demand relate to using tools and machinery. This is because the implementation of Fit for 55 is expected to accelerate the existing trend, leading to a structural reallocation of employment opportunities from blue-collar and manual jobs to jobs in the service economy.
The modelling results indicate that, although overall employment is projected to grow between 2019 and 2030, even under the implementation of ambitious initiatives to reduce greenhouse gas emissions, employment is projected to shrink considerably in some sectors and for some workers. In particular, the employment of blue-collar workers is projected to shrink, and in some sectors, such as mining coal and lignite, it is projected to shrink by as much as 90%. Because the distribution of workers in different sectors and occupations differs across countries as well as across regions within most countries, some countries or localities will be especially hard hit by job losses.
Country-specific assessments of changes in skill demand due to the green transition are important to feed into national policies that take the geographical distribution of workers by sector and occupation into account. Yet, solid country-level data on such changes is still relatively scarce and so is policy action (OECD, 2023a). The production of high-quality labour market information in this field still suffers from a lack of commonly agreed definitions on what green skills, tasks and jobs actually are. And while there is a range of studies available on how the green transition will affect skill demand, they tend not to be complementary and apply different methods. Policy activity in the area of skills for the green transition is often initiated on the ground and is driven, for instance, by forward-looking adult education institutions. At a national level, efforts are often not systematic. Continuously improving and updating the research to generate better evidence will be crucial to making sure that the right skills for the green transition are available where and when they are needed.
Despite these challenges, more and more OECD countries are putting in place (or have in the pipeline) innovative policies. In Europe, Sweden appears to be one of the countries that is investing the most in facilitating the smooth transition to a net-zero economy. For instance, in September 2022 the public employment service of Sweden opened a new office in Skellefteå in the northern part of the country with the mandate to facilitate the transition of the region towards a greener economy. The office is carrying out tailored assessment and anticipation exercises on the skill needs of the region to inform the design of its new programmes. As a result, the office is currently piloting cooperation with VET institutes in other regions, so that their students can do practical placements in greening industries in northern Sweden. Education institutions are also taking actions. For example, programme coordinators at University West map skills and competences covered in educational programmes against those in demand in the labour market to update their curricula and implement industry training programmes.
The forthcoming OECD Employment Outlook 2024 will devote a chapter to the analysis of skills in the context of the green transition. This will identify mismatches between existing workforce competences and the demands of emerging green industries. It will explore the specific skill requirements of occupations playing a key role in the green transition, comparing them with those of contracting jobs. It will also measure the required investments in training and present good practice in designing and implementing targeted policies to foster skills for the green transition.
References
Keese, M. and Marcolin, L. (2023), Labour and social policies for the green transition: A conceptual framework, OECD Social, Employment and Migration Working Papers, No 295, OECD Publishing, Paris.
OECD (2023a), Assessing and Anticipating Skills for the Green Transition: Unlocking Talent for a Sustainable Future, Getting Skills Right, OECD Publishing, Paris.
OECD (2023b), OECD Skills Outlook 2023: Skills for a Resilient Green and Digital Transition, OECD Publishing, Paris.
OECD (Forthcoming), Employment Outlook 2024: The Green Transition and the Labour Market, OECD Publishing, Paris.