green transition of the labour market
Introduction
Climate change and the need for a green transition are among the megatrends impacting the labour market (ILO 2017; Dølvik & Steen 2018). A green transition implies a shift from an economy based on fossil fuels to a green economy, defined as ‘an economic context in which prosperity and social equality increase, while pressures on the environment and ecological damage simultaneously decrease’ (Cedergren et al. 2022; 6). In terms of the labour market, this involves transitioning away from jobs that contribute to high levels of greenhouse gas emissions, negative environmental impacts and emissions, and towards jobs that support the environment and promote social equity. During this transition, new jobs will be created, ones dependent on fossil fuels will be reformed or phased out, and the skills required for existing jobs may change (Vandeplas 2022).
It is widely agreed that this transition is necessary. According to a representative survey, 71% of the Nordic population are worried or very worried about climate change (Tapia et al. 2023). All of the Nordic governments have set ambitious targets for reducing greenhouse gas emissions and are committed to both the Paris Agreement (2015) and the EU climate law Fit for 55, which stipulates that the countries are legally bound to reduce their emissions by 55% (compared to 1990 level) by 2030 (EU Commission 2023). The green transition is also widely supported by business organisations and trade unions in the Nordic Region. This support was formalised in a Memorandum of Understanding on the Green Transition in 2023 (NCM 2023). The Memorandum, the Paris Agreement (UN 2015) and the European Green Deal (EU Comission 2019) all highlight that the impacts of the green transition differ between different regions and social groups.
This chapter looks at the effects of the green transition on the labour market from a geographical perspective. It begins with a discussion of how the green transition impacts the labour market, as well as the concepts of green jobs and brown (or polluting) jobs. The discussion then turns to the geographical distribution of brown/polluting and green jobs. The chapter concludes by looking at gender differences and future trends related to ‘green industrialisation’ and its dependency on fossil-free electricity production.
The green transition and green jobs
Phasing out fossil fuels and transitioning to a green economy will have major impacts on the labour market. In the short term, it is thought that the effects will be most pronounced in the energy-related sectors. However, in the medium and long term, the effects are expected to be felt in the economy more broadly due to a general structural adjustment, including in production systems (Cedergren et al. 2022).
There have been several attempts to assess the overall employment impacts of the green transition. Most of these macroeconomic assessments predict relatively small overall impacts, between -0.3% to 0.5% by 2030 across the whole EU (Vandeplas et al. 2022). An assessment of the Nordic Region showed that while the overall impact on employment of policies related to the green transition is expected to be small (less than 1%), the impact was greater on occupations related to private and public consumption services. Other occupations, such as engineering, metal machine trades as well as electrical trades, were all expected to grow. There were also differences within countries, as some regions were expected to create more jobs than others. According to the Nordic assessment, no major effects were anticipated in terms of salary levels or age distribution (Dixon et al. 2023).
There have been numerous different approaches to classifying jobs according to how ‘green’ they are, and a whole literature has emerged in this field (Stanef-Puică 2022; Kuai 2021). Typically, the classifications distinguish between green, brown and white jobs. Green jobs are those that reduce the impact on the environment, brown jobs are actively polluting, and white jobs are those with a relatively neutral environmental impact. Most jobs are considered white (Vandeplas 2022). While colour-coding jobs is not new, the concept of green jobs emerged around 2008 with the ‘Green Jobs Initiative’, started by different UN organisations and the ILO (Stanef-Puică, 2022). Since then, there have been many attempts to define green jobs by researchers and international institutions, such as the United Nations Environmental Programme (UNEP 2008), the International Labour Organization (ILO 2015), Eurostat (2016), Statistics Sweden (SCB 2017), and the Organization for Economic Co-operation and Development (OECD 2023b). While their approaches differ, they all agree that green jobs are those that: (i) address environmental damage to air, water, soil, waste, noise, biodiversity and landscapes, including cleaner technologies and products that prevent or minimise pollution; (ii) address resource depletion, leading to resource-efficient technologies and products, the main purpose of which must be environmental protection or resource management. The ‘Green Jobs Initiative’ also stressed that a green job should not only contribute to the environment but also be a decent job (Stanef-Puică 2022).
