The Future of Work in the Twin Transition to Green and Digital

The concept that the digital and energy transitions go hand in hand is rapidly transforming the EU economy and labor markets. New technologies and new forms of work stemming from digitalization, as well as climate change and the effort to move to a low-carbon economy are leading the twin transition. Member states face the challenge of adapting their economies to meet sustainability standards and maintain prosperity for future generations.

To achieve this, they should use digital innovation to reduce CO2 and move towards greater sustainably.

In her 2020 speech on her first 100 days in office, European Commission President Ursula von der Leyen declared the twin transition to digital and green as “the driving force of this Commission”. In her 2023 State of the Union address, she renewed her view that the green and digital transition go hand in hand. The COVID-19 pandemic and the recent energy crisis due to the Russian invasion of Ukraine have further emphasized the importance of both transitions for the EU’s economic and energy sovereignty. The EU, most notably in its Green Deal and Digital Decade, has already introduced important initiatives to guide movement towards these goals.

CHALLENGES FOR WORKERS IN THE TWIN TRANSITION

There is no single, pre-determined path for transformation. The impact of the transitions on employment levels and types of jobs is highly dependent on how technologies are deployed. Every dimension of the twin transition presents potential benefits and challenges for workers: new working conditions, new skills requirements, and access to social dialogue with social partners and unions. All this will change the shape of the labor market.

A successful twin transition will depend to a large extent on inclusive and well-designed policies that stimulate the economy and strengthen workers’ rights, so that everyone in the EU profits from the transition.

RAPIDLY EVOLVING JOB MARKETS

Predictions about digitalization and sustainability have two things in common: uncertainty and ambiguity about how they will affect employment. New low- and zero-carbon technologies, such as photovoltaic and wind energy, require workers to learn specific skills and will make other jobs obsolete. Digitalization, as seen in artificial intelligence (AI) and robotics, will change the working lives of many, making reskilling and on-the-job training essential. The energy transition also demands new technological skills to implement new emission-saving technologies.

SHORTAGES OF SKILLS AND WORKERS

To successfully roll out the energy transition, EU member states are in dire need of skilled workers. In industries such as solar power installation, heating engineering or construction, there is an estimated shortage of 200,000 workers in Germany alone. The country also needs 700,000 workers in the technology sector. By 2030, Europe will require a minimum of 20 million professionals in information and communication technology (ICT) to facilitate the digital transformation of the European economy. In 2022, only 9.4 million professionals worked in the sector.

GENDER INEQUALITY

There is a substantial gap between the participation of men and women in the digital economy and in the green job market. The European Commission calculated that the European economy lost €16.2 billion in productivity in 2018, two years before the pandemic, due to women leaving their digital jobs for social, cultural and individual reasons. The energy industry also lacks female participation at all levels, particularly in STEM (science, technology, engineering and mathematics) professions and leadership positions. Promoting gender equality can reduce the shortage of ICT workers with the added benefit of increasing the EU employment growth rate from 2.1% to an estimated 5% by 2050.

WORKERS’ RIGHTS

The twin transition may also contribute to increasing inequalities and labor market polarization due to unequal access to education and digital technology. While highly skilled and mobile workers are more likely to benefit from digitalization, low-skilled workers or workers in declining sectors face increasingly precarious working conditions, the threat of dismissal or exclusion from the labor market.

GLOBAL DIGITAL DIVIDE

The digital divide, another factor that will determine winners and losers as digitization becomes more entrenched, is more pronounced for low-income and low-skilled people and regions. This is a special concern since increased availability of digital technology leads to increased usage of the technologies, as seen in the so-called rebound effect.

Digital technologies will support the ecological transition as they substitute carbon-intensive technology and extraction. Yet the production of digital technology, such as semiconductors and the infrastructure for photovoltaic systems, demands large amounts of energy. Societies in the Global South are affected more strongly by the negative consequences of the digital divide and the energy transition. Extraction of raw materials, particularly rare-earth metals for mobile phones or electric vehicles, often happens under harsh and exploitative working conditions. These practices are increasingly becoming burdensome with negative consequences for the environmental ecosystems and marginalized communities in the Global South.

POLICY RECOMMENDATIONS

Ensure Education Access and Lifelong Learning

Workers and policymakers are motivated by the fear of possible redundancies resulting from new technology such as robotics, software applications and, most recently, AI. AI is more likely to impact highly educated and older workers than previous technologies have. EU policy, therefore, needs to focus on implementing new forms of integrated academic training and apprenticeship that prepare the workforce for the challenges of new, digital jobs and the green economy. Programs need to be developed to improve skills and reskill the incumbent workforce for the new digitalization of production processes and business models. Training is essential to ensure that all workers can transition to more sustainable and better-quality digital jobs and take advantage of the opportunities offered by advancing technologies.

