Memorandum submitted by the Institute
for Public Policy Research
1. SUMMARY
— Rather than focusing on "green"
jobs, the Low Carbon Industrial Strategy should consider what
the impact of a transition to a low-carbon economy will mean for
jobs and employment across the economy.
— The Strategy should contain measures
for assisting existing companies in transforming their operations
to become low-carbon and for supporting people currently working
in sectors that will decline.
— The policy framework for creating new
low-carbon jobs should be targeted at strategic sectors and should
contain credible long-term targets, measures to assure the domestic
market and targeted support measures.
— New low-carbon jobs are likely to provide
good quality jobs. Some areas have the potential to provide job
opportunities for low skilled workers and others for female workers,
however, opportunities to these groups need to be opened up across
all sectors.
— A more strategic approach to skills supply
is needed, which targets specific sectors and levels where there
is evidence of specific skills shortages.
2. ABOUT IPPR
2.1 The Institute for Public Policy Research
(ippr) is the UK's leading progressive think tank, producing cutting
edge research and innovative policy ideas for a just, democratic
and sustainable world. Ippr has a strong track record of policy-focused
research on climate change, economy and business, and welfare
and poverty. We are currently engaged in a research project investigating
the potential for creating "green-collar jobs" in the
UK. The first output from this work—a study of job creation
potential in the offshore wind sector—was published in April
2009.[1]
We are also running a programme of work called "Tomorrow's
Capitalism", which is exploring the structure and future
of our economic system.[2]
3. INTRODUCTION
3.1 The prospect of "green jobs"
that contribute towards tackling the problems of rising unemployment
and environmental degradation is an appealing one. However, there
is no accepted definition of what "green jobs" actually
are. The term has variously been used to refer to jobs in environmental
services (such as waste treatment, anti-pollution measures and
water services), new renewable energy plant and other low-carbon
energy sources, production of low-carbon or environmentally friendly
products, installation of energy efficiency measures, environmental
consulting and carbon finance. Some definitions extend as far
as including services like public transport that offer a low-carbon
alternative to the car.
3.2 Ippr's view is that rather than trying
to draw a boundary around a set of job titles that can be labelled
as "green", a more appropriate starting place is to
think about what the impact of moving to a low-carbon economy
is likely to be on jobs and employment. The Climate Change Act
sets out very challenging carbon reduction targets for the UK
and this is likely to affect existing businesses and jobs in three
ways. First, we can expect to see a growth of new industries and
jobs associated with low-carbon energy generation and energy efficiency
measures, for example in renewable energy or building technologies.
Second, some existing industries will have to change in nature
if they are to remain competitive in a low-carbon world. For example,
manufacturers of gas guzzling cars will need to switch to producing
low—and zero-carbon vehicles. Carbon intensive industries—such
as steel and cement—also fall within this category as they
will need to develop new, lower-carbon manufacturing techniques.
Finally, some industries and jobs will decline and disappear.
For example, jobs in offshore oil and gas will eventually cease
to exist.
3.3 In this sense, all jobs will
need to be "green" in the future, otherwise they will
not be sustainable in a low-carbon economy.
4. LOW CARBON
INDUSTRIAL STRATEGY
4.1 The Government's Low Carbon Industrial
Strategy Vision is right to acknowledge that the transition to
a low carbon world will transform our whole economy. However,
much of the focus of the Vision document[3]
is on the new opportunities for job creation, with little consideration
of industries that are likely to experience change or even decline.
The Industrial Strategy needs to contain proposals both to create
new jobs and to manage the transition from high—to
low-carbon for existing companies. This suggests that a comprehensive
low-carbon industrial strategy will need to achieve four objectives.
It should:
— Stimulate the development and uptake
of the low-carbon infrastructure—such as renewable energy
generation—that underpins the rest of the economy.
— Stimulate innovation and rapid uptake
of new low-carbon goods and services.
— Enable existing industries to achieve
low-carbon operating models.
— Ensure viable pathways for people working
in declining high-carbon industries to move into new jobs.