Operationalising the green job concept is not easy, as it depends on the classifications that underlie standard labour market statistics. The concept of ‘green’ is also a moving target since what was once considered green may not be considered so in the future (Wøien & Peter 2021). There are two main approaches to quantifying the green jobs concept – they may be defined on the basis of sector or by tasks performed by occupations. Both approaches have their strengths and weaknesses, and only a few sectors and occupations can be described as entirely green or brown (Kuai 2021). In this chapter, we will look at green and brown jobs from different perspectives. The next section focuses on brown jobs, which we measure using emissions data by sector. After that, the focus then shifts to the geographical distribution of green jobs, where we follow the approach set out by Vona et al. (2018), which focuses on green tasks in specific occupations. Vona et al. (2018) describe green occupations as those that require specific skills, especially in engineering and management, for creating and implementing environmental technologies and practices.
The green transition and the labour market – what is a brown job?
Just as for green jobs, there are different methods for defining ‘brown’ or ‘polluting’ jobs – e.g. by sector or by occupation (Vandeplas 2022; Vona 2018; OECD 2023b). One way of assessing the environmental impact of the labour market is to look at the greenhouse gas emissions that it produces. Emissions data can be broken down by economic sector, which makes it possible to look at emissions by types of jobs.
In 2022, greenhouse gas (GHG) emissions per person employed in the Nordic Region were 15.7 tonnes. This is higher than the EU average of 13.5 tonnes. There are also fairly big differences between the Nordic countries, with higher emissions per person employed in Iceland (28.6), Denmark (23.1) and Norway (20.5) and lower emissions in Finland (15.7) and Sweden (8). On the other hand, the emissions per person employed have decreased faster in the Nordic Region than for the EU as a whole. In the last decade, emissions per person employed fell by 24% in the Nordic Region compared to the EU average of 22%. The biggest decrease (32%) was in Finland (see Figure 6.1).
Figure 6.1: GHG emissions per person employed Source: Own calculations based on Eurostat |
The sectors with the highest emissions per worker vary slightly between the countries. In Sweden and Norway, the sector with by far the highest emissions per worker was the manufacture of petroleum coke and refined petroleum products. However, it should be noted that the number of workers in this sector is small. In Denmark, the highest emissions by person employed could be found in water transport; in Finland, in electricity, gas, steam and air-conditioning supply; and in Iceland, in the manufacture of basic metals. In general, the highest-emitting sectors with the most workers were transport (including water and air), agriculture and food production, mining and manufacturing. These sectors are important for the economy and for a working society, and most of these jobs cannot just be phased out. Instead, new methods and new skills are needed in order to phase out emissions without also eliminating the jobs.
By calculating the average emissions per person employed and per sector
Based on two-digit employment by sector (NACE) data.
The municipalities with particularly high emissions per worker are dominated by certain high-emitting sectors, e.g. transport (e.g. Brøndby, DK), agriculture (e.g. Tønder, DK), refineries (e.g. Porvoo, FI) and manufacturing (e.g. Oxelösund, SE). Overall, emissions per worker are higher in rural areas (24 tonnes) compared to 18 tonnes for intermediate areas and 13 for urban areas.
According to the task-based method used by Vona (2017) and OECD (2023b), 15.1% of all employment in the Nordic Region is classified as polluting jobs. This is 3.4% higher than the OECD average of 11.7% (OECD 2023b). The task-based method also reveals a higher share of brown/polluting jobs in rural areas (ibid.). As a result, rural areas are subject to greater pressure for structural change. However, studies show that the skills needed for brown jobs are quite similar to those needed in the rest of the economy, and as such, the prospects are good for reintegrating workers into the labour market (Vandeplas 2022).
Map 6.1: Greenhouse-gas emissions per person employed |
Box 6.1: Methodology – identifying and quantifying green jobs
While there are different approaches to defining green jobs, the most commonly used method in the literature is the task-based approach developed by Vona et al. (2017). This is also the method that has been applied in this chapter, as well as in a recent OECD report (OECD 2023a). Vona et al.’s method is in turn inspired by Dierdorff et al. (2009), who used the US-based Occupational Information Network (O*NET) to provide a detailed mapping of skills and tasks related to green jobs and the green transition. Vona et al. (2017) use this classification of skills to elaborate a measure of ‘greenness’ for each occupation. Four general occupational categories emerge as particularly green, in the sense that they include many green skills and green tasks: engineering and technical; operation management; monitoring; and science.
