Scenario update Willi Haas Dominik Wiedenhofer Marina FischerKowalski

Scenario update Willi Haas, Dominik Wiedenhofer, Marina Fischer-Kowalski SEC

Introduction • An overwhelming stock of literature on SET clearly argues, that there will be more change than continuity; however, changes are quite unclear • Still, both policy and research domains from various fields explore issues as they were independent from each other; maybe this is a rational response • Update of D 1. 2 WP: Scenarios taking into account results of WPs 2 -8 as well as partial results of WPs 11 -19 • This is neither a research based on literature nor a presentation of model results • Explore potential links between scenarios and WPs • Welcome your feedback/observations SEC

Three future scenarios for 2050 UNEP, International Resource panel 2011 2050 2000 . SEC

The transition to a service economy: a sollution? The service sector requires significant amounts of energy and materials, but mostly through intermediate demand investments – Eurostat study (Schoer et al. 2012) EU 27 in 2005 Schoer, K. et al. 2012. “Raw Material Consumption of the European Union – Concept, Calculation Method, and Results. ” Environmental Science & Technology 46, no. 16: 8903– 9. doi: 10. 1021/es 300434 c. RES = real estate services SEC

Global scenarios and European responses Global level Megatrends in natural conditions 1. Energy transitions 2. Rising challenges to resource security 3. Increasing climate change impacts Global scenarios friendly tough European level Three response options No policy change No additional policy, European policy response remains in a business-as-usual mode, defending the given mode of production & consumption Ecological Modernization Economic growth first, achieve eco-efficient production through market-based instruments, “internalizing externalities”, higher flexibility Sustainability transformation Balancing social & environmental issues: Smart, lean and fair societal metabolism combined with concerns on welfare and social inclusion; changes in consumption (patterns and lower levels) with structural change of economy Societal megatrends 4. Demographic transitions 5. Shifting economic and political centres of gravity 6. Growing ICT use and knowledge sharing SEC

WP 2 -8: potential drivers/challenges • WP 2: shows that labour market discourses rarely incorporate green issues • WP 4: highlights that currently labour markets are faced with strong polarization pressure and sketch out potential future pathways • WP 5: investigates how social investment can contribute to long-term social sustainability goals, while current welfare spending is dominated by short-term mitigation • WP 6: shows that labour market flexibility and innovation are linked; although pure efficiency concerns should be balanced with social concerns • WP 7: assumes that in health and care services there are two spheres emerging: formal, more standardised, high-quality services and hidden, semi-formal services of unknown quality SEC

Improves our understanding of current situation WP. . Contributes to clarification of „Ecological Modernization“ response Contributes to „Sustainability Transformation“ response

Improves our understanding of current situation WP 2 labour market discourses on ‚good jobs‘ Highlights the need for a clearer conceptualization of „green“ jobs/skills; and the lack of reliable quantitative data (monitoring SET relevant changes) WP 4 On-going polarization of labour market and increasing pressure esp. on middle-skilled jobs; potential deepening of socioeconomic inequality and job attainment opportunities Contributes to clarification of „Ecological Modernization“ response Contributes to „Sustainability Transformation“ response Flexibility concerns prevail over classical job security issues; improved economic performance and competitiveness as major goal Productive synthesis of flexibility and security discourses following a narrative of „good work“ and balanced combination of flexibility and security, combined with societal safety nets and diversity of options for employees; implementation on national levels, not only EU level documents Polarization of socio-economic inequality and labour market is only partly addressed, mostly focused on employability and flexibility Convergence of approaches towards an open educational system with less/no early barriers and tracking; focus on root causes of polarization;

Improves our understanding of current situation WP 5 WP 6 Refocusing of welfare spending towards long-term societal goals has great potential and has shown good effects in selected countries Links between innovation, firm -flexibility, cyclical behaviour of the economy and employment Contributes to clarification of „Ecological Modernization“ response Very mixed trends on social investments in Europe due to financial constraints and shortterm focus of policy; polarization concerns increase and efforts fail to adequately address inequality Strong efforts towards more flexible labour markets, shortterm contracts and employee mobility to strengthen economic growth (which is supposed to create jobs and income) Contributes to „Sustainability Transformation“ response Concerted European consensus towards efficient social investments which contribute to a more cohesive and equal Europe; focus on social services and investments for all (c. f. childcare); esp. Southern & Eastern European countries can extend social investments Flexibility in the labour market and for firms to improve innovation potentials; flanked by efficient and comprehensive active labour market policies, social investments (c. f. WP 5), and income support when required

