The climate transition and its social dimension demand more powerful instruments than the European Commission proposes.
The European Green Deal (EGD) of 2019 included pledges to ‘leave no one behind.’ But what about concrete policies? The Just Transition Mechanism and the proposed Social Climate Fund are among the main European Union measures intended to mitigate the impact of the transition to a zero-carbon economy on the most affected regions, vulnerable individuals and businesses. As part of the latest instalment of its ‘Fit for 55’ package of legislative proposals—to achieve a net reduction of 55 per cent in greenhouse-gas emissions from 1990 levels by 2030—the European Commission last month published a proposal for a Council of the EU recommendation on ensuring a fair transition towards climate neutrality.
The proposal contains guidance to member states on how to address the social and employment effects of the transition to ‘net zero’. While an important recognition of these issues, the non-binding instrument envisaged lacks sufficient detail and attention to some key topics. It should not be seen as a substitute for strengthening the social dimension of EU-level legislative and policy measures on climate change. At most, it should be only a first step in an urgently needed, comprehensive, just-transition policy framework that forms an integral part of the EGD and accompanies maximum climate ambition.
Fundamental transformation
Climate policies are having and will continue to have major effects on the world of work. Millions of new jobs are being created in the transition to a zero-carbon economy but many jobs will disappear (as in fossil energy). Most will undergo a fundamental transformation, and the places where jobs are lost and created will not necessarily be the same. This unprecedented wave of restructuring will have unequal effects in many aspects, including with regard to skills, gender, age, economic activity and region. Sectoral differences will be particularly significant.
The energy and automotive sectors will be most affected by climate and environmental regulations at European and national levels. For coal-based power the regional effects will be harsh, while the transformation of the automotive sector, with a share of more than 5 per cent of total European employment, poses the biggest challenge.
The development of new competences, skills and forms of work organisation will also be critical for expanding sectors such as renewable energy, construction and low-carbon infrastructure. There will be increasing demand for skills in digital competences and STEM (science, technology, engineering and mathematics) knowledges, to trigger innovation and breakthrough technologies, greener construction and urban planning, circular-economy practices and so on.
To match the rising demand for specific skills and competences, training programmes and education curricula need to be adapted to the needs of the labour market. The public sector and businesses could co-operate to make these programmes fit for the future. Reskilling and upskilling should be made available to the wider workforce and flexibly delivered (in terms of hours or online access), ensuring that nobody is left behind while attracting new talents to green jobs to avoid skill gaps.
Distributional effects
Effective climate policies can only be based on a comprehensive but balanced policy framework that includes regulation, standards, taxes and market mechanisms. The latter—such as the EU’s Emissions Trading Scheme (ETS)—are important in sending price signals to market actors but they have significantly regressive distributional effects, disproportionately affecting low-income households, which also have less capacity to adopt low-carbon technologies. Energy and transport poverty are already serious challenges, particularly in some member states and regions.
Some groups will be particularly affected. There is wide evidence pointing to disproportionate vulnerabilities faced by women around the world due to climate change, including reduced access to education, information and decision-making. Migrants comprise another critical group, as most foreign-born workers are employed in relatively low-paying and polluting sectors, with limited or no access to upskilling.
A just transition requires that addressing the employment and distributional effects of getting to net zero should be integral to the climate package—not left to supplementary corrective measures. The EGD recognises this but in practice social- and employment-policy initiatives have remained fragmented and additional. This shortcoming became very clear with the announcement of Fit for 55 last July.
Europe now has a Just Transition Fund (JTF) with limited resources, dedicated mostly to helping coal regions manage the social and employment effects of its phase-out. This is very important but reaches only a small fraction of those affected by decarbonisation. The newly-announced Social Climate Fund (SCF) has a very specific target—to fend off the detrimental distributional effects of a new ETS for buildings and transport—and its €72.2 billion capacity, spread over seven years, will be insufficient to address the challenges ahead. Highly affected sectors such as the automotive and energy-intensive industries have neither dedicated instruments nor a fund.
The proposed recommendation is a ‘toolbox’ for member states to manage the outlined employment and social effects, based on existing tools. Implementation will be monitored via the European Semester. States are urged to provide active support for quality employment and ensure access to quality and inclusive education, training and lifelong learning. Tax and welfare systems should be fair, and access to affordable essential services and housing should be guaranteed for those most affected. The situation of vulnerable groups and the need to involve social partners are emphasised.
Not binding
This sounds good in theory, but how will member states with very different capacities and commitments get there? The instrument is not legally binding and implementation will depend on political pressure via the semester. The propositions are vaguely formulated and leave wide discretion to member states, which may comply relatively minimally. They point to existing funding mechanisms, such as the JTF, SCF, ETS and tax revenues, but no new funding instruments are foreseen for what—if understood in a meaningful way—should be very significant, costly initiatives.
There are other notable omissions. The document refers to ensuring the affordability and accessibility of sustainable mobility, but not low-carbon technologies in general. Though mentioned, there is little emphasis or detail on measures to involve the public meaningfully in climate policies. There is no recognition of the social impacts of decarbonisation beyond the EU, particularly in the global south—including threats to fundamental rights in global supply chains linked to resources and technology necessary for decarbonisation.
The social dimension of the EGD therefore remains significantly underdeveloped, compared with the ‘hard law’ Fit for 55 initiatives. Circumscribed EU competence to act on employment is only a partial explanation. The union must strive towards a robust and comprehensive just-transition policy framework, to guide member states in managing change. It should inter alia include:
- support for workers in the transition to new quality jobs with measures targeted at specific sectors (automobiles, energy-intensive industries and so on), tailored to national and regional specifics;
- targeted measures to tackle energy and transport poverty, facilitating the affordability and accessibility of low-carbon technologies for lower-income households—such as retrofitting of buildings, access to renewable energy, vehicle fleet change and developing public transport;
- comprehensive development initiatives to help carbon-intensive regions towards a sustainable economy, and
- promotion and strengthening of social dialogue and stakeholder involvement at all levels.
Today a large part of the workforce is in fear of change, a concern justified in a labour-market environment of increasing precariousness. As long as ‘change’ instils fear, the biggest transformation since the industrial revolution ahead of us cannot succeed. Inclusive and comprehensive social, labour-market and economic policies are, therefore, essential to securing social justice, resilience and sustainability.
Mehtap Akgüç is senior researcher in the economic, employment and social policies unit of the European Trade Union Institute and an affiliate of the Institute of Labor Economics, focusing on labour markets and wage inequalities, migration and mobility, the green and circular economy and economic development.
Kalina Arabadjieva is a researcher at the European Trade Union Institute, with a PhD in labour law. She is working on gender equality and the just transition.
Béla Galgóczi is Senior Researcher at the European Trade Union Institute and editor of Response measures to the energy crisis: policy targeting and climate trade-offs (ETUI, 2023).