Vona et al. (2017) based their method on US O*NET and SOC (Standard Occupational Classification) data, which was later translated into the International Standard Classification of Occupations (ISCO) that is used in Europe. The result is a typology in which each of the 437 four-digit occupations in the ISCO classification is categorised on the basis of its green tasks. According to this translation, 83 of the occupations involve green tasks. Access to detailed data on municipal-level occupations made it possible to present the results on regional and municipal levels for Sweden, Norway, Denmark and Finland. For Iceland and the Faroe Islands, national data has been used. The period of analysis for each country varied according to data availability. This report looked at the most recent year in which comparable data was available for all of the Nordic countries, i.e. 2021.
A final harmonisation step was implemented to ensure consistency with the OECD study, which used the same method, but on the NUTS2 level (OECD 2023a). This step aggregated the green and brown classifications and values at NUTS2 level, after which the adjustment factor was calculated. This factor indicates the extent to which the OECD reference values differ from the current values, and as such serves as a multiplier that can adjust current results toward reference values. The adjustment factor was then applied to the quantification (in %) of green and brown occupations at the municipal level, and the values for green and brown employees per municipality were adjusted.
There is no perfect way to assess green jobs. Some of the weaknesses of this method include the information that is lost in translation, as the classification from O*NET is first translated into six-digit SOC and then to four-digit ISCO. The reasons why a certain occupation is considered green (or not) are, therefore, not always intuitive. The classification also produces a binary result – an occupation is either considered green or not. This is, of course, a simplification, as greenness also varies within occupations.
Examples of the main ISCO/O*NET jobs connected with green occupations include: software and system developers, landscape architects, recycling and reclamation workers, refuse and recyclable material collectors, energy auditors/sustainability specialists, business salespeople, planners and investigators, office assistants and secretaries, specialist trade, management and organisational developers, primary school teachers, electrical engineers, etc.
The geography of green jobs
In 2021, around 3.4 million jobs, or an average of 25.2% of total employment in the Nordic Region was classified as green, according to the task-based approach used by Vona (2017) and OECD (2023b). This is 7.6 percentage points higher than the OECD average of 17.6% (OECD 2023b). The highest share of green jobs could be found in Sweden (26.6%), followed by Norway (26.3%), Finland and Denmark (both 23.6%) and Iceland (23%). Although higher than the European average, there are differences at the regional and municipal levels among the Nordic countries regarding the share of green jobs.
In general, urban areas exhibit a greater prevalence of green jobs – on average 28% in urban areas compared to 21% in rural areas. Especially the capital regions stand out, except for Rogaland in Norway the regions with the highest share of green jobs were all capital regions – ranging from 27% green jobs in Hovestaden (Copenhagen) to 30% in Stockholm.
In Sweden, municipalities within the Stockholm region, such as Sundbyberg, Upplands-Bro, Stockholm, Nykvarn and Solna boast a share of green jobs exceeding 30%. But also some more industrial municipalities, like Burlöv in Skåne (34%), Gnosjö in Småland (32%) and Ludvika in Dalarna (31%) surpass the 30% mark in green jobs. Taking a closer look at the regional level numbers, the variations are significant. Between Stockholm (30%) and Kalmar (21%) there is a nine-percentage-point difference.
In Norway, municipalities with the highest share of green jobs include Bærum, Kongsberg and Lier in Viken; Sandnes, Sola, Stavanger and Sokndal in Rogaland and Ulstein and Aukra in Møre og Romsdal. At the regional level, the share of green jobs varies from 32% in Rogaland to 20% in Innlandet. Rogaland is the center of the oil and gas sector in Norway, but has actively worked towards creating more green jobs, relying on their big production of fossil-free electricity and skilled workforce from the oil and gas industry. (Førland 2023).
In Finland, most of the municipalitis with a high share of green jobs are located in the capital region (Uusimaa). These include Kauniainen, Sipoo, Espoo and Vantaa (all with shares over 30%). Other municipalities that stand out are for example Uusikaupunki (33%) in Varsinais-Suomi and Pirkkala (29%) and Lempäälä (28%) in Pirkanmaa. In Uusikaupunki there are many jobs in the vehicle industry and paper industry – both with ambitious goals for reducing the environmental impact. The Helsinki region (Uusimaa) is the region with the highest share of green jobs (28%) and Etelä-Savo is the region with the lowest share (17%).
