4. Locally relevant actions for green jobs and skills

The green transition will have a profound impact on local labour markets, requiring some workers to switch jobs and re-skill. Achieving the goals of the Paris agreement requires a shift towards less polluting and more resource-efficient activities. This process, referred to as the green transition, implies a transformation of the labour market. It will have profound implications for workers in polluting jobs who, without developing new skills, will be at risk of becoming unemployed. However, the need to master new skills goes beyond this group. Broader re- and up-skilling efforts are necessary, to avoid green skills shortages that could hamper the achievement of climate goals, especially in the context of unprecedented labour shortages in many OECD countries (OECD, 2022[1]).

This labour market shift is happening at a time when the world of work is already changing rapidly and many local labour markets are struggling to keep up. Technological progress, globalisation, and demographic changes are already putting pressure on people to change career paths and re-skill (OECD, 2018[2]; OECD, 2019[3]). The impact of these trends has a strong regional dimension. While over the past two decades a convergence in terms of per-capita GDP was observed across countries (especially in Europe), the within-country differences remained large or even increased (OECD, 2018[4]; OECD, 2022[5]).

If no action is taken, the green transition may deepen the divide across regions. Communities dependent on polluting jobs are most exposed to the negative impact of the green transition. These jobs are often geographically concentrated in large sites such as mining operations, refineries, and aluminium smelters. Such regions are often already underdeveloped with lower average income and skill levels (World Bank, 2022[6]). Furthermore, workers in polluting industries are often less likely to attend training courses (see chapter 2), and thus less likely to successfully reskill for the green transitions. Green-task jobs have been created in some pollution-intensive regions, yet places at the forefront of the green transition tend to be the ones that have few polluting jobs and are already well placed to manage the transition. This also corresponds to the finding that most green jobs are located in urban, capital-rich areas, with generally higher skill levels (see chapter 2). As green jobs are generally better paid and polluting jobs face high risk of disappearance, non-intervention could potentially worsen existing divergence between regions.

Local skills systems are already struggling to keep pace with changing labour market needs. National and local governments need to step up their efforts to help people seize green employment opportunities. The extent to which economies can benefit from, and deliver, the green transition will depend on the pace at which the labour force can develop new skills. Active engagement will be necessary from (i) workers - updating their skills, (ii) employers - offering learning and internal mobility opportunities to workers, and finally (iii) public actors – supporting the occupational and sectoral transitions in the labour market (European Commission, 2021[7]). An important challenge for the coming years is to ensure that skills systems, which are already under pressure, have the capacity to support the green transition. In the last decade, training participation has not kept up with the rapidly changing demand for skills (OECD, 2018[8]). Those who needed training the most were the least likely to get it (OECD, 2022[9]). Therefore, policy makers face a two-pronged challenge. They need to strengthen the overall capacity of the skills systems and, at the same time, ensure that they are ready to respond to the impact of the green transition.

The green transition is largely policy- rather than market-driven, which calls for decisive policy responses, including rapid implementation of skills policies. The increasing demand for green skills is mainly a result of environmental regulations. This means that labour market changes may be more abrupt than in the case of other, market-driven transitions, where new technology is adopted gradually and demand evolves more smoothly. Therefore, policy makers need to act faster to ensure that the environmental regulations are accompanied by appropriate skills policies.

For skills policies to be effective, they will need to be tailored to local challenges and opportunities. Regions with a high share of polluting jobs at risk of displacement will require policies that support the creation of new employment opportunities and a smooth reallocation of workers from declining to emerging industries and occupations. This should include programmes to increase green skills to reap the benefits of the green economy (OECD, 2017[10]). In contrast, regions with a high share of green jobs will need to invest in development of green skills to avoid potential labour market shortages as demand grows and allow further growth of their green task job market. In general, policies should be geared towards viewing the green transition as an opportunity, and appropriate skills systems and incentives for green businesses should be put in place to attract new, green investment.