4.2 The Strategy should take the carbon
reduction budgets and pathways set out in the Committee on Climate
Change's 2008 report as a starting point and then needs to
take a strategic approach to developing new industries and supporting
existing industries in moving to low-carbon practices. In the
past, government has tended to favour a "horizontal"
approach to industrial and technology policy (where policies are
not targeted at any particular sector or industry), but this can
result in limited resources being spread too thinly and a failure
to recognise demand side as well as supply side measures.[4]
The Strategy should identify priority areas based on three criteria:
potential for carbon reduction, potential for job creation and
potential to provide decent working conditions. Interventions
should then be targeted on these areas.
4.3 In addition to thinking about new job
opportunities, the Strategy must consider existing industries
and jobs that will disappear in a low-carbon world. Trade Unions[5]
and the ILO[6]
have highlighted the need for a "just transition" to
a low carbon economy. This means ensuring that measures are in
place to protect people who may lose their jobs as a result of
mitigation efforts. For example, this will include working with
employees and Trade Unions to determine where new jobs might be
found, ensuring appropriate retraining opportunities are available,
providing relocation support and providing adequate financial
assistance where it is not possible for people to move immediately
into new employment.
5. IMPACT OF
THE GOVERNMENT'S
LONG-TERM
POLICY FRAMEWORK
ON LOW-CARBON
INVESTMENT AND
EMPLOYMENT IN
ENVIRONMENTAL INDUSTRIES
5.1 ippr conducted a study into the potential
for creating jobs in the offshore wind sector in early 2009.[7]
This research investigated whether the Government's current policy
framework would be sufficient to encourage investment and employment
in this area. Our study identified some positive aspects of the
current framework, most notably the Climate Change Act and targets
for 2020 and 2050, which have sent a clear signal to the
private sector that government is serious about tackling climate
change and reducing the UK's greenhouse gas emissions. However,
three areas were identified where policy was felt to be lacking.
5.2 The first was the market. There are
a number of factors that are contributing to uncertainty about
the amount of offshore wind capacity that is likely to materialise
in the future and the timescale on which it will be built. This
in turn makes supply chain industries nervous about setting up
in the UK since the market for their products is not guaranteed.
The main causes of this market uncertainty are: concerns about
whether the grid will be upgraded to accommodate offshore wind
power and when this is likely to happen; doubt about whether the
new Infrastructure Planning Committee will speed up planning processes
as intended; and whether bottlenecks in the supply chain can be
overcome.
5.3 The second area is around policies that
actively promote the industry, or "industrial activism".
Other European countries that have successfully built up their
domestic wind industries (such as Denmark, Germany and Spain)
have used a number of measures to encourage investment on top
of renewable energy targets and financial support mechanisms like
feed-in tariffs. These have included financial and tax incentives,
infrastructure development and targeted R&D programmes. The
UK's approach in the past has been to use "horizontal"
policy measures but there is a need to be more strategic and to
target existing support measures better at industries that offer
both carbon reduction potential and decent job creation opportunities.
Support measures also need to be more visible. For example, financial
support for offshore wind is already available in the UK but it
is currently spread thinly across a number of different programmes,
which makes accessing it complicated and time-consuming. Consolidating
this funding into a dedicated support programme would help to
make the UK more attractive to potential investors. There is also
a need to upgrade strategic infrastructure, such as ports.
5.4 Finally there is a perception that there
is a shortage of suitable skills among the workforce. In particular
in engineering technicians and in the manufacturing sector more
generally. This is addressed in more detail below.
5.5 Our study into offshore wind presents
some general lessons for the development of a policy framework
to support jobs in environmental industries more broadly:
— Long-term and credible targets are important
to send signals to the private sector. The targets set out in
the Climate Change Act are a good start, but credible sectoral
targets should be developed too (for example, the current targets
for delivering offshore wind capacity under Round Three are not
felt to be credible)
— The development of any new environmental
industry requires a stable and sizeable domestic market. This
means developing appropriate economic support mechanisms and working
with industry to identify barriers to delivery and policies to
overcome them.
— Additional targeted support such as financial
and tax incentives, R&D support and infrastructure development
will help to attract investment.
— A more strategic approach to skills and
training policy is necessary to ensure a lack of skills does not
deter investment and that the UK workforce is well placed to benefit
from new job opportunities in new industries.
