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Understanding the impact of the transition to net zero on low paid jobs

The transition to Scotland becoming a net zero economy by 2045 will lead to a transformation of many parts of Scotland’s economy. Ensuring that the upheaval does not cause significant harm to the workers affected is an ongoing concern of the Scottish Government, and a ‘Just Transition’ approach has been developed to mitigate negative impacts and to ensure emerging opportunities are shared widely.

Many elements of the transition to net zero are yet to be confirmed. According to the Committee on Climate Change, the Scottish Government has still to clarify how it will meet an expected shortfall in carbon removals between now and the target dates set out in legislation. Clarifying what these actions will be is the first required step in understanding what the impact on employment across the economy will be.

This report finds that the analysis accompanying the net zero plans under the Just Transition badge fall short of being able to assess the impact across the whole economy. Directly impacted jobs in industries with a high carbon footprint, and their immediate supply chain, are present in the literature and government policy analysis. However, the types of policies that are in scope for the net zero transition will have an impact well beyond these carbon heavy industries into less obvious sectors, such as retail and hospitality.

For example, energy efficiency and heating system requirements in commercial buildings will increase (at least in the short term) the cost base for firms who own and occupy buildings where changes are required. Regulations governing waste processing will have knock on effects for firms that dispose of items, such as packaging and food waste. The reducing size of carbon intensive industries will lead to a shift in spending patterns as employees seek employment elsewhere and changing consumer preferences towards low emission goods and services could impact heavily on demand in some sectors.

The specific remit of this work is to look at where these wider impacts intersect with low paid jobs. For a government also wedded to poverty reduction, ensuring that low paid workers are within the sights of the Just Transition strategy is of clear strategic importance. Unfortunately, we have found little evidence that this is the case.

Methods to ensure that low paid workers are able to be captured in analysis of the transition to net zero need to be developed. This paper provides an overview of two experimental approaches that could be further developed to provide this insight. These approaches show that there is potential for disruption to low paid workers from the net zero transition. Further refinement is required in order to arrive at a fuller understanding of the net effect and the timing of this potential disruption. Beyond this, policy makers need to better grasp the challenge of how to ensure the net zero transition can benefit low paid workers through opportunities in emerging, higher paid sectors.

We hope this analysis is helpful in informing the discussion going forward around how to support low paid workers through the net zero transition. There is no doubt that significant action to reduce emissions is required, and that without this transformation the risk to low paid workers, and wider society, from climate breakdown will dwarf any of the figures contained in this report. The main conclusion from our analysis is simply that the government need to go further in their assessment of what is required for a Just Transition. Although further development and consensus over the best way to capture this is required, this is achievable and will ensure government policies around climate change mitigation and poverty reduction are aligned and self-sustaining.

Authors

Emma Congreve is a Senior Knowledge Exchange Fellow and Deputy Director at the Fraser of Allander Institute. Emma's work at the Institute is focussed on policy analysis, covering a wide range of areas of social and economic policy.  Emma is an experienced economist and has previously held roles as a senior economist at the Joseph Rowntree Foundation and as an economic adviser within the Scottish Government.

Ciara is an Associate Economist at the Fraser of Allander Institute. She has a broad research experience across different areas including poverty and inequality, the voluntary sector, health, education, trade, and renewables and climate change. Ciara has an MSc in Applied Economics (Distinction) and a first-class BA Honour’s degree in Economics and Finance, both from the University of Strathclyde.

Pauline Anderson

Pauline works in the Department for Work, Employment and Organisation. Her expertise lies in the broad area of skills, jobs and working life – with a particular focus on green jobs, skills and a ‘just’ transition to net zero. She sits on the Climate Emergency Skills Action Plan (CESAP) Implementation Steering Group.

Matthew Hannon

Matthew works as a Professor of Sustainable Energy Business and Policy at the Hunter Centre for Entrepreneurship, Strathclyde Business School. His research examines the business models, policies and technologies necessary to accelerate the transition to a net-zero economy.

Josh Oxby

Josh works as an international people-centred energy policy advisor and consultant. He is completing his PhD on the employment and skills impacts of the Scottish NetZero 2045 just transition at the Hunter Centre for Entrepreneurship, Strathclyde Business School. He sits on the Scottish Government’s Climate Policy Engagement Network (CPEN) in his capacity as a UN-SDG Youth Advisor.