This chapter examines how sound skills and labour market policies can prepare regions for the impact of the green transition on the local labour market. It first examines two cross-cutting issues that form the basis of an effective skills response: (i) multi-level and multi-stakeholder collaboration, and (ii) labour market intelligence. Subsequently, the sections focus on the two main policy pillars of a systemic response to the skills needs created by the green transition: (iii) adult learning, and (iv) Public Employment Services.

Alignment of environmental and labour market policies is critical to avoid skills mismatches and shortages. The green transition is largely policy - rather than market - driven. Regulations and incentive schemes introduced as part of energy and environmental policies were found to be a major driver of demand for green occupations and the corresponding skills (Cedefop, 2012[11]). In other words, governments have considerable control of the levers that stimulate skills demand during the transition. That implies (i) greater responsibility for policy action, but also (ii) better predictability of sectors and regions that will be affected, which allows forward-planning, retraining, and setting up redistribution mechanisms (OECD/Cedefop, 2014[12]).

Alignment of environmental and labour market policies requires effective collaboration across ministries. In most countries, the part of the government responsible for stimulating green skills demand is separate from the part responsible for skills and labour market policies that influence supply. Weak connections between these bodies are a common feature of institutional setups. As a result, environmental policies are often designed in isolation from skills and labour market policies, and do not take into consideration skills availability and labour market implications (Cedefop, 2019[13]).To ensure that supply and demand policies go hand-in-hand, ministries and bodies responsible for both policy areas need to work closely together.

There are some good examples of coordination of environmental and labour market policies. In France, in 2007 the government initiated the Grenelle de l’environnement, a multi-party debate on public policy related to environmental and sustainable development. These roundtables involved representatives of national and local governments, trade unions, representatives of employers, and non-governmental organisations, who participated on an equal footing (Cedefop, 2019[13]) and designed a comprehensive strategy to prepare the workforce for the green transition: the National Mobilisation Plan for Green Jobs (see Box 4.1). In the Netherlands, numerous ministries and other stakeholders jointly developed the Action plan on green and digital jobs, which aims to address labour shortages identified as a barrier in the green transition (see Box 4.1). In Spain, the Ministry of Ecological Transition and the Ministry of Labour, Migrations and Social Security - together with affected employers and trade unions - signed an Agreement for a Just Energy Transition for thermal power plants in closure (see Box 4.15).

Local and regional governments are often already involved in skills and labour market policies, although the level of responsibilities differs. Many models of local and regional engagement in adult learning exist. Some have limited responsibility or operate on an ad hoc basis only (9% of respondents). Others have limited legal responsibilities but actually operate beyond their legal competences (22%). The most engaged models take a leading role in designing and delivery of adult learning systems (25%).1 Around nine out of ten cities and regions allocate a portion of their budget to adult learning. In short, while the level of responsibility differs, in most OECD countries there is at least some regional or local role in education and training systems (OECD, 2022[9]).

The geographical differences in the impact of the green transition will increase the importance of engaging regional and local governments in skills and labour market policy. The disparities in terms of availability and quality of employment opportunities and skills across local labour markets, which exist in all OECD countries, call for a tailored approach to local challenges and strengths (OECD, 2016[15]). Environmental policies may result in further divergence across regions – leading to job losses in some regions and skills shortages in others – magnifying the need for targeted interventions. Place-based policies could be, in principle, designed at the national level. However, engagement of local governments can improve their effectiveness. Firstly, local governments are typically more familiar with local labour market needs and priorities. Secondly, designing selected services at the local level may give more space for experimentation with innovative approaches optimised to local needs. Thirdly, local governments are well-placed to act as a centre and initiator of local skills coalitions (OECD, 2022[9]). Therefore, engaging local and regional governments in skills and labour market policies can improve the effectiveness of responding to local skills needs, including those driven by the green transition.

The role of regional and local governments in the green transition goes beyond skills initiatives and includes other local economic development efforts such as investment in infrastructure. For example, in the European Union municipalities are responsible for around one-third of all public investment. Many municipalities are already taking action to address climate change and increase environment sustainability. These efforts are, however, less common in less developed regions. While municipalities in less developed regions have ambitious plans that could push their green transition to the same level as developed regions, they face barriers to implement them. Among the main obstacles to deliver the investment plans is limited access to expert knowledge and lack of right skills. For almost 70% of municipalities lack of environmental skills is a barrier to investment. This barrier is more prevalent in less developed regions (EIB, 2023[16]).

