Will there be a great green divide?

The green transition is reshaping jobs, firms and places. It is also creating “winners and losers” as we race to reach net zero, with gaps emerging in the geography of green jobs. Left unchecked, this could lead to some places being left behind, jeopardising the green transition. What can cities and regions do to boost green job creation?

What are green jobs?
We can define green jobs based on the tasks they entail. Jobs are classified as green if at least 10% of tasks contribute to environmental objectives such as preserving the environment and reducing emissions.

Slow pace to reach net zero

Green jobs are an essential part of the transition to a sustainable economy. However, a new OECD report reveals there has been almost zero progress in creating green jobs in the last decade. Despite high demand for green talent and a reported shortage of “green talent” as governments and businesses invest to go green, the creation of green jobs has been slow. The share of workers in green jobs in 30 OECD countries grew by just 2% between 2011 and 2018, and a regional green jobs divide has emerged within countries.

A double advantage for cities…

Green jobs are concentrated in cities and capital regions. In 19 out of 25 countries, the capital region has the highest share of green jobs. Up to 35% of jobs are green in the regions home to Paris, London, Stockholm, Helsinki, and Vilnius. PWC’s Green Jobs Barometer shows that London and the South-East pull away from the rest of the UK in green job growth, hosting 32.7% of all new green jobs. What’s more, green jobs also tend to offer up to 20% higher pay than other jobs, and spur additional job creation. For every green job created in the UK, 2.2 more jobs are created elsewhere in the economy.

In addition to benefiting from these green jobs, some capital cities also boast a low share of polluting jobs so are less at risk of job losses in these areas over the coming years. Polluting jobs account for 10% of employment in Île-de-France, compared with 16% in the rest of France. Other capital regions, such as those in the Baltic states, have a high share of green jobs and polluting jobs, which creates space for job transitions.

Cities have more green jobs because much of the work is in high-skilled, knowledge-intensive activities such as engineering, architecture and scientific and technical occupations, which have traditionally been concentrated in cities.

Regions that have spent more on innovation have recorded faster growth in green job creation. The UK’s innovation expenditure skews towards London and the South East region, which were awarded 49% alone in 2018 and which have the highest green job share in the country.

… with remote regions lagging behind

In contrast, the share of green jobs in the remote areas of Greece, Italy, Spain and North Americacan be as low as 7%. South Dakota’s (one of the most rural and frontier US regions) share of green jobs is below 10%, compared to over 25% in the metropolitan District of Columbia, Washington.

Although rural areas have enormous potential for renewable energy investments, such as in solar, wind or hydropower, the jobs created in these industries are not necessarily local. Engineers, lawyers, and consultancy firms work remotely on these projects from big cities, and construction workers are present in the areas for only a short time and quickly move on. Indeed, evidence from Spain suggests the local employment impacts of wind investments are next to zero.

Meanwhile, polluting jobs are even more spatially concentrated than green jobs, with a high share in regions with a lower GDP per capita. This leaves them vulnerable to greater job losses and the disappearance of important economic activity that could hold back their communities for years to come. For example, the coal mining region of Western Macedonia in Greece had the highest national unemployment rate in 2021 at nearly 20% and the lowest national share of green jobs at 7%.

What holds regions back?

Emission intensive sectors, such as mining, manufacturing, oil, and gas, are often concentrated in poor or remote regions, creating a higher share of polluting jobs and greater risk of job displacement. Rural Northwest Czech Republic, has struggled to adjust to the green transition, with below-average share of green jobs and over 12 times more emissions than Prague, with employment concentrated in the chemical sector.

Some regions are therefore in danger of being left further behind as richer cities, often home to major cities, pull ahead in the green transition.

Bridging the divide

Reskilling or reallocating workers in polluting jobs will help ensure that regions are not left in the lurch with high unemployment. Spain’s Just Transition Strategy supports the reskilling of workers in coal-dependent regions. In 2022, following the closure of the Carboneras coal plant, local stakeholders launched the EUR 150 000 Futur-e programme to retrain and relocate 500 local workers.

Lagging regions must also seek to boost participation in green entrepreneurship. The EU-backed Greenworal project is one example, providing green entrepreneurship skills to adult women in rural areas of Cyprus, Spain, Ireland and Lithuania. The goal is to enable a balance between natural resource use and profitability in rural areas, whilst simultaneously driving inclusivity by empowering women entrepreneurs who have traditionally faced barriers in starting businesses and in the green transition.

Although the green transition is a global effort, its labour market impact is local. Policy makers and local actors must provide targeted support to help regions contribute to and share in the benefits of the green transition. Applying a local lens to the green policy agenda can pave the way for a just green transition that ensures no one is left behind.

Job Creation and Local Economic Development 2023: Bridging the Great Green Divide is available to read now.

Economist at | Website | + posts

Lukas Kleine-Rueschkamp is an Economist at the Organisation for Economic Co-operation and Development (OECD) in Paris. His main areas of research interest are in political economy and development, with a particular interest in political institutions and state capture in developing countries, the economic consequences of conflict and civil wars, and urbanisation in developing countries. He has a BSc in Economics from the University of Bonn. He was a Fulbright Scholar at the University of California, Berkeley before gaining a Master of Philosophy in Economics and a PhD in Economics from the University of Oxford.

Policy Analyst at OECD Centre for Entrepreneurship, SMEs, Regions and Cities (CFE) | + posts

Lana Fitzgerald is working for the OECD Centre for Entrepreneurship, SMEs, Regions and Cities where she supports work in policy research and advice. She has an undergraduate degree in European Studies from Trinity College Dublin, where she specialized in French, Spanish and cultural history. She also holds a certificate in Social Sciences and Humanities from Sciences Po, Paris. She is interested in matters of tourism, cultural policy and local development.