4.9 Green employment

Green employment is a key enabler for ensuring that a transition to climate neutrality is just. The term green employment can broadly be defined as referring to decent jobs that contribute to preserving or restoring the environment, though there are varying definitions.

This briefing considers past trends (assessed based on historic changes to employment) and the outlook for green employment. For the outlook, we consider the transition's likely impacts on employment and whether the policies that have been implemented are sufficient to enable a just transition to climate neutrality.

Key policies

The European Green Deal (EGD) and the Eighth Environment Action Programme (8th EAP) aim to accelerate the EU economy's green transition. Meanwhile, the Clean Industrial Deal (CID), the Net Zero industry Act (NZIA) and the Critical Raw Materials Act (CRMA) seek to accelerate the transition to climate neutrality while boosting EU industry's competitiveness, creating quality jobs and supporting the EU's efforts to become energy independent.

The Just Transition Mechanism (JTM) adds an important socio-economic dimension to the EGD by supporting regions, industries and workers facing the greatest challenges. The Just Transition Fund supports the economic diversification and reconversion of regions that rely heavily on carbon-intensive activities. The Recovery and Resilience Facility and the European Social Fund Plus also support green employment and skills-related investments.

Past trends (10-15 years)

Improving trends/developments dominate

Past trends indicate the transition to a green economy is underway with the number of green jobs increasing. In 2022, employment in the environmental goods and services sectors (EGSS) reached 6.7 million full-time equivalents, more than doubling from 3.0 million in 2000.

Globally, renewables have driven significant increases in employment, though jobs are concentrated in a small number of countries. In the EU, employment in renewable energy production doubled from around 600,000 in 2021 to 1.2 million in 2022. At the same time, while employment losses in high-emission sectors are to be expected in the near future as a result of the implementation of Fit for 55 policies, there has been no clear decreasing trend in the share of employment in high-polluting jobs between 2011 and 2019 across European countries.

Outlook (10-15 years)

Trends/developments expected to show a mixed picture

Transitioning to a green economy will continue to create significant green employment opportunities in some sectors with the right policy mix. While overall net gains are likely to be modest, the economy is expected to undergo structural transformations, with substantial employment reallocation across sectors. Employment is projected to decrease in high-emission industries, with job creation anticipated in expanding low-emission activities. However, the shifts to green employment tend to favour more developed regions, potentially widening regional disparities.

The required pace of change entails other significant challenges. Skills shortages — already a key barrier to investment for business — are expected to increase with a growing demand for certain skills. Upskilling and managing structural changes (e.g. demographic change) are key challenges in an already tight labour market.

The transition could also worsen existing gender inequalities. Addressing low female representation in new green sectors would be an appropriate response to this challenge and would also alleviate labour shortages. Policies to empower people via skills, capture positive economic impacts and address negative ones will be key to ensuring that the required transition is delivered in a just way. 

The EU has taken significant steps in this direction. The EGD and 8th EAP aim to accelerate the EU economy's green transition. Though policies like the NZIA and CID are not without their critics they have the potential to accelerate progress, boost competitiveness and create quality jobs.

Overall, however, the impact of policy is uncertain at this point and EU industries are facing increasing headwinds — skills shortages, supply chain dependencies, intensifying global competition, high energy prices, a challenging economic context and competing investment priorities — despite having a leading role historically in developing net-zero technologies.

Prospects of meeting policy targets 2030/2050

2030: No specific policy targets

2050: No specific policy targets

Robustness

Data on past trends are based on figures published by various international organisations. The Eurostat estimates used are arguably a narrow proxy for green employment but they are complemented by other sectoral estimates and peer-reviewed literature. The lack of conceptual clarity about the definition of green activities and methodological difficulties in quantifying their labour market implications pose a significant challenge. The outlook is assessed to be uncertain based on expert judgement. Both growth in green jobs and minimising disruptive impacts depend on sufficient policy action in the context of international competition and mega trends. While the EU has adopted ambitious policies to ensure its competitiveness, it is too early to assess the impacts and current evidence suggests there will be significant challenges.

Charts/maps

Figure 1. Employment in the environmental economy by domain, EU, 2010-2022 (in thousands of Full-Time Equivalents)