In Denmark, the highest share of green jobs can be found in Allerød (41%), Høje-Taastrup (36%), Ballerup (32%), Brøndby (30%) and Copenhagen (30%) in the Copenhagen region. Other municipalities that stand out include Skive in Midtjylland (31%), and Frederica in Syddanmark (31%). At the regional level, the share of green jobs varies between 27% in Hovedstaden (Copenhagen) to 17% in Sjælland.
Iceland and the Faroe Islands were analysed at the national level due to a lack of detailed data on employment categories. The share in both countries is 20–25%, which indicates a significant number of green jobs, above the EU average.
As map 6.2 shows, there are significant regional disparities regarding the distribution of green jobs, with a higher share in urban regions. One of the reasons for this is that the green transition is in an early phase and there is a demand for new skills and innovations. The green jobs are therefore correlated with higher education and a skilled workforce (OECD 2023b). Consequently, emerging activities have a greater chance of being related to sustainability or the green economy when they are geographically based in diversified economic centres (Hardy et al. 2018).
Map 6.2: Share of green-task jobs (2021) |
Despite the focus on high skilled jobs in urban areas, the green transition is also expected to create many vocational jobs (Persson Thunqvist et al. 2023), and investments in green industries are taking place also outside capital regions, e.g. in the north of Sweden (Wallin 2021; Danbolt 2023). The challenge is to find the right skills, both high-skilled work and vocationally trained, that are needed. In Sweden, for instance, the Västerbotten region, which is known for its robust industrial tradition, is collaborating with the Swedish Job Security Council (TRR) to assist individuals who have become unemployed, including as a result of the pandemic (Wallin 2021). This initiative has allowed for the reallocation of unemployed workers, which has strengthened the green economy. In addition, sustainability-focused companies have established factories in the region, attracting both workforce and development initiatives.
Gender differences in green jobs
Women face several obstacles to equal participation in the green economy. One key challenge is gender-based occupational segregation, which may increase as the green sector expands. Other challenges include deep-rooted cultural and societal expectations, a lack of policies that address gender equality and transformation, inadequate opportunities for training and mentorship, and unevenness in asset ownership (Danbolt 2023). Although the Nordic countries are above the OECD average for female workers in green jobs, Nordic women remain underrepresented in the green economy (OECD 2023b; Danbolt 2023).
This unevenness is shown in Map 6.3, where blue shades indicate a higher number of men in green occupations (values below 1), while yellow indicates a higher number of women (values higher than 1). The balance between both men’s and women’s distribution is identified by the value 1, which is represented in ochre. The top ten green occupations in which women outnumber men vary in different countries. Examples include assistants and secretaries, primary school teachers, financial assistants, nurses, home carers, home health carers, and other occupations identified via the green job classification method (Vona et al. 2018). On the other hand, men are predominant in occupations such as software and system developers, management and organisational developers, and civil engineering occupations.
These differences in occupation types contribute to the underrepresentation of women in STEM-related occupations and are indicative of current challenges related to green transition outcomes. Studies have shown that efforts to address climate change tend to have an overall positive impact on employment, especially in male-dominated sectors, including the energy, industrial and agricultural sectors. At the same time, the services sector, which is predominantly female, suffers the most significant negative impacts on employment (Sand 2023).
Furthermore, it is evident that metropolitan and surrounding areas have been at the forefront of green job creation. In these areas, there have been significant efforts to narrow the gender gap, thereby influencing the spatial distribution of men and women across this sector. This trend may be attributed to the fact that these areas have a higher concentration of skilled professionals, which leads to an increased demand for green jobs – and, consequently, more opportunities (Danbolt 2023).
In Sweden, municipalities in the Stockholm region, as well as Värmland, Skåne and Västra Götaland, have a slightly higher number of women in green jobs than men. The municipalities with a higher number of women presented a gender distribution ratio of 1.1–1.5. Similarly, in Norway, municipalities in the Oslo, Troms og Finnmark, Nordland and Vestland regions have more women in green occupations, with ratios of 1.6–1.03. In Finland, the gender distribution ratio was the lowest, at both municipal and regional levels, when compared to Sweden and Norway – most notably, Uusimaa, Etelä-Pohjanmaa and Keski-Suomi, with ratios of 0.6–0.5.
