Who’s ready for the green economy? Measuring skills for the low-carbon transition

What are green jobs and skills, how do they impact current occupations and how can they contribute to a greener and more modern economy? Banner image: Shutterstock/Jacky Photographer
Who’s ready for the green economy? Measuring skills for the low-carbon transition

This article is part of a series in which OECD experts and thought leaders  from around the world and all parts of society  address the COVID-19 crisis, discussing and developing solutions now and for the future. Aiming to foster the fruitful exchange of expertise and perspectives across fields to help us rise to this critical challenge, opinions expressed do not necessarily represent the views of the OECD.

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Notwithstanding the delays implementing the Paris agreement on climate change, carbon neutrality remains a key priority in the agenda of all industrialised economies. The transition away from fossil fuels requires enormous investments to modernise most sectors of the economy, from power generation to transport, agriculture and manufacturing. Policymakers around the world agree that we need a series of co-ordinated policy interventions for the low-carbon transition. Beyond addressing market failures related to pollution, these interventions should also address others related to knowledge creation and network construction. While post-pandemic policy discourse focuses on building the future’s tangible and intangible infrastructure, ambitious green spending plans are opposed in the present by both industrial lobbyists and workers worried about their jobs. To create policies that address these concerns, a better understanding of the skills needed in a low-carbon economy is important.

Distributional effects of green spending packages are often invoked as the main political obstacle to the low-carbon transition, echoing the protests of the “Yellow Vest” movement in France or the job-killing argument for fossil fuel workers in the United States. Particularly for employment effects, distributional concerns loom large due to the spatial concentrations of fossil fuel industries, whose collapse may trigger a cascade of social problems (i.e. crime, drug use and various psychological problems) in the most affected regions. While the European Green Deal and the proposals currently discussed by the US Congress envisage compensation packages for distressed communities and workers, the best way to spend this money remains unclear. Intuitively, retraining coal miners has greater potential for long-term employability than offering them generous redundancy payment. To be effective, retraining should target the skills required in potentially fast-growing, low-carbon activities—so called “green skills”—yet current policy analyses lack a measurement framework to identify them. For example, the European Skills Agenda for sustainable competitiveness, social fairness and resilience proposes explicit targets about how to improve skills to facilitate the digital transition, while the plan for the creation of skills for the green transition remains vague, e.g. “defining a taxonomy of skills for the green transition”.

More on the Forum Network: Net-zero Economy, Net Economic Benefits: The green future of skills, jobs and infrastructure by Philip Jordan, Vice-President, BW Research Partnership; Senior Fellow, Harvard University

In a series of recent papers, we make the case for the use of the “task” approach specifically to identify green jobs and skills. The main strength of this approach is that it defines the occupational exposure to a certain technology—whether green or not—using granular data on the task content of occupations. These data were developed in the United States to inform labour market actors on emerging skill mismatches and bottlenecks. The most prominent example is the workplace survey known as the Occupational Information Network (O*NET), which contains a very comprehensive list of tasks and skills used in more than 900 occupations. Recently, Germany and Italy have conducted similar surveys to retrieve detailed information on the task and skill content of occupations. The OECD’s Programme for International Assessment of Adult Competences (PIAAC) collects information on a smaller subset of skills and for fewer occupations, but in multiple countries. In the private sector, new players, such as Burning Glass Technology, have developed new algorithms to extract the task content of job vacancies in a O*NET-type of setup.

Despite this progress in data collection, only a few datasets measure the occupational exposure to green technologies and production methods. An exception is the Green Economy Program of O*NET that was designed to collect detailed information on green and non-green tasks for around 100 occupations more closely involved in the green economy. Green tasks are defined here by the potential to reduce harmful environmental impacts; examples include “life-cycle analyses of environmental impacts” or “develop specifications for wind technology components”. Using these data, we constructed an index of occupational greenness that is used to identify, within a broad set of general skills and competences, those that are more likely needed to perform green tasks. The idea is to let the data reveal the skills that have an advantage in performing green tasks. We find that the green skills are primarily engineering and technical skills that are not only acquired through university education, but also in vocational and on-the-job training courses.

Watch the video Will our recovery be sustainable? which discusses the sustainability of pandemic related recovery efforts

Importantly, we show that our green skill index is highly correlated with the labour market outcomes of environmental policies. First, the green investments of the American Recovery and Reinvestment Act enacted after the Great Recession of 2008 created more jobs in United States regions that have an abundant supply of workers with the appropriate green skills. Second, new National Ambient Air Quality Standards in the mid-2000s increased the local demand for workers with green skills in United States metropolitan areas facing more stringent regulatory requirements. Third, the historical increase of energy prices in the European Union manufacturing sector boosted the demand of technicians and professionals, which include the most green-skill intensive occupations. Finally, a task-based estimate of the share of green employment, which reweights employment data using the occupational share of green tasks, closely matches estimates of the share of green goods and services. In contrast, occupation-based measures of green employment, which simply classify occupations as green or not, overstate the size of green employment in the economy.

Overall, these applications shed light on the importance of building precise measures of green skills to predict the macroeconomic and distributional effects of green spending policies. But such data are not widely available. The lack of task and skill data for several countries can only be fixed through the development of new data projects. Thus, now is the time to design surveys based on valid assumptions and principles. This blog post makes the case for the task-based approach as the appropriate conceptual framework to design such surveys or, as for the case of Burning Glass data, to extract information from job vacancy data. As a cautionary note, while the task-based approach is well-suited to analyse aspects of retraining to better match labour supply to the needs of a low-carbon economy, a systemic shift towards a low-carbon economy also needs profound changes in individual behaviours and values. This requires a deeper rethinking of the entire vocational training and educational systems, beginning with pre-schooling. This is an unexplored area of research where more efforts are much needed.

Lear more about the green skills in the 2021 joint Cedefop/OECD symposium: Apprenticeships for greener economies and societies

Watch this video to learn about the results of the OECD's Programme for the International Assessment of Adult Competencies (PIAAC), which measures adults’ proficiency in key information-processing skills

Related Topics

Climate  Sustainable Development Goals New Societal Contract  Future of Work  Future of Education & Skills