The engagement of regional and local governments in skills and labour market policies and local economic development efforts for the green transition, calls for effective collaboration across levels of government. Vertical collaboration helps ensure that the government as a whole sends a coherent message. It informs the national government about the specific skills needs in the local area, and at the same time, helps regional actors understand and support national policies. In addition, collaboration encourages exchange of local experiences and helps build capacity at the local level (OECD, 2022[9]). Finally, it creates a sense of ownership, which supports policy implementation (OECD, 2020[17]). Overall, developing effective mechanisms for collaboration across the levels of government can make policies more coherent and effectively implemented.

Regional and local governments could also consider forming partnerships with other cities and regions that are affected in a similar way by the green transition. Governments can pool resources, benefit from economies of scale when developing services (OECD, 2022[9]), and increase their leverage with national governments and cross-national institutions. For example, the European Committee of the Regions initiated the Automotive Regions Alliance, which brings together regions in the EU committed to a successful green transition of the automotive and supply industry. The Alliance aims to establish a European mechanism to support a just and successful transition of the automotive and supply industry regions, including through streamlining various funds. It intends to undertake a territorial impact assessment, support reskilling and upskilling of the workforce, and advocate measures that promote the use of electric and low-carbon vehicles through public procurement and improved accessibility of refuelling and recharging stations (European Committee of the Regions, 2022[18]).

Engagement of local stakeholders can help design better-informed responses to the green transition and secure buy-in from labour market actors. Firstly, collaborative approaches bring diverse expertise to the table. The involvement of training institutions and PES in policy design helps address implementation challenges observed on the ground. Strong linkages with employers promote services and curricula that are demand-driven and meet employers’ needs (OECD, 2022[9]). This is especially important at the early stage of the green transition, when collaboration with firms can fill information gaps about new tasks and skills needs. Moreover, collaborative approaches help promote buy-in from labour market actors (OECD, 2019[19]). Involvement of training institutions and PES, from policy development to implementation, strengthens their sense of ownership, which facilitates the implementation of policies. Bringing employers on board can raise their awareness of environmental regulations and increase their investment in up-skilling their workers. Finally, engagement of social partners reduces the risk of triggering the feeling of anger and resentment, and instead, helps secure buy-in from employers and workers for actions required to protect the environment.

Governments take different approaches to including stakeholders in developing a response to the green transition. Some governments have focused on employer engagement. In the United Kingdom, the role of employers in addressing the growing demand for green skills has been emphasised in the national skills strategy. A ”skills for a green economy” group composed of sector skills councils was established as a measure of supporting green skills development (Cedefop, 2019[13]). In Korea, two skills councils focused on the green economy were created: one on the renewable energy sector, and the other one on green industry trends, risk analysis and green finance (ILO, 2011[14]). Other initiatives focused on engaging a broader range of stakeholders. Examples include Centres of Vocational Excellence, which was established to deliver high quality vocational education in the EU and the TRACER programme, which supports the transition towards sustainable energy in nine coal-intensive regions in Europe (see Box 4.2).

Rapid labour market changes, driven by the green transition and other megatrends, mean that timely and high-quality information about skills supply and demand is needed now more than ever. Fast changes in the world of work, which affect the skills required in the labour market, could shape the coming “reskilling revolution” (World Economic Forum, 2021[20]). The green transition will further accelerate the pace with which workers need to adapt their skills. While there are various policy tools that can support this process, they will only be effective if labour market participants and policy makers know: (i) what skills are available in the local labour market, (ii) what skills are in demand, and finally (iii) how local skills demand will change in the future to anticipate reskilling needs. In addition, effective mechanisms and procedures need to be in place so that such information feeds into policymaking, career guidance, content of training, and individual education and career choices (OECD, 2018[8]).

