Study on job creation in a post-growth economy Terms of reference (TOR) of the study ordered by the Greens/EFA group in the European Parliament
Introduction For the last decades, economic growth has fuelled and not alleviated social inequalities; the “trickle down” hypothesis was proven to be incorrect. At the same time, an unsustainable growth based on finite resources, heavy consumption of reproductive ones and high waste generation and pollution creation, has aggravated our ecological footprint. Material Growth is not a sustainable economic development but a slow suicide. Yet, potential growth has decreased over time and long-term forecasts (see, OECDs 2060 review) announce that inflecting this trend can be dubbed as wishful (and in fact non desirable) thinking. During the previous term, the Greens/EFA Group published a couple of studies that outlined the possibility of designing a new economic system compatible with the biophysical boundaries of Planet Earth (IDDRI) and also showed how (and by how much) to finance this Green New Deal (Re-Define / Sony Kapoor). As a foresighted political group, the Greens want to analyse the consequences of a new economical paradigm and to propose convincing and confidence-inspiring ways to respond to societal challenges, assuring human welfare and development, when there is little or no material growth anymore. Therefore, a couple of issues that are particularly sensitive to the citizens have been shortlisted to be examined further. This study will help us : 1. to show that the Greens' political project is based on a deep and overarching understanding of the economic system and it's relation with the biophysical limits of the Planet; 2. to offer credible responses to the post-growth challenge; 3. to address (non-)legislative files (for instance the EU Growth and Jobs Strategy currently called EU2020 Strategy) under this post-growth paradigma.. This first new study commissioned by MEP Karima Delli, Philippe Lamberts, Ernest Maragall, Bart Staes and the Green European Foundation with the financial support of the Greens/EFA Group will focus specifically on the issue of job creation in a “post-growth economy”.
The study The contractor will be asked to: - produce a study of which the scope will be the EU, the euro area and/or, depending on the availability of data, several representative Member States (France, Germany, Belgium, Italy, Spain, Austria, Poland, Greece, United Kingdom)
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I. As to the past (the last three decades, depending on the availability of data) a. examine the short term and long term correlations between GDP growth and job creation and the possible causes for the significant difference between the time horizons chosen (if any); to show indicators related to the energy (and, if possible) the carbon and resource intensity of these jobs; these indicators should take into account the statistical bias due to the structural change underwent by economies over the course of several years (decline of manufacturing activities, relocation and offshoring services, increase of the services sectors…) b. with this respect, show whether some Member States perform significantly better than the average in terms of energy intensity per euro or per job according to the various sectors (agriculture ; manufacturing ; construction ; energy ; services ; public administration (including education, health and social services)) ; Can the overall picture at the Member States level be explained by the economic structure (is the conclusion robust under the assumption that the economic production would be the same in all countries)? Can the best performing Member States / sectors be considered as sustainable (according to quantified criteria)? Can this be explained by offshoring / relocation of the most polluting activities? Can we identify a rebound effect when examining the performances of Member States / sectors? II. As to the long term outlook (time horizon of 2040-2050) A. Under a simple model c. forecast (un)employment rates in a business-as-usual scenario, using assumptions based on the long term outlook of the OECD (“Shifting Gear: Policy Challenges for the Next 50 Years”, July 2014) and expected trend as to the impact of growing digitalization and automation on jobs; and forecast GDP growth, using the forward looking papers of the IEA (“The outlook to 2050 and the role of energy technology”, July 2015), of studies dealing with the depletion of resources (European Commission, ”Annex to the Report on Critical Raw Materials for the EU”, for instance); stress the feedback loops between these parameters such as the relationships between the scarcity of some resources, energy demand and automation; d. perform a sensitivity analysis of the result outcome; e. map, if possible, the evolution of the (un)employment rates at the EU NUTS-2 level; B. Under an “enhanced” model f. examine the impacts in terms of capital-labour substitution, given that energy cost, exhaustion of resources and limited substitutability of some of them will limit mechanisation and automation, while ageing will also be a strain on the labour force; How would these parameters influence previous results? g. introduce - knowing that it is less difficult to implement the transition to a more sustainable economic system at the local level and when a strong consensus is built among all stakeholders - if possible: - a parameter reflecting the “degree of (de)centralization” of the economy; - a parameter reflecting the “degree of openness” of the economy; - a parameter reflecting the “quality of the economic democracy” h. assuming productivity changes, both at system level and at GDP per worker level, and taking into account demographic trends and taking into account the
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abovementioned impacts in terms of capital-labour substitution, what would be the total volume of hours worked with respect to the business-as-usual scenario (on the basis of the most relevant macroeconomic hypothesis contained in the 2014 “Shifting Gear” by the OECD and in “The 2015 Ageing Report: Underlying Assumptions and Projection Methodologies” by the European Commission, 2014). Under which conditions would work sharing lead to full employment (unemployment < 4 %): a. Considering the total of hours worked needed in this new scenario, is it realistic to imagine work sharing and reduction of weekly worked hours? If yes, to what extent? b. how would wage costs evolve, if the reduction of working time per worker is not matched by a proportional decrease in the wage costs? c. By how much then would average wage costs have to fall to offset extra jobs created by this measure, the relative (expected) development of labourintensive and less productive jobs/sectors? d. Which changes in corporate profits apportionment would absorb that wages fall and with which potential impacts on investment? e. Considering that public social (unemployment) spending would diminish consequently, what if a certain percentage of this decrease would be used to cushion the additional wage costs? f. What if, at the same time, wages of the best paid workers were capped, or wages of the least paid workers escaped a wage decrease? i. taking an average household and using Nässén and Larsson’s assumptions and analysis of time use and consumption patterns of Swedish households, estimate the effects of changing income and availability of leisure time. ("Would shorter working time reduce greenhouse gas emissions? An analysis of time use and consumption in Swedish households", 2015) The study should contain a chapter or a set of boxes, highlighting indicators that should be developed (and if so, their current availability and acceptability for experts and organisations) or integrated in the EU economic governance (cf. Macroeconomic scoreboard for instance) or in a renewed EU Jobs & Growth Strategy (currently the EU2020 Strategy). As to the drafting, if some parts are, by their very nature, technical, the study should contain a summary of each chapter and a conclusion that should be understandable by anyone interested in the matter and should present a set of messages and graphs / tables / pictures that can be used for campaigning. A non-technical summary should be presented at the beginning of each section. The final version of the text will be published by the Green European Foundation using a specific lay-out.
Timeframe The work will be divided in two phases: by the 1st of May 2016, the contractor will submit a first draft that will be discussed with the Greens and other relevant stakeholders in order to identify things that would deserve further analysis, to specify some points regarding to the methodology or parameters used, to improve the expected outreach to a wider
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public (by already suggesting and preparing some media materials to publish on the day the report will be published and presented); by the 1st of July 2016, the contractor will handle the final version of the study.
Deadline for the bidders to respond to the call : November 30 2015 Contact person: Olivier Derruine, Olivier.Derruine@europarl.europa.eu
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