TRANSFORMATIONS: WHAT DO WE KNOW?
4.1. EVIDENCE FROM OECD COUNTRIES
Employment estimates of the environmental sector have been conducted mostly within the EU. First attempts to estimate its size were under-taken by the OECD and EU (OECD and Eurostat 1999). Ecotec (2001) was one of the first studies to analyze the size of the sector within the EU for the period 1994 to 1999. Over 2 million full-time equivalent green jobs existed in the EU in 1999, with approximately 1.5 million jobs in pollution management and around 650,000 jobs in resource management. Employment growth rates in these activities were above economy-wide averages.
The fraction of employment in the environmental sector over total paid employment was approxi-mately 1.3 per cent.
As the number of EU countries expanded, the Ecotec report was updated by Ernst & Young in
54 2006, showing that total employment increased from 1.45 million jobs in the EU-15 of 1999 to 1.85 million in the EU-25 of 2004 in pollution management activities while resource manage-ment activities increased from 0.6 million in the
EU-15 to 1.04 million jobs in the EU-25 over the same period (Ernst&Young 2006). A 2009 update analyzed green jobs through to EU-27, between 2000 and 2008 (Ecorys 2009) (Table 4.1).
Table 4.1: Employment estimates of green jobs in the European Union
Activity Employment (2000) Employment (2008) Growth rate %
Average annual
Waste management 844,766 1,466,673 7.1
Water supply 417,763 703,758 6.7
Wastewater management 253,554 302,958 2.3
Recycled materials 229,286 512,337 10.6
Others 129,313 193,854 5.2
Renewable energy 49,756 167,283 16.4
Air pollution 22,600 19,067 -2.1
Biodiversity 39,667 49,196 2.7
Soil & Groundwater 14,882 18,412 2.7
Noise & Vibration 4,176 7,565 7.7
Total 2,005,764 3,441,102 7.0
Source: Ecorys (2009)
As the UN established the SEEA framework, the EU’s EGSS concept evolved to complement it.
Eurostat shows that across the EU the share of EGSS in total value added grew by more than 50 per cent between 2000 and 2012, while employ-ment grew from 2.785 million to more than 4.1 million in full-time equivalents during the same period, which corresponds to an average annual growth rate of about 3 per cent. The majority of these new jobs were created in energy resource management, in particular the production of
energy from renewable sources, the production of wind and solar power stations and equipment, and installations for heat and energy savings.
Figure 4.1 shows the development of the EGSS in selected EU countries and the EU28 between 2005 and 2013. The growth rate of jobs has been mostly positive. According to Figure 4.2, the employ-ment shares of the EGSS for the latest available year (2014) range from around 0.9 per cent of total employment in Ireland up to 4 per cent in Austria and Luxembourg.
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Figure 4.1: Employment in the environmental sector, 2005–2013 Panel A: Employment shares in EGSS in EU countries
Note (*): For Austria, Germany, Luxembourg, Netherlands and Romania the shares are from 2012, for France and Lithuania, the shares are from 2011. For some countries the base year (2005) refers to 2007 or 2008. Thus, not comparable by definition.
Panel B: Annual employment growth in EGSS in EU countries, 2005–2013
Source: ILO Research department based on Eurostat.
6
5
4
3
2
1
0
Austria
EU28 Bulgaria France Germany Lithuania Luxembourg Poland
Netherlands Romania
2005 2013*
Luxembourg Romania
Germany
France
Bulgaria
Austria
EU28
-20 -10 0 10 20 30 40
56 Figure 4.2: Employment shares in EGSS in EU countries, 2014
Until the function was defunded in 2013, green job estimates were made in the United States by the Department of Commerce and by the Department of Labor’s BLS using a case-by-case classification of green industries. The US Depart-ment of Commerce (2010) estimated the number of green jobs in the United States in the private sector in 2007 to be around 2.4 million, under a broad definition, which amounted to 2 per cent of total private sector employment in that year.