Timely information can guide choices for students, workers, and employers and reduce the risks of skills mismatches and shortages. For skills demand to match supply, workers can adjust their career choices and training decisions, and firms can adapt production processes through their investment decisions and HR policies (Hartog, 2000[21]) (Cedefop, 2021[22]). However, such a supply/demand equilibrium assumes that workers and employers have perfect information about skills requirements. Without timely and precise labour market information, this is less likely to happen - students, workers, and employers will make sub-optimal choices leading to skills mismatches and shortages. For the economy, this means (i) lower productivity growth resulting from slower technology adoption, (ii) lost production due to unfilled vacancies, and (iii) unemployment (OECD, 2016[23]).

Training providers and policy makers also need timely and reliable labour market intelligence to put in place policies and services that enable the green transition. Identification of current and future skills imbalances supports training providers and policy makers responsible for education, employment, and migration. For example, in education policy, skills-needs information feeds into the design of career guidance and curricula and helps decide which programmes to promote. In employment policies, skills-needs information helps design and target active labour market policies offered by public employment services. Finally, in some countries, skills needs information is used in migration policy, to identify migrants that possess skills in high demand and fast track their application (OECD, 2016[23]).

To support a just green transition, it is also critical to develop a better understanding of the characteristics of workers at risk of displacement due to the green transition. The cost of the green transition will be unequal across workers (see Chapter 2). Individuals at high risk of displacement are predominantly male, have lower educational attainment and medium-skill levels. They also tend to have lower training participation rates than other workers. To provide them with effective support in transitioning to other occupations and sectors, the responsible agencies will need detailed information on their age, educational attainment, work experience, skills, employment barriers and income.

Skills assessment and anticipation (SAA) exercises do not always account for the impact of environmental policies. Virtually all OECD countries collect information on current and future skills needs by carrying out SAA exercises (OECD, 2016[23]). However, SAA exercises often do not reflect the impact of environmental policies on the labour market. Ad hoc plans and strategies on green jobs and skills, including future forecasts, seem to be a feature of the policy landscape (Cedefop, 2019[13]). Due to the lack of well-established classifications and measurements of green jobs, many countries rely on qualitative information (ILO, 2011[14]). However, there are also examples of systematic quantitative analysis of the impact of the green transition on skills and occupations, such as the work of the National Observatory for Jobs and Occupations of the Green Economy in France (see Box 4.3).

Reflecting the impact of the green transition in regular SAA exercises and occupational classifications, rather than studying it in isolation, helps take into account the interactions between labour market trends. The green transition is happening in parallel with multiple other trends affecting current and future skills requirements. These trends can overlap or interact (e.g., the green and digital mutually reinforcing ‘twin transitions’ (Muench, 2022[27])), and therefore, they cannot be studied in isolation. Instead, dynamic economic system models, such as dynamic general equilibrium models, which reflect the impact of the green transition and other megatrends, are needed (OECD, 2017[10]). Occupational classifications also need to be updated to account for the changing skills and educational requirements in occupations affected by the green transition. Without that, the results of SAA exercises will not reflect the new skills required in the existing occupations and in new occupations created by the green transition.

An important barrier to designing policies based on skills-needs information is the insufficient granularity of available data. National-level data can be useful in designing broad training policies and monitoring labour market dynamics. However, they may hide large local shortages and mismatches or mask the specific skills needs of regions and sectors (Shah, 2005[28]) (OECD, 2022[9]). Even before the green transition, there was evidence of region-specific labour market shortages and mismatches (OECD, 2016[23]) (OECD, forthcoming[29]). Policy makers across the OECD emphasise the need for more disaggregated data. Two-thirds of Ministries of Labour and Education in the OECD countries indicated insufficient disaggregation of results as the most constraint in effectively using SAA information for policy (OECD, 2016[23]).

