The twin transition is reshaping labour markets and changing the types of skills that are in demand. OECD countries face hard challenges in adapting to this transition, including job creation and loss in different locations, regional dependence on declining sectors, the need to address skill gaps and workforce shortages, and demographic pressures.
Each region is approaching the twin transition from a unique starting point, leveraging their economic strengths to overcome obstacles and seize new opportunities for building more resilient economies.
Different journeys towards the twin transition
The new OECD Twin Transition Tracker sheds light on regions’ exposure to the twin transition, skills and labour demand, and regional adaptation — helping pinpoint areas for improvement while supporting targeted policy development. It shows that around 17% of jobs in the OECD are green – a proportion that is growing in most regions, while jobs in high-emission industries are declining in 9 out of 10 OECD regions. However, the share of green jobs varies significantly, ranging from 8% to over 30%, depending on the region.
5-year change in the share of green jobs in OECD regions
Cities racing ahead
With many low-emissions jobs in service and high-tech industries, cities may find it easier to maintain and create jobs during the transition. Two examples are Stockholm, Sweden, and Zurich, Switzerland, which have two of the highest shares of green jobs in the OECD (32% and 28%, respectively) and a small share of jobs in high-GHG emissions industries (9% and 14%). These regions also have few jobs at risk of automation —around 2% for both regions, compared to an OECD average of 8%.
In these regions, it is important to support the development of skills to keep up with growing demand. Green and digital jobs show above-average tightness – a common proxy of labour shortages – in 9 out of 10 OECD regions. On average, green jobs are 1.5 times tighter than other jobs, while ICT jobs are 2.7 times tighter. To tackle these shortages, regions can create opportunities for adult learning and deepen partnerships between education providers, industry and workers.
Revitalising industrial regions
On the other hand, challenges lie ahead for industrial regions that rely heavily on GHG-intensive sectors such as coal mining, oil and gas extraction, and energy-intensive manufacturing. On average, the share of jobs in high-emission industries has decreased by 0.6 percentage points over the past five years in the OECD. However, regional differences are significant, with changes ranging from a 4 percentage point increase to a 5 percentage point decrease, and larger declines often occurring in more industrial regions. Incomes are also under pressure in these areas, with workers in shrinking sectors experiencing 24% greater earnings losses than those in other industries over the last six years.
Vulnerable regions can benefit from supporting workers in re-skilling. One initiative addressing this challenge is EU’s RES-SKILL. Germany, Poland, Hungary, and Greece together employ 81% of the coal workforce in the EU and are expected to be significantly impacted by job losses due to the transition. RES-SKILL involves education providers, employers, and workers in regions most affected by job transformation to strengthen vocational education and training for former coal workers, improving their reemployment opportunities, and addressing new workforce needs in the renewable energy sector.
But they also need to create new jobs – and many are already seizing the opportunities presented by the transition to catch up and transform their economies. For example, Grand Est in France, a region with significant manufacturing activity, particularly in the automotive sector, is experiencing a boom in green jobs. The region’s share of these jobs increased by 12.6 percentage points over the last five years, far exceeding the OECD and French average increase of 4.3 and 0.7 percentage points, respectively.
Part of its strategy has been its “Industrial Parks of the Future” initiative to combat deindustrialisation in remote areas by turning them into sustainable industrial zones. The regional agency, Grand E-Nov+, created a tool to assess existing industrial parks and identify areas for improvement. This initiative seeks to attract new industries and investments through improved infrastructure, sustainability, and a focus on high-value economic activities, potentially addressing challenges during the twin transition such as limited talent attraction, and low industry reallocation from high- to low-GHG emission activities.
Regional profile: Grand Est, France
Attracting talent
Many OECD regions face demographic challenges and a shrinking workforce, as there are, on average, fewer than two working-age individuals for each person aged 65 or older. In addition to enhancing local skills, regions could benefit from strategies aimed at attracting talent from elsewhere and providing clear pathways to jobs in expanding sectors to meet rising demand.
In Louisiana, United States, the initiative Capturing Better Futures aims to attract youth to green careers with a focus in offering quality employment opportunities. The region faces a shortage of workers in the growing carbon capture sector and struggles with out-migration due to limited job prospects for young people. Capturing Better Futures offers a fully financed year-long training course in carbon capturing for high school students, leading to Registered Apprenticeships where they continue training while receiving a full wage, health insurance, and other employment benefits.
Some policies, like Copenhagen Capacity (Copcap) in Denmark, focus on attracting foreign talent to address potential workforce gaps. This initiative implements a range of actions to attract and retain foreign talent including targeted branding efforts to promote Denmark as an attractive destination for workers, offering start-up packages for foreign workers, and retaining STEM talent through specialised events and career programmes that connect skilled professionals with local opportunities.
The path forward for OECD regions
Evidence-based approaches and labour market intelligence are crucial for understanding these regional differences and shaping effective policy responses. Tools like the OECD Twin Transition Tracker enable regions to access data and international comparisons, helping policy-makers to identify policy priorities, and other regions to learn from as each charts its unique course through the twin transitions.
Do you want to learn how other regions are doing in the twin transition? The Twin Transition Tracker is available here.
Laurenz Baertsch is a Junior Economist in the Local Labour Market Analysis Unit at the OECD Centre for Entrepreneurship, SMEs, Regions, and Cities. His work focuses on conducting quantitative research on local labour markets in the context of green and digital transitions. Before joining this team, he worked at the OECD’s Employment, Labour and Social Affairs Directorate, where he conducted statistical evaluations on perceptions of climate change mitigation policies and on cross-country differences in perceptions of social protection. Laurenz holds a Master's in Research Economics and a PhD in Economics from the University Pompeu Fabra.
Patricia Peñalosa is a Policy Analyst in the Local Employment and Skills Unit at the OECD Centre for Entrepreneurship, SMEs, Regions, and Cities, where she conducts research on how regions are preparing their workforce for the jobs of the future. Previously, she worked in the OECD’s Science, Technology, and Innovation Directorate, where her work focused on policies that support innovation for digital and environmental transitions, with a special emphasis on co-creation. Patricia holds aMaster's degree in Urbanand Economic Geography from Utrecht University, where she worked as a Research Assistant at the Copernicus Institute of Sustainable Development.