Map 6.3: Gender distribution in green-task jobs (2021) |
Green industrialisation and green energy
In addition to the previously mentioned difficulty in assessing and measuring green jobs, it should also be noted that green-job typologies measure the situation at the time of the latest available statistics. As such, they do not give a full picture of the jobs that will be created by the green transition. The green transition of the labour market is at an early stage, and many investments in ‘green industrialisation’ are taking place right now. This has sometimes been referred to as ‘the green industrial revolution’ (Pareliussen & Purwin 2023).
In Sweden, but also to some extent in Norway and Finland, this development is mainly taking place in the northern part of the countries. In Sweden, for example, large-scale investments are being made in industries related to the green transition – around EUR 110 billion in Västerbotten and Norrbotten alone in the next few years (Larsson 2022). This is mainly occurring in sectors such as green steel, battery production and mining. In 2023, Norway launched a ‘Green Industrial Initiative’ so that the country would lead the way in green innovation and investment. Similar initiatives are underway in the other Nordic countries.
Naturally, this process of green industrialisation requires labour – according to different assessments, between 20,000 to 25,000 workers are needed in the new industry jobs in Northern Sweden. As an indirect consequence, there will also be a need for up to 30,000 jobs in other sectors (Larsson 2022; Teknikföretagen 2023; SKR 2023). Attracting skilled workers is a major challenge for the regions. Other challenges include providing the right education and training programmes to ensure that the workers have the right skills and securing the transport infrastructure, housing and urban planning necessary to attract people to these areas (Larsson 2022).
A prerequisite for these investments is the availability of predictable and relatively cheap fossil-free electricity (Larsson 2022). The Nordic Region is well positioned here since 96% of Nordic electricity production comes from fossil-free sources – 73% from renewables (mainly hydropower) and 17% from nuclear power in 2021.
2021 was the latest year with full data coverage at regional level. In 2023, a new nuclear reactor, Olkiluoto 3, came on stream in Finland.
Map 6.4: Electricity production (2021) |
Despite the relatively high electricity production per capita in the Nordic Region from an international perspective, it is expected that electricity demand will increase significantly. In Sweden, projections show that 70 TWh more electricity will be needed in 2030 – an increase of around 40% compared to the country’s electricity generation in 2022. The biggest increase in demand is expected in the transition to fossil-free steel production, but demand is also expected to rise in the paper industry, chemical industry, hydrogen production, technical industries and mining. Most of this increased demand is expected in the northern part of Sweden (SKGS 2023).
Concluding remarks
This chapter has looked at the green transition from a geographical perspective. While it is clear that the green transition will have big impacts on the labour market, it is difficult to predict the precise form these impacts will take. According to the typologies presented, the Nordic Region has a higher share of both green jobs and brown jobs compared to the EU average. This indicates that the Nordic Region is competitive when it comes to green innovation, but also that there is still a need for structural change. The maps on emissions per person employed and green jobs indicate that there is a higher share of jobs with high emissions in rural areas and a higher share of green jobs in urban areas. This implies that rural areas are subject to greater pressure in relation to restructuring the labour market.
However, the green transition is still at an early stage. Investment in green industrialisation is expected to create many new jobs, not least in more remote areas. Finding people with the right skills to fill these vacancies will be a major challenge, especially considering the labour shortage across the economy as a whole (see Chapter 5). In addition, all of the Nordic countries are undergoing the same transition, and therefore (to some extent) they are competing for the same labour. Green industrialisation is also dependent on a big and predictable supply of fossil-free electricity production. While the Nordic Region is a global leader in terms of electricity production per capita, more output will be required to satisfy future demand.
Lastly, it should be noted that concepts such as ‘green industrialisation’ and ‘green jobs’ should be used with care since what is considered green is a moving target. For example, the previous focus on the bioeconomy has been criticised since activities that are nature-based are not necessarily good for the environment – cf. the controversies surrounding land-use management and biodiversity loss (Khan et al. 2021). While some industries will help to lower CO2 emissions, there may be other environmental concerns related to these activities. One example of this is mining – many processes related to green industry require rare earth minerals, but extracting these can have a major environmental impact.
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