There is some evidence that green jobs are growing at a faster rate than employment as a whole (albeit from a low base). But there are many claims and counter-claims about the effect of green growth on overall employment. In a new report, the Grantham Research Institute assesses the impact of green growth on jobs and employment. Dr Alex Brown, author of the report, explains more.

Do environmental policies create more jobs than they destroy?

The truth is, we don’t know exactly how many green jobs are being created, nor do we know how many brown jobs are being destroyed as a result of the transition to a low-carbon economy. In most countries, adequate data accounting for the number of jobs in clean and dirty industries just doesn’t exist.

With climate change mitigation measures strengthening around the world, it is increasingly important for national statistical agencies to get a better grasp on what is happening to employment (and GDP) in affected sectors. Policy-makers need to be aware of the extent of structural change that their policies are inducing.

For instance, policy-makers are not yet able to assess conflicting claims about the quality and quantity of green jobs that have already been created, or may be created in the future. Other factors such as effects on labour productivity and the costs of employment are often overlooked too.

How to assess the impacts of green growth

It is particularly important for developing countries to take account of the indirect effects of environmental policies, such as regulation, taxes and public spending on green investment. This should help ensure that green growth is sustainable and contributes to reducing poverty and increasing employment opportunities.

Fully assessing the effect environmental policies have on employment presents a considerable challenge. Here are two possible approaches:

1. Focus on the changes in employment in industries that provide environmental goods and services.
2. Count the number of jobs created and destroyed when firms adopt technologies with less environmental impact and switch to less polluting inputs, regardless of their primary outputs.

Both of these approaches can be helpful for assessing the direct impact of environmental policies. However, policy-makers need to take account for the fact that policies promoting green growth have a number of indirect effects that have a significant impact on the overall economy.  The latter approach therefore is advantageous for guiding overall assessments of environmental and growth policies.

The role of national statistical agencies

National statistical agencies need to provide better information about how green policies affect labour markets indirectly through supply chains and through changes in overall demand and production costs.From the perspective of national policy-makers, the net change in total employment (and average job quality) across the whole economy is at least as important as the direct gross change in employment in environmental sectors.

But first, there needs to be agreement among national statistical agencies about a common definition of a ‘green job’ that is applied consistently across the world.

Potential for green jobs

Green growth offers considerable potential for job creation, with the right labour market policies. But headline figures about the number of ‘green jobs’ created by environmental policies are misleading by themselves since they do not account for the number of ‘brown jobs’ in dirty industries that are lost as a result, nor for knock-on effects in the rest of the economy.

National policy-makers should develop strategies for coping with employment losses in the sectors that will suffer from green growth policies, remembering that this may include sectors hit by higher real prices for currently carbon-intensive inputs (such as electricity, aluminium and cement).

In the long run, green growth needs to depend more on education, skills and innovation and less on exploiting natural resources at a faster than they can be renewed.