Significant differences in the impact of the green transition across sectors and regions magnify the need for disaggregated information on skills demand and shortages. At the aggregate level, employment growth is forecast to be higher by 2030 than if the European Green Deal emission target was not met. The expected 1.2% additional employment by 2030 associated with meeting the EGD targets translates into approximately 2.5 million additional jobs in the EU (Cedefop, 2021[30]). However, this number fails to reveal significant differences across sectors. Employment in water supply and waste management is expected to increase by over 900 000, while in coke and refined petroleum, gas, steam and air conditioning, and mining and quarrying 286 000 extra jobs (on top of the baseline forecast) are expected to be lost (Cedefop, 2021[30]). While forecasts at the regional level are not available, there are initial signs of divergence across regions – the presence of polluting jobs that are likely to disappear is regionally concentrated and the share of green jobs in the labour market differs geographically (see Chapter 2). The variation in the impact of the green transition across regions and sectors underscores the importance of targeted education, training and skills policies, which requires sufficiently disaggregated data. In France, effort has been made to reflect the place-specific impact of the green transition through the work of regional observatories and targeted projects (see Box 4.4).

Better alignment of data collection with policy use can be achieved by including the users of SAA exercises in their development (OECD, 2022[9]). Skills are difficult to measure and they are, therefore, often approximated by the demand for occupations, qualifications (e.g., technical/vocational, university), field of study, or, to a lesser extent, by the demand for some cognitive or non-cognitive skills (e.g., numeracy, literacy etc.) (OECD, 2016[23]). As a result, the information collected through SAA exercises is not always well-aligned with the potential policy use.2 Linking SAA exercises to specific policies helps ensure that the approach taken to measure skills is well-aligned with the policy use but reduces its wider relevance (OECD, 2016[23]). One way of ensuring that the data collected through SAA are applicable more broadly, and at the same time, well-aligned with policy use, is through engagement of data users (e.g., regional governments, educational and training institutions, and PES) in the governance structure of SAA. A good example is the National Observatory for Jobs and Occupations of the Green Economy in France that brings together a variety of institutions to develop methodologies and produce statistics on the impact of the green transition on jobs and skills (see Box 4.3).

Including regional and local governments in the structure of SAA exercises is particularly important. Given the differences in the skills needs across regions, local governments often need to complement the countrywide labour market and skills policies with additional programmes tailored to local needs. Yet, so far, across OECD countries, only 41% of regional governments and 31% of regional development agencies are involved in the development of SAA exercises. Sub-regional governments are rarely involved - exceptions include Canada, Italy, and Portugal (OECD, 2016[23]), despite the fact that skills-needs exercises can ensure that the information collected meets their needs and is available at the appropriate level of disaggregation. Moreover, the regional angle helps reflect the differences in the labour market structure across regions, validate the results at the local level, and bring nuance to the conclusions reached. Finally, multi-level governance of SAA exercises may spur vertical collaboration on identification of policy targets and formulation of policy responses, making the local and national policies more coherent (see section Building green skills coalitions ).

Targeted studies to identify the characteristics of individuals at risk of displacement due to the green transition can complement regular labour market intelligence. Carrying out such analyses in advance would allow Public Employment Services (PES) and other institutions to proactively target affected workers and tailor services to their needs, and as a result, reduce the risk of long-term unemployment. For example, in Germany, the Federal Employment Agency’s research institute IAB carried out a study to identify the number and characteristics of workers at risk of displacement due to the coal phase-out. The results informed the development of a package of support offered by the PES (see Box 4.14).

Digital tools can help identify career transition pathways for workers in polluting industries. The green transition will require workers to transition into other occupations, sometimes across industries. The adjustment costs are significantly reduced if, in the new job, the worker utilises skills that they acquired in previous professions. Digital tools can help achieve that by identifying occupations with similar skills and comparable compensation. Efforts to develop such tools have been made by public and private actors, although the existing tools differ in their level of sophistication (see Box 4.5).

A green transition that benefits most workers requires effective and future-proof adult learning systems. The transition to a low carbon and resource-efficient economy, as well as the effects brought about by other megatrends, require a workforce capable of acquiring skills throughout their lives. After developing foundation skills during their initial education (see Box 4.6), young people consolidate them and test them in practice at the workplace. Subsequently, mature workers maintain and upgrade their existing skills, develop new skills, and certify the skills acquired on-the-job (ILO, 2010[35]). The last step, referred to as adult learning, becomes increasingly important in a rapidly changing labour market, in which the skillset gained through initial education quickly becomes insufficient or obsolete.