BLS (2012) estimated that around 3.4 million jobs in the United States could be classified as green jobs in 2011 with around 2.5 million of those in the private sector. The BLS figures suggest that 2.3 per cent of private sector jobs, and 4.2 per cent of public sector jobs, can be classified as green jobs in the US, but none of these numbers consider the aspect of ILO’s Decent Work. Given the most up-to-date estimates, the biggest share in US green private sector employment was in manufacturing, followed by construction and professional, scien-tific and technical services (BLS 2012).
For the United States, Pollin et al. (2008) estimate the projected employment effects of a proposed 10-year green recovery programme. It would consist of ten broad implementation steps, rang-ing from a cap-and-trade system to technolo-gy-specific programmes. The authors consider six green investment areas: retrofitting build-ings, mass transit, smart grid, wind power, solar power and advanced bio-fuels. They estimate that 935,200 direct jobs would result, along with 586,000 indirect jobs and 496,000 induced jobs, by spending $100 billion in these investment areas.
According to the projection, the green recovery programme would produce larger total employ-ment effects and generate higher household incomes than investing in alternative scenarios such as the oil industry.
Morgenstern et al. (2002) also focus on the US, investigating the effects of environmental poli-cies for four industries: pulp and paper mills, plastic manufacturers, petroleum refiners, and iron and steel mills sectors. On average, a US$
1 million increase in environmental spending would produce 2 to 3 additional jobs across the four industries. Belova et al. (2013) revised those estimates by increasing the number of industries included in the analysis. For the same four indus-tries, the authors find larger employment effects than Morgenstern et al. (2002). For the other six industries, results were positive and significant only for the rolling and drawing industry. In particular, each additional US$ 1 million of envi-ronmental expenditure would produce 22 to 23 additional jobs in rolling and drawing. Finally, the authors conclude that for 6 out of 10 industries, the model indicates 10 to 30 additional employ-ees hired for US$ 1 million spent in abatement expenditures (Belova et al. 2013).
Kato et al. (2012) analyze the short-term effects of an environmental tax on structural change for a set of nine high-income countries: Germany, Australia, France, Hungary, Japan, Korea, Sweden,
UK and the US. They distinguish between high and low intensities of carbon-consuming sectors and evaluate three different policy options.
3.0 2.5 2.0 1.5 1.0 0.5 0
Austria
European Union Bulgaria Denmark France Ireland Lithuania Romania
Netherlatnds Sweden
Belgium Czech Republic Estonia Germany Latvia Luxembourg Slovenia
Poland United Kingdom
Country Employment share (%) 3.5
4.0
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The first option is a carbon tax levied on goods produced by highly carbon-intensive sectors and a subsidy paid on goods produced by low carbon-intensive sectors. The overall employ-ment effect is estimated to be positive at around 0.5 per cent. Secondly, they examine the effects of a carbon tax levied on goods produced by high carbon-intensive sectors, without any subsidy in return. In this case, the carbon tax would produce a decrease in employment of roughly 0.4 per cent. The last policy option consists of a carbon tax levied on highly carbon-intensive sectors and a revenue-neutral wage subsidy paid to both sectors. This policy would produce the greatest net gains in terms of employment and output.
UNEP (2008) uses a literature survey to estimate the employment effects of green transformation and, in particular, energy efficiency improve-ments in six economic sectors: renewable energy, buildings, food and agriculture, basic industry and recycling, transportation and forestry. In the renewable energy sector, the net employment effect produced by green transformation ranges from 1.4 to 2.5 million jobs by 2020 in Europe, while estimates for the US vary considerably.
For instance, a study conducted by the Ameri-can Solar Energy Society estimates that by 2030 the US will have created 1.3 million direct and 7.9 million indirect jobs in renewable energies under a business-as-usual scenario in renewable energy (UNEP 2008). According to IRENA (2017), renew-able energy employment was 1,163,000 in the European Union and 777,000 in the United States in 2016. In the residential building sector, Wade, Wiltshire and Scrase (2000) found that energy-ef-ficient investment programmes would produce positive effects in nine European countries. In particular, for every EUR 1 million invested in energy-efficiency programmes, 11.3 to 13.5 full-time equivalent direct jobs would be created.