6. NATURE OF
NEW JOBS
CREATED BY
A LOW
CARBON INDUSTRIAL
STRATEGY
6.1 The growth of low carbon industries
offers potential for signficant job creation. However, new employment
opportunities in low carbon industries need to be accessible to
those who need them the most—particularly those who tend
to lose out in the current labour market, including women, people
with low skills and those with poor work records; and people who
have experienced unemployment has a result of this recession.
Given the extent of low pay in the UK, policy should also focus
on ensuring that new jobs are good quality jobs.
6.2 ippr has carried out new analysis of
existing industries to try to gain an insight into the nature
of new jobs which are likely to be created by the transition to
a low-carbon economy, and which groups might benefit most from
the growth in employment in these industries.[8]
We identified 15 industry divisions where employment growth
can be expected, which we have summarised into five main industry
groups—manufacturing, construction, utilities, wholesale,
and business and financial services.
6.3 In carrying out this analysis, ippr
had two main concerns:
1. The quality of new jobs created by the low
carbon economy: in identifying opportunities for job creation,
emphasis should be placed on creating good quality jobs which
pay a decent wage, rather than creating jobs that simply add to
the already high levels of low pay in the UK.[9]
2. The accessibility of new, good quality jobs
to groups who tend to do less well in the labour market, specifically:
— Women: it is important that new opportunities
for job creation do not reinforce the high and enduring gender
pay gap, and even play a role in reducing this gap.
— Long-term unemployed/inactive: wherever
possible, job creation should benefit people who tend to be excluded
from the labour market.
— Low-skilled/those with a poor work record:
creating a new set of high-skill jobs in the low carbon sector
is attractive, but risks excluding those with low skills or patchy
work records. There also needs to be a focus on creating jobs
at lower and intermediate levels, alongside career ladders and
appropriate workplace training to enable workers to progress if
they wish.
6.4 Our analysis, using 2008 data from
Labour Force Survey, has enabled us to develop a picture of employment
in the sectors which are likely to grow as a result of the expansion
of the low carbon economy. Here, we present a summary of our findings
for the three industry groups likely to account for the greatest
number of new low carbon jobs.[10]
6.5 Manufacturing
— Jobs are likely to be created in the
manufacture of machinery, electrical equipment, non-metal products,
plastics, fabricated metals, refined petroleum products, and motor
vehicles.
— The average rate of low pay in these
seven industry divisions is well below the national average, at
14 per cent compared to the UK average of 21 per cent,
suggesting that these will be good quality jobs.
— Only a fifth of workers in these industries
are women, indicating that women may be excluded from new job
opportunities in low carbon manufacturing.
— Employment in these manufacturing divisions
is evenly spread between higher, intermediate and lower occupational
groups, suggesting there will be opportunities for employment
at all levels.
6.6 Construction
— Jobs are likely to be created in site
preparation, installation and whole-structure construction.
— Only 14 per cent of construction
workers are low paid so growth in this sector is also likely to
provide good quality job opportunities.
— However, only 14 per cent of the
workforce is female, so women may also be excluded from many of
the new jobs in this sector.
— The occupational structure in construction
is focused on the intermediate level, with many jobs in skilled
trades, and a substantial number of jobs in lower occupational
groups. This could provide good quality opportunities for those
with lower and intermediate skills.
6.7 Business and financial services
— Jobs are likely to be created in this
sector in financial services (low carbon finance), architectural
and engineering services, computing, R&D and other business
services.
— On average, 11 per cent of workers
in these 5 industry divisions are currently low paid, so
this sector offers good prospects for good quality employment.
There are also very few workers in this sector with no qualifications.
— Women currently make up nearly half the
workforce in this sector, so the prospects for women to benefit
from the expansion of good quality employment is much higher here.
However, action will be needed to ensure that women are not concentrated
in low paying occupations within this sector.
— The occupational structure of this sector
is heavily skewed towards higher occupational groups. This could
mean that there are limited opportunities here for low-skilled
workers or those with poor work records.
6.8 This brief summary provides some reasons
to be positive about the nature of jobs in low carbon industries.
