About half of the world’s GDP is dependent on nature and the sustainable management of ecosystem services, which includes 1.2bn jobs in farming, fisheries, forestry, and tourism, the International Labour Organization states.
In recent times, climate & environmental change is quickly becoming the largest threat to poverty reduction, decent work, sustainable development, and social justice.
Recognising the urgent need for a transition to environmental sustainability in the world of work, the governing body of the International Labour Office, the executive body of the International Labour Organization (ILO), has shared details about a just transition covering cover consideration of industrial policies and technology, towards environmentally sustainable economies and societies for all.
These will be part of the agenda at the 111th session of the International Labour Conference, happening from 5 to 16 June 2023, with leaders including Zaini Ujang, Secretary-General, Ministry of Human Resources, Malaysia, in attendance.
Observed and projected impacts of unmitigated climate and environmental change
The observed and projected impacts of unmitigated climate and environmental change are becoming increasingly clear and incontrovertible.
For some background, the Inter-governmental Panel on Climate Change (IPCC) concluded in a recent report that global warming is becoming increasingly complex and difficult to manage and will have profound and prolonged effects on all ecosystems and human systems. It will also particularly have a negative impact on human health and well-being, including in terms of heat stress, malnutrition, and mental health. Paired with more extreme weather events which will lead to storm-induced damage to coastal areas, and damage to infrastructure and key economic sectors, the ILO foresees that restoring the infrastructure damaged due to climate and environmental change will become the heaviest economic burden for most countries, and may in turn reduce investment in other key sectors.
Further shared by the ILO, approximately half of the world’s gross domestic product (GDP) is dependent to a greater or lesser extent on nature and the sustainable management of ecosystem services. This includes 1.2bn jobs in farming, fisheries, forestry, and tourism.
With people living in poverty often being disproportionally dependent on natural resources for their livelihoods and food security, climate change could push up to 130mn people into poverty within the next ten years if unmitigated, leading to displacement and migration. In fact, the World Bank estimates that up to 216mn people could have to migrate internally by 2050.
In tandem, a changing climate and environment will alter how humankind lives, works, consumes, and produces unless combative efforts are drastically scaled up. In addition to gradual shifts in temperature and the cumulative effects of rising sea levels and droughts, our climate is becoming increasingly unpredictable, with prolonged heat waves, stronger storms and hurricanes, and other extreme weather events. ILO research shows that between 2000 and 2015, an estimated 23mn working-life years were lost annually as a result of different environment-related disasters caused or exacerbated by human activity.
In addition to financial and working-hour losses, climate and environmental change poses a multidimensional threat to occupational safety and health. This would mean an increase in the risk of injury, disease, and death for workers due to heat stress, catastrophic weather events, exposure to hazardous chemicals, air pollution, and infectious diseases, among others. Workers, especially those working outdoors, will be exposed to the impacts of climate change, biodiversity loss, and pollution for longer durations and at greater intensities. Heat stress alone is predicted to bring about productivity loss equivalent to 80mn jobs by 2030 — an ILO study has estimated that the projected increase in global temperatures will render 2% of all work hours too hot to enable safe employment by 2030.
However, there is growing evidence that the energy transition and the transformation of other key economic sectors will create employment opportunities and can be strong drivers of skills upgrading, sustainable enterprise creation, more resilient and inclusive economic growth, a higher standard of living, and sustainable development. In terms of employment, ILO research indicates that the employment created in a just transition scenario will offset the risks of job losses and result in a net gain in jobs.
Still, such positive labour market and social outcomes are not automatic. To seize the significant opportunities to attain full, productive employment, social inclusion, and decent work for all during these complex transitions, it is important to step up the development and implementation of specific policies for inclusive macroeconomic growth, sustainable enterprises, skills development, other active labour market interventions, social protection, occupational safety and health and other rights at work, and find new solutions through social dialogue.
Employment impacts of a just transition towards inclusive and environmentally sustainable economies
Climate and environmental policies are key to tackling climate and environmental change. However, the ILO also recognises that they may have adverse social and economic impacts — particularly on the most economically disadvantaged and vulnerable groups. To avoid such unintended effects and to harness the opportunities for decent work, the formulation and implementation of climate and environmental policies must be underpinned by social justice and equity. By integrating social justice considerations into environmental and climate policies, governments can harness their potential positive impacts and mitigate any negative effects.
Despite so, most climate and environmental policies do not systematically make use of social and employment promotion instruments and do not build on participatory processes with social dialogue and consultations. Supporting policies, which are often formulated and implemented in parallel, need to be considered coherently. These include macroeconomic, sectoral or industrial, social, and employment policies, such as sustainable enterprise creation, employment-intensive investment, and skills training.
Against this backdrop, the ILO believes that a global package of climate and environmental policy measures has the potential to produce a net global increase in employment across all sectors. Research estimates that a combined shift to low-carbon and circular economies may result in the creation of some 100mn jobs by 2030, as compared to a business-as-usual scenario. However, without a corresponding set of supporting social and economic policy measures, unplanned and abrupt job losses in carbon-intensive and polluting sectors are likely — some 78mn jobs may be destroyed, relocated, or redefined, which highlights the need for strong policies to manage the transition. An additional 20mn jobs could be created through nature-based solutions.
Climate and environmental policies induce an economy-wide structural transformation within and across economic sectors such as energy, industry, transport, agriculture, marine and forestry, pollution management, and recycling. These policies not only directly impact the sectors themselves but also indirectly affect the supplying industries. They therefore fundamentally alter the structure of countries’ economies, business environments and labour markets.
