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Labour market frictions have negative impact on climate policy

New publication in Dutch about the effects of the energy transition and climate policy on labour market frictions

Researchers from the Research Centre for Education and the Labour Market (ROA) and PBL Netherlands Environmental Assessment Agency have developed a model that shows for five years in advance, which bottlenecks in the labour market may arise with the implementation of climate policies. The analyses show that there is an expected shortage of, particularly, technicians at bachelor and master level, in addition to technicians and craftsmen at MBO (vocational) level. In Zeeland, Drenthe and Limburg, the bottlenecks may be greater than on average because of the relatively large amount of investments in new technologies taking place there. The insights from this model help employers, educational institutions and the government to see where adjustments are needed to be able to achieve the climate goals in 2030 and 2050.

An important precondition for achieving the current government’s climate targets is the availability of a sufficient number of suitable workers. Greenhouse gas emissions can only be adequately reduced if enough solar panels, wind farms, charging stations, energy-efficient equipment and installations are installed. For this, skilled workers are indispensable.

“There is a great need for machine mechanics, metal workers, construction workers and engineers. Especially for the engineers there is a labor market shortage. The expected need for this workforce is already far greater than the supply, our analysis shows. Action is therefore needed to ensure that the shortage of skilled workers does not become an obstacle for meeting the 2030 climate targets,” explains PBL researcher Anet Weterings.

The PBL-ROA model provides a detailed picture up to five years ahead of which educational fields, occupations, and regions will face bottlenecks if all the investments required for the climate targets take place. This makes clear how much and what type of labor this will require, and how that need differs from the expected supply. This is analysed across the whole labour market, i.e. for all sectors in the economy.

“There is also demand for technical personnel outside the technical sectors. In addition, shifts in investment as a result of climate policy may reduce demand for staff in other sectors. For example, households that purchase solar panels may spend less on eating out that year, which could affect the hospitality industry,” says Jessie Bakens, researcher at ROA. The inclusion of economic linkages between sectors and regions makes this model unique. This helps to prevent the consequences of climate policy for the labor market from being underestimated - an important function of the model.

A timely insight into bottlenecks in the labour market enables parties such as governments, businesses, educational institutions and trade unions to take targeted action to prevent staff shortages from becoming an obstacle to climate policy. The PBL-ROA model that has now been developed is part of the information framework of the 2019 Climate Agreement, which states the necessity of monitoring the effects of climate policy in the Netherlands on the labor market.

At the moment, only an estimate of the investments required based on a draft climate agreement is available. The Rutte IV government has more ambitious targets, which means that the bottlenecks will be more substantial than in the current analysis. As soon as it becomes clear which investments will follow from the more ambitious climate policy, a new estimate of the bottlenecks on the labor market can be made with the PBL-ROA model.

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