All three sectors provide relatively good quality jobs (as measured
by the extent of low pay); potential growth in manufacturing and
construction offer opportunities for those with lower skills;
and growth in business services linked to low carbon industries
provides good opportunities for female workers. Clearly, challenges
exist, including: opening up job opportunities in manufacturing
and construction to women, and in business services for the lower
skilled; strengthening career ladders in some sectors to enable
low-skilled workers to progress; and ensuring that the welfare
and skills sytems is capable of supporting the long-term unemployed
and inactive into new low carbon jobs.
7. THE UK SKILLS
BASE AND
THE EFFECTIVENESS
OF GOVERNMENT
POLICY IN
ENHANCE IT
7.1 Given the range of activities which
could fall under the "green jobs" heading, there is
no single, generic "green" skillset. Jobs are likely
to be created in areas as varied as low carbon finance, high-tech
manufacturing, management consultancy, R&D, computing and
architectural services, and each sector will have its own skills
requirements and workforce development needs.
7.2 Previous research by ippr has found
that, across the whole labour market, the supply of skills has
been outstripping employer demand for skills over the last few
decades.[11]
National surveys also show that employer-reported skills shortages
have been falling.[12]
This suggests that where skills gaps exist, they are very concentrated
and specific.
7.3 This is supported by analysis carried
out by the Engineering and Technology Board,[13]
which found shortages of skilled engineering technicians (qualified
at below degree level) in certain sectors, but no shortage of
graduate-level engineers. This suggests that the perceived shortage
of workers with STEM skills—which will be important for
some low carbon industries—only operates at certain levels
and in certain industries, and does not apply more generally.
7.4 The Migration Advisory Council has also
identified a number of occupations which may be needed in the
low carbon economy where the UK currently has skills shortages—for
example, geologists (needed for geothermal energy projects), high
integrity pipe welders (needed to connect consumers to neighbourhood
district heating systems) and electricity transmission overhead
line workers (needed for upgrading the electricity grid and building
connections to new renewable energy sources). While these shortages
may be of concern, they are all highly specific shortages requiring
uniquely skilled and experienced specialists.
7.5 This is somewhat at odds with the government's
overall approach to workforce skills, which is driven by generic
targets which benchmark the UK's performance against the top performing
OECD countries. For example, the government has a target to have
over 90 per cent of adults qualified to Level 2 (equivalent
to five GCSEs at A-C), and 68 per cent of adults qualified
to Level 3 (equivalent to A Level), by 2020.[14]
However, these targets say nothing about what kind of qualifications
will be achieved, in which industries, and how they will be matched
with employer demand.
7.6 We believe that a much more strategic
approach to skills supply is needed, which targets specific sectors
and levels where there is evidence of specific skills shortages
in priority sectors. Such an approach would go hand in hand with
a policy of "industrial activism", as discussed above,
and would integrate skills with the other factors that we know
are important drivers of productivity and firm success, such as
product market strategies, capital investment, R&D and the
application of innovation. This strategic approach must also go
beyond the demand-led approach which has previously characterised
the post-Leitch adult skills agenda. If the UK is to benefit from
the growth of the low carbon economy, there needs to be some central
oversight of skills provision which allows us to train people
for new and emerging jobs, and to coordinate skills provision
to meet future demand.
7.7 Despite some useful statements from
the government recognising the limits of a purely demand-led system,[15]
and a very useful contribution from the UK Commission on Employment
and Skills,[16]
it is not clear that the government's approach in England has
changed very much in practice. For example, the development of
the new Skills Funding Agency still seems to be premised on delivering
a demand-led system. Getting the approach right requires the government
to achieve a difficult balance between a system based on current
and future employer demand but which is not entirely demand-led.
7.8 There is also a danger that the rhetoric
around "green" jobs, which tends to paint these jobs
as completely new and very high-skilled, gives the impression
that significant investment is needed to upskill workers across
a range of industries. This is clearly the case for some occupations—like
those identified by the ETB and the MAC—but may not apply
in many sectors.
7.9 Given the significant fall in demand
in the property sector and consequent rise in unemployment in
this sector, for example, there is likely to be a sufficient supply
of skilled construction workers to support a substantial increase
in energy efficiency programmes. This is also likely to be true
in the manufacture of alternative-fuel vehicles, given the current
position of the UK car industry. In these sectors, it would seem
that workers with existing skills could potentially be re-trained
without the need for large-scale government investment.