Effective and inclusive adult learning systems can help workers remain employable and productive throughout their careers, despite changing skills needs. If such systems are in place, the green transition can be delivered effectively and benefit most workers. Otherwise, skills shortages may hinder its implementation and inequality will likely increase.

Effective adult learning systems can become a comparative advantage that regions can leverage to attract investment from green businesses. While many factors are taken into account in firm location decisions, research shows that innovative capabilities and human capital play an important role (Crescenzi, 2018[36]). This is especially relevant in the context of the green transition as green skills are unequally distributed across regions and some of them are in short supply. Regions with an already high share of green jobs have a comparative advantage in attracting green investment given the availability of workers and other firms with which they can collaborate. Other regions can leverage their adult learning systems to attract investment by offering support in re-training and up-skilling for green jobs.

Many local adult learning systems need to be strengthened to help workers adapt to labour market changes that are beingdriven by the green transition and other megatrends. Across OECD countries, workers who need training the most are least likely to get it. These groups include the low skilled, older adults, displaced workers, as well as self-employed, part-time, and temporary workers (OECD, 2019[3]). Training rates also differ across sectors. Some sectors are heavily affected by the green transition. These include construction, wholesale and retail trade, and administrative and support services, where training rates tend to be relatively low (OECD, 2019[3]). Finally, training is not always of good quality or aligned with the needs of the labour market (OECD, 2019[3]). Therefore, there is a need to strengthen local adult learning systems so that they can support the green transition. Three pillars to focus on are: i) broadening access to adult learning offers, with a special focus on vulnerable groups; ii) getting employers on board to ensure training meets local labour market demand and employers’ needs; and iii) putting in place strong governance systems that build synergies between adult learning policies and programmes and leverage the expertise of a broad range of stakeholders (OECD, 2022[37]; OECD, 2022[9]; OECD, 2021[38]).

Tackling the changing demand for skills caused by the green transition requires a comprehensive strategy and a systematic review of local adult learning systems. Comprehensive strategies that explicitly address the changing demand for skills and lead to an extensive review of curricula are rare (Cedefop, 2019[13]). The existing plans and strategies that tackle green skills needs tend to be produced ad-hoc and focus on specific sectors and regions where skills shortages have already materialised. That results in reactive and fragmented training delivery. Existing initiatives that alleviate immediate needs could be complemented with a more structured and systematic approach that (i) builds synergies between the initiatives, and (ii) anticipates and responds to medium- and long-term needs. A good example of a comprehensive approach to greening adult learning, based on solid labour market intelligence, is found in France (see Box 4.7).

Prioritisation of sectors heavily affected by the green transition and development of sector-specific programmes can be an effective way of adapting adult learning systems.While nearly all sectors are impacted by the green transition and a comprehensive strategy to adapt adult learning is needed, the extent to which sectors are affected differs (see Chapter 2). That calls for prioritisation of sectors at the frontier of the green transition and those threatened by it (Cedefop, 2021[30]). Moreover, sectors differ in the type of training that needs to be offered. For example, while the shift to clean energy is expected to drive demand for mining rare earths, overall, in mining, the transition to net zero calls mainly for mobility-oriented re-skilling that allows workers to shift into other occupations and sectors. In contrast, the construction sector, which is expected to grow, will mainly require up-skilling and re-skilling of existing and new workers (ILO, 2019[48]). Finally, sectors face different challenges in terms of how training is delivered. For example, construction is increasingly fragmented through self-employment and subcontracting (Cedefop and OECD, 2022[49]). Micro and small enterprises, which represent 99% of firms in the construction sector, tend to have limited capacity and resources to offer work-based learning, which presents a significant challenge for adult learning in the sector (Cedefop and OECD, 2022[49]). For these reasons, the sectors most affected by the green transition must be given priority. A tailored adult learning offer must reflect the specific needs of the sector. In Denmark, this is achieved through the involvement of National Trade Committees, which represent sectors, in the revision of training and qualifications. Another example of a sectoral approach is the Ecobuild.brussels cluster of firms in sustainable construction and renovation initiated by the Brussels-Capital Region in Belgium (see Box 4.8).