Improves our understanding of current situation Contributes to clarification of „Ecological Modernization“ response Contributes to „Sustainability Transformation“ response WP 7 Health and care sectors at crossroads; labour force is rapidly ageing Mixed approach, mainly the „low road“; widening gap between formal and informal sector Convergence towards the „high road“ in social services provision (Sirovátka et al. 2013, 6 f); balanced mix between formal and informal sector WP 8 Ongoing urbanization and potential for more flexible labour market in cities, esp. for part-time work, work-life balance Boosting of economic growth via urban labour market flexbility and high-skilled labour; increasing inequality between rich cities and poor(er) rural areas and urban poor Environmental efficiency potential of cities can be tapped and more sustainable life stlyes emerge due to high education and potential for more flexible labour regime, such as part time work

WP 11 -19: two birds with one stone? Skill level Skill gap tough/friendly – eco-modernization/sustainability transformation Social services Health care Energysector Transport Material manage ment Agriculture Housing Quantity

Thank you for your attention this is not just Polish stone SET labour

WP 2: Are green considerations part of existing labour market discourses? • labour market discourses in Hungary, Spain and Slovakia generally lack „green“ considerations, partly also in the UK • In these countries the discourse is mostly caught up in classical flexibility vs security debates and • „[…] the UK discourse is the only one among the four countries in which ‘green values’ appear on the horizon of main stakeholders when they try to leave the ‘flexibility with or without security’ discourse behind, do not consider the concept of flexicurity sufficient, and reach out for the ‘good work’ narrative. ” (Kovacs et al. 2013, p. 27)

Currently only small number of green skills and jobs in the existing labour market … additionally urgent need for better definitions and data (WP 2 & 4) WP 2 critically discusses that current large surveys and taxonomies on goods jobs and skills, job satisfaction, etc … only to a very limited extent include green attributes and hardly allow for an identification of green jobs & skills. „In almost all taxonomies, the ‘greenness’ of jobs is missing from the list of main quality features (and does not even appear among their constituting variables) despite the fact that, as demonstrated above, in the political discourse terms such as ‘green values’, ‘green jobs’, ‘green skills’, ‘green turn’, ‘Green Deal’ ‘green investment’, ‘green transition’, ‘green-collar worker’, ‘greening the economy’ have been mushrooming during the past 10 to 15 years. Thus, the fundamental question of whether or not ‘green jobs are good jobs’ cannot be discussed with the survey respondents. The same applies to the rival preferences for ‘creating jobs in a green industry’ versus ‘greening’ the jobs in a ‘brown’ industry, or to the problem of the ‘brown’ (dirty) jobs in ‘green’ (clean) industries’. (Kovacs 2013, 31 f) WP 4, using a database on job adds, shows that: “[…] to date, there is only a small number of green jobs in the European economy. With only 3. 25% of jobs in the European Union being ‘dark’ or ‘light’ green in focus and activities, the impact of the socio-ecological transition on the labour market still seems to be fairly limited. ” (Colijn 2013, 2) “This means that on top of other forces currently influencing the labour market, such as the increasing influence of information technology, greening the economy will also call for more workers educated in science, technology, engineering and mathematics (STEM). The upside of this finding is that those jobs are not just highly skilled, but also medium skilled, providing potential employment during a time when there are fewer jobs for this group of workers. ” (Colijn 2013, 2)

Future of Skills – Convergence or Polarization? (WP 4) “There are undoubtedly powerful forces pushing for more polarisation, particularly in the labour market. In most European countries, destruction or lower growth of routine, middle skill jobs can be observed. This has important implications also for the low-skilled as the displaced middle-skilled individuals are more likely to compete and push them out. As employers adjust job content and requirements to this fact, as well as the gradual upskilling of the population, nominally ‘low-skilled’ jobs can be surprisingly demanding. However, the demands can be manifested in very different forms, and the skill-intensity of a position and its formal educational requirements are often wide apart. This leads to reassessment of what is a skill and how people acquire it. We demonstrated that there is increasing complexity in what a ‘low-skilled’ person is and how well (or poorly) s/he fares in the labour market. The accelerating upskilling of populations in developed countries points to a not-too-distant future where higher education will be somewhere between a mass and universal phenomenon. At the same time, the importance of of experience is likely to grow, with implications for the prospects of labour market entrants. ” (Beblavy and Veselkova 2014, 18)