7.10 This need to be realistic and precise
about where skills gaps exist and where significant up/re-skilling
is needed also feeds into issues of perception about the skills
base of the UK workforce. There is some anecdotal evidence that
foreign firms are deterred from investing in the UK because they
believe there is a shortage of STEM skills among the workforce.
However, the ETB research shows that shortages of engineering
skills are only a problem in certain areas (for example at the
technician level), which suggests that we need to create a better
understanding of where exactly skills gaps lie. We can then develop
a strategy to overcome negative perceptions, together with a targeted
approach to addressing genuine skills shortages where they exist.
29 May 2009
1 Bird J (2009) Green Jobs: Prospects for creating
jobs from offshore wind in the UK London: ippr, available
at: http://www.ippr.org/publicationsandreports/publication.asp?id=658 Back
2
See http://www.ippr.org/tomorrowscapitalism/ Back
3
HM Government (2009) Low Carbon Industrial Strategy: A Vision,
London: The Stationery Office Limited, available at: http://www.berr.gov.uk/files/file50373.pdf Back
4
Watson J (2008) Setting Priorities in Energy Innovation Policy:
Lessons for the UK Cambridge, MA: ETIP Discussion Paper, Belfer
Center for Science and International Affairs, Kennedy School of
Government, Harvard University http://belfercenter.ksg.harvard.edu/files/2008_Watson_Priorities.pdf Back
5
TUC (2008) A Green and Fair Future For a Just Transition to
a Low Carbon Economy London: TUC, available at: http://www.tuc.org.uk/touchstone/Justtransition/greenfuture.pdf Back
6
UNEP/ILO/IOE/ITUC (2008) Green Jobs: Towards decent work in
a sustainable, low-carbon world available at: http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/publication/wcms_098503.pdf Back
7
Bird J (2009) Green Jobs: Prospects for creating jobs from
offshore wind in the UK London: ippr, available at: http://www.ippr.org/publicationsandreports/publication.asp?id=658 Back
8
We have done this by assigning a SIC code to each of the low carbon
activities identified in the report Low Carbon and Environmental
Goods and Services: An Industry Analysis, commissioned from
Innovas by Berr in 2008. Using this process, we identified 15 SIC
industry divisions which are likely to experience employment growth
as a result of the expansion of low carbon industries. This method
can only provide a guide to the possible nature of new jobs in
the low carbon sector, as it is unlikely that new jobs in this
sector will be identical to existing jobs. In addition, underlying
structural changes in the labour market, such as some "hollowing
out" of intermediate level jobs and the gradual decline of
manufacturing, may have an impact on the kinds of jobs created
in the low carbon sector. Back
9
Previous research by ippr has highlighted the extent of low pay
in the UK and raised concerns about the link between low pay,
inequality, in-work poverty and poor economic performance within
firms, for example, Lawton K (2009) Nice Work If You Can Get
It: Achieving a sustainable solution to low pay and in-work poverty
London: ippr. Back
10
We also have data on the two other industry groups, wholesale
and utilities, but have not included them here due to space constraints
since fewer jobs are expected to be created in these groups. Service
jobs in energy efficiency (such as home energy auditors) are also
excluded due to space constraints. Back
11
Lawton K (2009) Nice Work If You Can Get It: Achieving a sustainable
solution to low pay and in-work poverty London: ippr Back
12
Learning and Skills Council (2008) National Employer Skills
Survey 2007 Coventry: LSC Back
13
ETB (2008) Engineering UK 2008 London: ETB Back
14
UK Commission for Employment and Skills (2009) Ambition 2020:
World class skills and jobs for the UK Wath-upon-Dearne: UKCES Back
15
See for example Strategic Skills: Right skills, right place, right
time speech by John Denham, 24 October 2008, Centrepoint
http://www.dius.gov.uk/news_and_speeches/speeches/john_denham/right_skills Back
16
UCKES (2009) Ambition 2020: World class skills and jobs for the
UK Wath-upon-Dearne: UKCES Back
|