Targeted and tailored adult learning programmes are especially needed in regions that are heavily reliant on polluting industries. In these regions, a significant share of the labour force will have to switch occupations and sectors. To ensure that these communities and individuals are not left behind, a significant investment in re-skilling, with a training offer tailored to the characteristics of displaced workers, will be needed. Therefore, in some countries, additional training for regions dependent on polluting industries will need to complement the national adult learning systems. A good example of targeted support for regions with a heavy reliance on polluting jobs is the EU Just Transition Fund, which provides grants for a variety of interventions, including up-skilling and re-skilling activities and training, to Member States with territories expected to be the most negatively impacted by the green transition (see Box 4.9).

Regions and cities at the forefront of the green transition may also require dedicated strategies. The empirical analysis presented in this report reveals significant differences in how well regions capture the benefits of the green transition. While, on average, around 18% of workers in the OECD hold green-task jobs, this statistic stands at 35% in the Vilnius Region, 32% in Stockholm and Luxemburg, and 30% in Île-de-France, Greater London and Oslo and Viken. Regions at the forefront of the green transition have great opportunities to attract further investment in green technology, given that proximity to existing green businesses may offer benefits such as access to a pool of suppliers and skilled workforce. However, to capture this opportunity fully, these regions need to tackle the skills shortages that may develop. Already 58% of companies indicate the shortage of a skilled workforce as a major barrier to making their business model greener (Eurochambers, 2022[51]). Copenhagen, Denmark is addressing skills gaps through a strategy that involves career guidance and rebranding of TVET to encourage young people to choose green careers, support for employers to reskill their employees, and incorporation of green skills in programmes targeted at unemployed people. In Navarre, Spain the increasing demand for renewable energy specialists was addressed by establishing a specialised training centre, CENIFER. In New York, the development of green skills is supported through a range of subsidised training and internships (see Box 4.10).

Local adult learning systems need to be proactive in identifying and reacting to future local skills needs driven by the green transition. Offering training only after skills bottlenecks have developed means job vacancies will go unfilled and technology uptake will be slower, which will weigh on production levels. Instead, local and national government can take advantage of labour market information to proactively adapt adult learning systems. In particular, information on occupations for which demand will increase can be used to decide which programmes to promote. Labour market information can also help identify curricula to be scaled down or discontinued. Moreover, information on new occupations created by the green transition can guide the development of new curricula. Finally, information on the change in the task composition driven by the green transition could inform a comprehensive review of curricula for affected occupations. For more detail, see the section titled “Using data to avoid green skills mismatches and shortages”.

Career guidance for adults can be a tool to raise awareness of the new skills and occupations that are emerging as part of the green economy. Many adults who do not train point to a lack of appropriate training offer as a barrier. This is not always due to an absolute lack of offer, but often due to a lack of information on the utilisation of such courses. Career guidance can be a tool to help adults navigate the changes in the labour market brought on by the green transition and other megatrends. Counselling can help workers decide which available courses will increase their employability. However, participation in career guidance differs across workers. On average, 40% of adults have spoken to a career guidance advisor in the previous five years,3 but this share was lower among older workers, individuals in rural areas, and workers with lower educational attainment (OECD, 2021[53]). Reflecting the impact of the green transition in career guidance and increasing its inclusiveness can raise awareness of the employment opportunities in the green economy, direct workers to appropriate training, and as a result help workers benefit from the green transition.

Increasing career guidance for employees in SMEs can help close the gap in adult training participation between SMEs and large firms. Currently, employees of SMEs do not often have access to career guidance as in-house career guidance is rare in SMEs and micro firms. Moreover, most PES career guidance is focused on the young, the old and the unemployed, leaving many employees in SMEs un-attended. Career guidance in SMEs can help employees develop steps and attend courses to up-skill, and thus should be further developed. This can be done by: (i), increasing the outreach of PES to include employed workers, (ii) encouraging company career guidance provision as firms inform their employees of growth steps within the firm and courses to attend to achieve such growth (iii), creating an online career guidance platform that all workers can access to gain information on possible future career steps and skill development (OECD, 2020[54]).

