The Possible Implications of the Green Transition for the EU Labour Market

With policy ambitions at an all-time high, the green transition is set to accelerate over the next decade and trigger significant structural change in EU labour markets. While aggregate employment impacts of the green transition may remain contained, shifts are likely to occur between sectors, firms, occupations, and regions. This calls for policymakers to anticipate and address the distributional risks of climate policy. Three types of jobs (‘green’, ‘white’ and ‘brown’) are distinguished that would be differently affected. Brown jobs would be most negatively affected. While on aggregate, their share is relatively small, impacts may be concentrated in sectors and regions. As the ease of labour reallocation will crucially depend on the similarity of location and skills of the jobs that are newly created, demographic characteristics of workers in brown sectors are discussed. It is argued that with the right policy support, transition costs can be mitigated, particularly at the current juncture, where abour markets are tight. At the same time, regional socio-economic specificities need to be accounted for. Policy action should focus on providing inclusive social protection, education and training, individualised re-employment support, temporary job subsidies, and effective regional development policy. Acting in anticipation can improve policy effectiveness. Lessons should be drawn from past structural transformations aimed at economic diversification. At the same time, care should be taken to counter political backlash against climate policies based on job-killing arguments with evidence of positive employment effects in well-managed cases and clear communication on policy strategies to address distributional consequences.