Importantly, the labour market may be unable to transition to new industries and business models if the appropriate skills are not available, social protection is lacking and communities and regions are not supported through coherent structural, industrial and macroeconomic policies. Such policies are therefore of paramount importance in fast-tracking the labour market transition, including through investments in skills development and lifelong learning, social protection and by actively involving communities and ILO constituents as part of the solution.
The ILO also provided an overview by sector.
Energy and utilities
Significantly, the energy and utilities sector is responsible for over 70% of global greenhouse gas emissions. Yet, the direct job effect of climate policies on the sector is comparatively small, with a projected net gain of some 1mn jobs globally by 2030.
However, if indirect employment effects in supplying sectors are included, the renewable energy industry has the potential to create some 43mn direct and indirect jobs by 2050. This is due to the need to produce clean energy technology, build green infrastructure, and retrofit buildings. The induced employment effect amounts to an additional 8mn net jobs by 2030, notably through the savings from spending on petrol in the shift to cheaper electricity, and the additional income of workers, which will further increase demand and create jobs in the service industries. However, this will be accompanied by a restructuring, with losses of up to 8mn jobs in the coal, oil and gas production industries
By region, recent ILO research on the employment impact of phasing out coal in South-East Asia underlines the need to maintain employment in regions where coal production is concentrated, as job losses would create resistance and slow down the implementation of the energy transition. Assessments of the potential for green jobs in India, Indonesia, the Philippines, and South Africa show that a renewable energy policy to phase down coal combined with a policy on wind turbines and solar manufacturing could create more jobs than would be lost in coal mining.
The transport sector, in particular road transport, is a major source of greenhouse gases, accounting for some 25% of global emissions. It is also a major source of black soot and local air pollution, which result in some 8mn deaths globally every year. The introduction of a voluntary or mandatory target of 50% of all vehicles to be fully electric in industrialised and car-manufacturing countries by 2030 would not only reduce emissions, but also create a net total of almost 10mn jobs across all sectors globally.
Similar to the energy transition, job creation across the supplying industries is much larger than the direct employment effect in the transport sector (an increase of only 0.7mn jobs). This is produced mainly by a structural shift to increased use of more economical electric vehicles and the electrification of transport and public transport services.
As the electrical and battery industries are currently mostly based in Asia, the majority of the jobs created under current projections will be in the region.
About 1.2bn jobs rely directly on the effective management and sustainability of a healthy environment, in particular those in farming, fishing, and forestry. Environmental degradation threatens critical ecosystem services and the jobs that depend on them. Workers from lower-income countries, rural workers, people in poverty, indigenous peoples, and other disadvantaged groups are affected most by environmental degradation and the impact of climate change.
Conversely, they can reap major benefits from climate action through improved farming, fishing, forestry, and biodiversity conservation. Some countries have in fact succeeded in improving labour market outcomes, creating jobs while building natural assets, restoring lands, and decoupling growth from environmental destruction and carbon emissions.
Overall, the type and breadth of policy responses to the climate and environmental crisis present two main challenges for the world of work. The employment challenge is that the transition will cause jobs to be lost, relocated, and transformed at the same time as new jobs are created. On the other hand, the socio-economic challenge, which is only starting to be recognised, is that a transitional increase in the global price of energy raises the cost of basic necessities, such as food, health, and housing. This is impacting low-income earners most, as they spend a larger share of their income on energy and related goods, thereby increasing pre-existing gender, income, and wage inequality within and between countries.
The employment challenge and opportunity
In terms of the scale of the employment challenge, it is estimated that only around 2% of global employment will be directly altered by a structural transformation towards carbon-neutral and sustainable industries and economies – far less than from the transition in information and communication technologies.
One of the sectors most affected is the energy sector and the related mining and supplying industries in coal, and oil & gas. According to the latest estimates by the International Energy Agency, nearly 40mn people worldwide work in jobs related to clean energy, representing 56% of total employment in the energy sector. This means that, for the first time ever, jobs in clean energy outnumber jobs in producing, transporting and burning fossil fuels.
Further clean energy jobs and extractive activities will be required to meet the demand for critical minerals used in renewable energy production and electric vehicle manufacturing. However, new extractive projects driven by growing demand from the renewable energies sector also risk displacing or altering local communities and affecting livelihoods in sectors that depend on a healthy environment.
In order to ensure that the energy transition does not lead to new forms of social inequality, exclusion and environmental degradation, sectoral policies must ensure respect for the rights of workers and indigenous peoples, notably those in the mining of minerals critical for technology products and renewable energy and those involved in processing e-waste (such as decommissioned solar panels and turbines).
The socio-economic challenge and opportunity
There is a risk of worsening social equity, in particular due to energy transition policies. As energy is an input in fertilizer production, food processing, transport, cooking and heating, the increasing cost of energy raises the price of food and other basic needs. Low-income households are impacted disproportionally — as food, transport and housing account for a large share of expenditure in low-income households, but a much lesser share in high-income households, an increase in energy prices is worsening inequality.
As a result, millions could be pushed into poverty, access to employment opportunities could become even more unequal, and gender, income and wage inequality could worsen. Political instability, social unrest, conflict and opposition to climate policies could arise. In turn, this undermines the feasibility of climate action.
With this in mind, the ILO will review the key policy areas where urgent action is required to achieve socially, economically, and environmentally sustainable outcomes, and will consider key processes and various financing frameworks for their implementation.
There are four main elements:
- promoting inclusive, sustainable, and job-rich economies;
- ensuring social equity;
- managing the process;
- financing a just transition.
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