OECD urges governments to cushion green shift for low-skilled workers

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Governments need to make green jobs pay better and guarantee wages for workers who lose positions in high-emission sectors to persuade voters to press on with the net zero transition, the OECD said on Tuesday.  

The Paris-based organisation said more than a quarter of existing jobs would be strongly affected by climate policies, even though the overall level of employment will barely change.

“Without policy action, low-skill workers and households in rural areas would bear most of the burden of the transition,” said Stefano Scarpetta, the OECD’s director for employment, labour and social affairs. “High-skilled urban workers would be in the best position to reap the benefits.”

This raised “questions of basic fairness”, as well as undermining political support for change, added Scarpetta.

The analysis, part of the OECD’s annual assessment of labour market trends, comes in the wake of European elections that underscored voters’ disenchantment with green policies seen as costly to consumers.

Green parties lost almost all the ground they had gained in the previous vote, held in 2019. Concerns over energy costs loomed large in France’s divisive election campaign and its clean energy transition is now under threat from political stasis under a minority government.

Unions in the UK have pressed the new Labour government to secure job guarantees in return for any state support offered to Tata Steel, as the company moves to greener forms of steelmaking at its Port Talbot plant in South Wales.

Scarpetta said the 6 per cent of workers in high-emission sectors that were set to shrink faced “obvious large disparities” in job prospects, as they generally earned more than they would be able to in alternative occupations. These industries also tended to employ older, less-qualified men in rural areas, while “green-driven” jobs were more urban and skills-intensive.

The OECD said it would be crucial to do more to help workers who lost jobs in high-emissions industries, who often faced a “life-changing” and long-lasting drop in earnings in the years following their dismissal.

One option would be to introduce time-limited wage insurance schemes to last long enough for people to build skills and experience in new jobs.

The OECD also called for a sharper focus on wages and working conditions in jobs that will need filling for the net zero transition to succeed, and are often unattractive at present.

It found that green-driven occupations tended to be relatively well-paid, but that this did not hold for the roles low-skilled workers would be able to fill without extensive retraining.  

About a fifth of the workforce in OECD countries is already employed in green-driven occupations. The figure includes roles where job descriptions are changing because of the net zero transition, as well as in sectors such as construction that will be in demand because they supply goods and services to low-emission activities, and in new emerging areas.

While high-emission sectors tend to be well unionised, green-driven jobs are less likely to be covered by a collective bargaining agreement and less likely to offer job security.

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