Address Skills Shortage through Migration and Promotion of Gender Equality

To avoid delays in the twin transition caused by a shortage of skills, there needs to be a streamlined focus on bringing workers from non-EU countries into sectors relevant to the transitions. These sectors include energy and ITC. The European Green Deal, in fact, makes a direct reference to the relationship between climate change and migration. Acknowledging the significant potential contribution of migrants to sectors affected by the transitions, particularly agriculture, energy, manufacturing and construction, will substantially enhance opportunities for the twin transition to succeed.

For this reason, the European Commission’s Skills and Talent Package aims to increase the effectiveness of the EU’s legal migration policy. To better integrate newly arrived workers into the labor market requires the provision of language courses and upskilling and reskilling opportunities. As part of the European Year of Skills 2023, the European Commission also plans to adopt initiatives to enhance the recognition of and validation of skills acquired abroad, and a proposal to establish an EU Talent Pool to facilitate matching employers and migrants. Effort should focus on recruiting women, currently underrepresented in the digital and green sectors. When formulating policies and initiatives targeted towards enhancing gender equality within the digital and green sector, policymakers must be aware of the diverse stages in women’s lives that impact their career paths. Women still face significant barriers and discrimination in all stages of life: childhood, adolescence, initial entry into the workforce, motherhood and re-entry into the job market. Gender equality in STEM can be achieved through education training initiatives, such as providing mentorships and traineeships in ICT. Finally, dismantling stereotypes to encourage and support women to assume leadership positions, particularly in technology companies, will advance the closing of the ICT gender gap. Neglecting the untapped potential of more than half the population is wasteful. Gender inequality has large economic costs.

Achieve a Just Transition through New Forms of Participation

While highly skilled and mobile workers are more likely to benefit from digitalization, low-skilled workers or those in declining sectors face increasingly precarious working conditions, and the threat of dismissal or exclusion from the labor market.

To guarantee that people living in EU member states that rely on carbon-intensive industries are not left behind in the transition to a low-carbon continent, the European Green Deal introduced the Just Transition Mechanism. This includes a proposed Just Transition Fund that would provide €17.5 billion to support the most vulnerable regions and sectors affected by the transition.

Yet, significant work still needs to be done to improve dialogue with social partners and at the macro-policy level. The current level of involvement of social partners and unions in policymaking connected to the twin transition is perceived as inadequate. Policy needs to be established to ensure a fair distribution of profits between businesses and workers. Additionally, the benefits of digitalization can be shared among the workforce by enhancing work-life balance and dedicating time to upskilling through, for instance, a four-day workweek and a “training Friday”.24 These goals involve investing, by member state governments, in job-rich and low-emission sectors and technologies while upholding human and labor rights and “decent work” principles.

Guarantee Fairness and Sustainability Globally

Policy on the twin transition needs to respond to imbalances resulting from the unequal distribution of costs and benefits of digital technologies and their effect on the world’s natural resources.

A successful twin transition will depend to a large extent on inclusive and well-designed international dialogue on equal participation by the Global South so that workers’ rights worldwide are strengthened. The EU institutions and member states must form equal partnerships with countries in the Global South to secure fair development of digital and green technologies.

Widespread legislation to counteract the linear production model for digital technologies is also needed. At present, there are concerns that the widespread and rapid dissemination of short-lived digital devices will accelerate the depletion of the rare-earth metals needed to make them and significantly exacerbate the growing problem of digital waste.

In February 2022, the European Commission published the proposal for a Corporate Sustainability Due Diligence Directive (CSDDD), which aims to ensure that companies operating in the EU will be legally obliged to respect human rights and the environment in global value chains. Together with existing regulations and other regulatory initiatives, such as the Corporate Sustainability Reporting Directive (CSRD) and the EU Taxonomy Regulation, this represents another step towards sustainable economic activity under standardized European conditions.

THE FUTURE OF GREEN WORK

The twin transition is the future challenge that the EU must tackle to ensure economic prosperity, geopolitical sovereignty of its member states and global stability. To enable the converging green and digital transitions, policy decisions will need to address dynamics such as unequal access to digital education. These decisions will have a major impact on the global economy and labor market, and neglecting these dimensions may have serious negative environmental impacts and widen global and social inequalities. Ensuring a just and equitable transition policy requires addressing fair working conditions, equal participation and lifelong learning to prepare workers for labor-market changes and contribute to the twin transition.

The author is writing in a personal capacity and any views expressed do not represent an official position of the organizations with which she is affiliated.

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