23 April 2024 - Bianca Drotleff and Krisztina Zálnoky reflect on why a socially just transition to a circular economy is essential to ensuring equitable benefits for all workers if the EU is to deliver upon its Green Deal ambition to ‘leave no person and place behind’ in the pursuit of climate neutrality by 2050.
Circular economy and just transition: What is the status quo in the EU?
Amidst growing resource scarcity, geopolitical tensions and a global ‘race to the top’ towards climate neutrality, circular economy has an increasingly pivotal role to play in the green transition.
Its importance has been recognised by European policymakers as well. The EU’s Circular Economy Action Plan and its wide-ranging legislation provides a solid base to scale up circularity. However, there is an important topic that is yet to be better incorporated into legislation: how to ensure that this transition is socially just and creates decent and inclusive jobs in the EU and beyond its borders?
While it is widely understood that the circular economy offers a great job creation potential, (a net gain of up to 700,000 circular jobs by 2030 in the EU),1 less attention has been given to the nature and quality of these jobs. More broadly, there is little analysis around the potential distributional impacts and broader social implications of the transition to a more circular economy within the EU borders. This needs to change to live up to the EU’s Green Deal ambition to create a just transition.
Why are decent and inclusive circular jobs important in driving a socially just transition?
Circular jobs have great potential to improve the quality of life for workers and the wider society, including:
- Advancing social equity. Social economy organisations in the EU, such as associations, co-operatives, foundations, mutual organisations and social enterprises are already involved in a variety of circular activities across sectors, including reuse (e.g. second-hand economy), repair and recycling, which enable the integration of vulnerable groups, such as workers in the informal economy or people with disability, into the labour market
- Supporting rising labour standards. Improving working conditions and ensuring living wages will help tackle increasing social inequalities that affect workers’ health, living standards and access to essential needs that put a strain on public expenditure and the subsequent risks of low social cohesion. This also provides benefits for businesses, including a more stable workforce, better productivity and resilient value chains
- Strengthening social cohesion. Facilitating the access of informal workers to the formal labour market could help monitor their contribution to the circular economy and, in turn, ensure better workplace safety, fair compensation and recognition by their local communities as resourceful members of society. This also helps address some of the stereotypes that informal workers often face.
To fulfil these potentials, private and public sector needs to closely work together.
How can the private sector scale up this change?
The private sector holds a crucial role in ensuring circular jobs are decent and inclusive, especially considering its substantial share of EU employment. European businesses bear a responsibility to improve employment conditions, meet labour demands, uphold trade union rights, and foster the creation of decent and inclusive jobs amid the shift to a circular economy.
Some companies are already taking proactive steps by reskilling and upskilling their workforce to stay competitive in a circular economy. Others are phasing out harmful processes to ensure a healthy and safe environment, opening up social dialogues with employees to better navigate the transition to circular business models or generating direct and jobs within their organisations and throughout their value chain.
By championing such initiatives, businesses send a clear message to policymakers: ambitious policies are needed to support and accelerate the creation of decent, inclusive circular jobs and deliver on the European Green Deal.
How can policymakers enable decent and inclusive circular jobs?
As Europe gears up for institutional changes after the EU elections in June 2024, policymakers have a unique opportunity in shaping a socially just circular economy. Our report highlights key actions for policymakers to achieve that:
- Assess the distributional impacts of circular economy policies on all workers to identify the risks and opportunities, particularly for vulnerable workers
- Integrate considerations of social justice into the monitoring and evaluation of circular economy initiatives
- Secure adequate financing of the transition towards a socially just circular economy
- Foster collaboration between businesses and governments to embed strong social safeguards into circular economy policies
- Strengthen the coherence between social and circular economy policies through explicit and measurable linkages
- Ensure the global fairness and justice of circular economy policies by assessing their impacts beyond the EU's borders
- Establish a shared definition of circular jobs encompassing core, enabling and indirect circular jobs across the formal, informal and social economies.
Overall, effective climate policies that incorporate circular economy principles can help manage and offset the impact of concurrent megatrends such as rapid technological and demographic change, globalisation and growing demand for natural resources on the European labour market.
It is clear that circular economy policies require careful assessment and design as well as strong political and business commitment to ensure an equitable and inclusive transition. Now is the time to act upon it.
1. Cambridge Econometrics, Trinomics, and ICF, Impacts of Circular Economy Policies on the Labour Market (European Commission Directorate-General for Environment, 2018), https://circulareconomy.europa.eu/platform/sites/default/files/ec_2018_-...
