Pursuing energy efficiency will generate more construction jobs—but that requires tackling labour shortages and skills mismatches.
The ‘Fit for 55’ climate package, to achieve a 55 per cent reduction in European Union net greenhouse-gas emissions by 2030, beefed up previously agreed targets for the renewable share of energy and energy efficiency, while setting Europe on a path towards low-carbon production processes. This journey requires widespread restructuring of its energy systems.
Europe is the ‘old continent’: much of its building stock predates ambitious energy-efficiency requirements. Buildings are responsible for 40 per cent of EU energy consumption and 36 per cent of greenhouse-gas emissions. Improving energy efficiency in buildings therefore has a key role to play. Converting energy systems will however require huge investment and will result in a very material—and labour-intensive—transformation of the built environment.
Net new jobs
Eurofound research on how ‘Fit for 55’ will affect European labour markets by 2030 indicates that these policies will have a positive, if very modest, overall impact on employment growth. Compared with a business-as-usual projection, and taking account of job losses, some 204,000 net additional jobs will be created by 2030.
According to this research, the sector which will drive most of the employment gains is construction. Close to 40 per cent of additional investment expenditure foreseen will go into this sector and around two thirds of that into renovation of the housing stock.
At aggregate EU level, while most growth in employment is foreseen in services (a continuation of the longstanding employment shift to the services sector), construction is set to contribute disproportionately to overall employment growth. With an estimated 8 per cent of total employment in 2030, it will lay claim to over a fifth of foreseen employment increases.
This growth will be concentrated in particular in low-mid- and mid-paying jobs, which are typical in the sector. It will result in a flattening of what would otherwise be a more polarised pattern of employment growth.
The employment shifts specifically attributable to ‘Fit for 55’ will indeed be much more modest. But they are even more heavily skewed towards construction gains—around 300,000 by 2030.
Labour needed
So construction is at the heart of much of the energy transition—in building renewable power plants and related infrastructure and in retrofitting the third or more of Europe’s housing stock that is over half a century old. Labour will be required to improve insulation in the housing stock and to convert heating and cooling systems based on gas or oil to more efficient systems, based on heat-pump or photovoltaic technologies running on electricity. It will also be needed to install electric charging infrastructure, develop new power-generation capacity and extend that of the electricity grid.
Yet construction has never recovered from the Global Financial Crisis: there are 2.4 million fewer construction jobs in the EU in 2023 than in 2008. With the exceptions of Hungary and Romania, its share of employment has declined in every EU member state, the declines sharpest in those countries with preceding booms.
Even so, labour shortages are widespread in construction. This is clearly not due to lack of demand but rather to the ageing and non-renewal of the workforce. The sector has been slow to recover from the pandemic and the lifting of restrictions has revealed many former construction workers now employed in other sectors offering better working conditions.
Retraining and reskilling
There may also not be enough tradespersons with the specific competences required by the green transition—including plumbers, heating engineers and heat-pump installers. The European Centre for the Development of Vocational Training (Cedefop) estimates that by 2030 the sector would need to provide training for an additional 3-4 million workers to meet the goals of the European Green Deal. This will be challenging, given the high share of construction employment in small and even micro-enterprises.
The skillset of, say, a gas heating engineer will however significantly overlap with that of an air-to-water heat-pump engineer. It may take as little as a week of additional training for the former to acquire the necessary knowledge of the equipment and its system design. Financial incentives—many supported by EU funding—are increasingly available for retraining and reskilling on the worker side, as well as renewable-heating installation on the consumer side.
Soon there will anyway be little alternative. Domestic heating by gas or oil will be subject to limitations and eventual phase-out via the EU directives on the energy performance of buildings and energy efficiency.
So we have the targets and we have the incentives. All we need now is enough skilled construction workers to do the job.
John Hurley is a senior research manager in the employment unit at Eurofound.