Five policies for a Just transition to the Green Collar Workforce

Achieving net-zero emissions by mid-century will require one of the greatest economic transformations of all time. The rewards are substantial but so are the risks, especially for workers. According to a Deloitte Economics Institute analysis, more than 800 million jobs worldwide – approximately one quarter of today’s global workforce – are highly vulnerable to climate extremes and the impacts of economic transition. The impacts vary by region, with Asia Pacific and Africa particularly at risk of significant job disruption. However, if policy makers and business leaders collaborate on a coordinated economic, political, and social transition to net zero, more than 300 million additional jobs globally can be created by 2050.

Seizing the decarbonization opportunity requires making the transition work for all workers, whether they are empowered with new skills or leveraging existing skills in different ways. Detailed mapping of the global workforce reveals that 80% of the skills required to reach the net-zero targets already exist, making these goals achievable in the short to medium term. The need for upskilling, rather than complete retraining, means more opportunities with fewer barriers, particularly for workers in industries most at risk of major disruption such as agriculture and construction, as well as countries where educational funding is under pressure.

Each region will have its own pathway with a range of unique challenges and opportunities. Understanding these variations and nuances is critical to informing the level and type of government support needed. To help guide decision makers, the Deloitte Economics Institute has developed a Green Collar workforce policy agenda focused on five clear action areas:

Setting ambitious emissions reduction targets

The private sector is unlikely to achieve the level of emissions reduction required to meet net-zero by 2050, without support. Governments will play a fundamental role in stimulating and directing investment to areas of the economy where it will most likely deliver strong and equitable economic dividends. Ensuring reduction targets and timelines are clearly defined will deliver better outcomes for workers and go a long way in mitigating the costs of transition.

Designing new industrial policy

Taking a “systems approach” to decarbonization, rather than focusing on individual industries, leverages the interdependent nature of an economy and the extraordinary levels of coordination required to tackle our collective climate challenges. This approach recognizes that existing industries will be rebuilt as a series of complex, interconnected, emissions-free systems, such as energy, mobility, food and raw materials manufacturing. Government, finance, and technology can have a catalytic role in enabling transformation and the emergence of new sources of jobs and growth. Importantly, the Green Collar workforce should be at the center of such systems-based policies, to deliver on rapid decarbonization at the least cost to existing industries and workers.

Developing skills pathways into high-value jobs

The transitioning of disrupted workers into new opportunities in the decarbonized economy is a critical part of balancing the costs and benefits. Governments and businesses must work together to provide workers with employment pathways that represent equivalent or higher quality job opportunities to ensure living standards and engagement in work are maintained. In addition, skill pathways should create better outcomes in terms of wages, working conditions and job security, as well as support a worker’s career ambitions.

Ensuring an adaptive skills and education pipeline

As governments seek to empower workers to establish fulfilling new careers in a low-emissions future, the education and training sector will be an important policy lever. However, training systems should evolve in line with the needs of a decarbonized economy. This means upskilling and retraining disrupted workers and new students to facilitate pathways into high-growth sectors with in-demand skills. This is critical in order to realize the economic potential of decarbonization – and set the current and future generations of Green Collar workers on a pathway to success.

Applying a portfolio approach to skills reallocation

An effective, equitable transition requires a “portfolio approach” targeting specific cohorts in the economy, while acknowledging that not all workers or skills are the same. For example, for those workers most likely to be disrupted, a solution could be as simple as policies to raise awareness of job vacancies and the ease of transferring skills to new industries. For under-utilized or disengaged workers, a nudge through market signaling could direct them to training or mobilize them toward where they are most needed in the Green Collar workforce.

Taken together, these five action areas provide a policy roadmap for a just transition that creates equitable outcomes for workers across industries and regions. The opportunity for policy makers and business leaders is clear: to come together to redefine work in ways never seen before, enabling workers to adapt to global decarbonization while creating prosperity and purpose for all. To not do so could put hundreds of millions of jobs at risk.

Click here to read the full report.

David Barnes, Deloitte Global Regulatory & Public Policy Leader

Jennifer Steinmann, Deloitte Global Sustainability & Climate Practice Leader