Local actions for a green future

Tackling many challenges of the green transition calls for adapting and ramping up existing local labour market and skills systems. Yet, other challenges will require tailored policies. Local skills systems are already struggling to keep pace with the rapid change of jobs and skills needs, and to reach those individuals that would benefit the most from training. Therefore, governments need to double down on adult learning, and active labour market policies, informed by skills assessment and anticipation systems.

Achieving ambitious climate targets will require a shift towards less polluting and more resource efficient activities, meaning that some workers will need to switch jobs and develop new skills. For many workers in polluting jobs, the green transition means a choice between developing new skills or facing the risk of unemployment. However, the need to master new skills goes beyond this group. Broader re- and upskilling efforts are necessary, to avoid green skills shortages that could hamper the achievement of climate goals, especially in the context of unprecedented labour shortages in many OECD countries.

Too often, environmental and labour market policies are not aligned. Environmental policies, which drive the demand for green skills, have typically been developed in isolation from skills and labour market policies, which drive the supply. Urgent action is needed to meet climate policies with ambitious programmes to educate workers. Otherwise, skills shortages may stall the transition and the displacement of workers can lead to further divergence across people and places.

Policy needs to anticipate changes in skills and job demand. Existing programmes typically respond to skills shortages, instead of anticipating them. To change that, policy makers need to know: (i) what skills are available in the local labour market, (ii) what skills are in demand, and (iii) how local skills demand will change in the future. Timely data that reflect the impact of environmental regulation on the labour market are needed, supported by sufficiently detailed information for sectors occupations and regions to take into account the uneven impact of the green transition.

Local and national governments need to develop a forward-looking and comprehensive adult learning strategy to help workers acquire skills required in a green economy. In many OECD regions, skills systems are not ready for the reskilling needs brought by the green transition and other megatrends, often already struggling to keep up with the changing labour markets. Individuals that need training the most tend to be least likely to get it. Moreover, training is not always aligned with local labour market needs.

Policy makers face a double challenge. They need to broaden access to adult learning offers, particularly for vulnerable groups, and get employers on board to ensure training meets local labour market demand. Local skills systems need to be responsive to the shift in skills needs in the green transition, based on systematic reviews of educational curricula.

National, regional and local governments need to act jointly to develop policies tailored to local challenges and opportunities of the green transition. Green policies may exacerbate already existing regional disparities in GDP per capita and employment – as they could lead to job losses in some regions and skills shortages in others. Tailored training offers may be needed in sectors and regions most affected by the green transition – both those that face significant employment risks and those that are at the forefront of the green transition. The engagement of regional and local governments can help design policies that respond to local needs, with local governments being wellplaced to initiate local skills coalitions.

While the benefits of a sustainable economy will be shared, its costs will fall disproportionately on individuals employed in polluting sectors and places dependent on such jobs. The experience of past transitions shows that without effective action, mass lay-offs can spill over to other sectors and have long-term scarring effects on local communities, possibly causing resentment that may lower participation in re-employment programmes or diminish support for the green transition.

Public Employment Services can help promote a fair and inclusive green transition. Supporting workers in polluting jobs, who tend to have lower education level and hold medium-skilled occupations, early on through a tailored mix of career guidance, training, and income support maximises chances of re-employment. Support for displaced workers that considers a worker’s characteristics, labour market demand and feasibility of career transitions will prove more effective.