Potential for refocusing of traditional welfare spending towards ‘social investments’ – can they be made sustainable (green & social)? (WP 5) Social investment differs from traditional welfare states with a focus on passive spending in three ways: 1. Focus on societal development: the increasing and in many countries already high old-age dependency ratio, increases the need for both an increase in labour market participation as to pay for social security and for a higher fertility rate. Social investment focuses on providing services to reconcile work and care, reskilling and more flexible jobs to help catering to different needs of (potential) workers. 2. Focus on enabling citizens: Traditional welfare states depart from the idea that a short-term benefit is enough to solve problems such as unemployment. Yet, some unemployed might simply lack the right qualification to find a job or long-term unemployment might deplete their skills. Social investment focuses on training the unemployed, access to childcare as to enable mothers to reenter the labour market, access to education as to help people gain the skills needed on the labour market. 3. Focus on long-term reduction of neediness instead of short-term mitigation: social investment is a long-term strategy. Early investment in children’s education furthers their later development and positively influences their chances in later life. Social investment regards human capital investment as a tool to reduce intergenerational transmission of poverty. Whereas passive benefits rather focus on the reduction of poverty via transfers, social investment stresses the need for enabling children to develop their full potential independent of their social background. The traditional benefit-oriented welfare state focuses on short-term mitigation of risks, while social investment is a longer-term strategy aimed at reducing the risk of future neediness. (p 2) WELFARE TRANSORMATION AND WORK & FAMILY RECONCILATION: WHAT ROLE FOR SOCIAL INVESTMENT IN EUROPEAN WELFARE STATES? VERENA DRÄBING NEUJOBS POLICY BRIEF NO. D 5. 6

Potentials and pitfalls of social investments for the future … Given the pressures to cut public spending, it is important to remember that societies have not ceased to age, nor has the number of people in need of welfare to survive decreased. However, the toolbox of policymakers to address needs has become more varied in the past decades, shifting away from benefits only to benefits with training and services in some parts of Europe. Some of those tools might have long-lasting implications for productivity and growth. Since child poverty has proven to have considerable negative longterm effects [26 -28], taking care of families is of vital importance for the future. Also, keeping skills from deterioration in times of unemployment and low labour demand is important. • Key points: Countries with high investment in family policies are best able to reconcile work and care. The mix of flexible working time, universal childcare services, and generous leave schemes provided by the Scandinavian countries seems to contribute to high female employment. �Prior to the crisis, the Southern countries were already lagging behind in social investment in education, family policies and ALMPs. Further spending cuts might increase this gap and have long-term implications for future growth prospects since education and childcare important for human capital development while female labour market participation will be vital in the future as to financing pension schemes. �Increases in social investment are visible up to the crisis, especially in the continental and liberal countries, particularly the UK. Yet, problems remain to reconcile work and care: (1) income related differences in the use of services persist, (2) lack of flexible working time or ability to care for sick children predominantly employed in part-time, flexible and “atypical” jobs [22]. �Low skills remain problematic: lowly skilled people are less likely to find jobs, lowly skilled women are more likely to quit their job as to care for family members and lowly skilled are more likely to be poor. Consequently, it is important to keep up opportunities for children of unfavourable backgrounds via education and childcare, as well as options for retraining for those unable to find employment or to re-integrate women into the labour market. Of high importance for low skilled female employment are the costs of public services. If childcare and elderly care is not affordable, low-skilled women are the first to stay at home to care. (p 10) WELFARE TRANSORMATION AND WORK & FAMILY RECONCILATION: WHAT ROLE FOR SOCIAL INVESTMENT IN EUROPEAN WELFARE STATES? VERENA DRÄBING NEUJOBS POLICY BRIEF NO. D 5. 6

Long-run innovation potential can be fostered by increased labour market flexibility – although social concerns should be adressed as well (WP 6) • “First, relaxing employment protection legislation would be beneficial for innovation intensity particularly in industries with a high propensity to adjust to industry-specific technological and market driven factors through job reallocation. • Second, relaxing the use of temporary contracts in industries with higher job reallocation or layoff propensity is likely to pay off in terms of innovation intensity relatively more than reforming the employment protection legislation for regular contracts. • Third, labour market reforms such as relaxing employment protection regulations, are likely to affect significantly innovation performance in the long-run only while their effect in the short-run is unlikely to be sizable. Taken together our evidence suggests that, to the extent that enhancing innovation is a desirable policy objective, targeted labour market deregulation, such as relaxing the use of temporary contracts in industries with higher job reallocation or layoff propensity, could be advocated on the grounds of fostering innovation the long-run. ” (Murphy et al. 2013, p 16) • “While the focus […] has been on efficiency considerations, other policy objectives such as high employment rates and a more equal income distribution are equally important. Policy choices often imply trade offs which should be carefully considered in strategy and policy development. Any undesired effects of policies designed to improve the flexibility of labour markets should be addressed by appropriate social protection measures including income support and active labour market policies. ” (Murphy et al. 2013, p 16)

Health and care services at a crossroads? (WP 7) “i) […] labour force in the HSW sector is rapidly ageing; ii) the younger generations of workers in HSW less often have a high level of education compared with the older generations; and iii) even workers with a medium level of education are usually not specifically educated in health and welfare, although doctors and nurses, for example, do have these levels of education. ” (Sirovátka et al. 2013, 2) “Given these circumstances, two spheres may be emerging in social services: i) that of formal, more standardised, high-quality services provided by a relatively highly qualified workforce; and ii) that of hidden, semi-formal services of unknown quality provided by less qualified people who are often neighbours or immigrant workers. ” (ibid. , 3)