The impact of the green transition will require development of new curricula. There are four main effects of the green transition on regional labour markets. Each of them requires a different training offer (see Infographic 4.1). Firstly, some jobs will disappear and skills associated with them will become obsolete. This effect, a prominent example being the mining sector, is the most disruptive for workers. For them to smoothly transition into other occupations and sectors, timely, targeted, and effective transition-oriented re-skilling will be needed.The green transition will also create new occupations, for example in the production of hydrogen energy and carbon trading analysis.

These occupations will require new curricula to be developed and delivered. Short but focused courses can be used to teach subject-specific green skills or general skills relevant for the transition, depending on the profession. Additional modules are relatively easy and fast to develop. In some professions they might be sufficient, in others they can pave the way for a more extensive update of the curriculum (Cedefop and OECD, 2022[49]).

In the case of other occupations, increased delivery of existing curricula or up-skilling at the workplace may be sufficient. The third impact of the green transition is through increased demand for some non-green occupations, such as electricians, and for well-established green occupations, such as solar panel installers. In the case of these occupations, curricula are often already developed, but effort needs to be made to train a sufficient number of new labour market entrants and workers willing to re-skill. Finally, many occupations will undergo modest changes in terms of the skills they require. This effect, while perhaps less disruptive for workers, will affect a significant share of the workforce. Upskilling of workers, which can often take place on-the-job, may be sufficient to tackle this effect of the green transition (Cedefop, 2021[30]). Some employers have already invested in such upskilling activities. For example, pilots of Virgin Atlantic were trained to use more fuel-efficient procedures for take-off and landing, while Coca- Cola trained its designers to develop lighter packaging (GHK, 2009[55]). However, there is a role for policy makers in encouraging and supporting employers to invest in the upskilling of their workers.

Establishing strong links between vocational education and employers can help ensure training meets demand in the local labour market. Getting employers on board has long been recognised as necessary to ensure that skills and competencies that workers acquire are relevant, timely, and well-targeted (OECD, 2022[9]) (OECD, 2022[37]) (OECD/Cedefop, 2014[12]). In the context of limited data on skills required in a green economy, collaboration with employers that can partly fill the information gap becomes even more important. Engaging with employers’ associations throughout the planning, design and implementation phase of training can boost the responsiveness of education and training to the constantly evolving demand for green skills (OECD/Cedefop, 2014[12]). In addition, training on new green technologies may require costly technical infrastructure in training, which is often lacking in vocational schools. Here, too, cooperation with companies can be beneficial. Therefore, the green transition calls not only for a change in the content of training, but also in its structure and organisation: how curricula are designed and delivered, and who is involved in this process (Cedefop and OECD, 2022[49]). The GT VET initiative in the steel industry implemented jointly by steel companies in Germany, Italy, Poland, and United Kingdom is a good example of an employer-driven review of the VET system (see Box 4.11).

It is also important to engage with universities and other research institutes at the forefront of green innovation. In some fast-changing industries, employers may be too conservative with regard to the challenges that their companies will have to face. Institutions at the forefront of innovation may be better placed to advise on the future skills demand in their field of expertise. A good example is the energy sector in which renewable energy technology is often developed by subsidised innovation institutions such as universities, which makes them well placed to support development of training to use these technologies (The European Week of Regions and Cities Webinar, 2022[56]).

Apprenticeships can serve as enablers of the green transition, by not only helping participants develop green skills, but also through facilitation of mutual learning between TVET schools and employers. Apprenticeships can serve as a mechanism to address green labour market shortages, by helping participants develop the right skills that are directly employable. At the same time, dual apprenticeship systems, in which learning takes place, both in a company and at a vocational school, offer an opportunity to build close linkages between education providers and employers. Close linkages facilitate mutual learning and, as a result, contribute to the greening of both firms and education institutions. Collaboration between firms and training providers increases the chance that firms express their needs related to the green transition in a timely manner when curricula are updated4. Therefore, apprenticeships are well-placed to quickly respond to labour market needs driven by the green transition. Moreover, apprenticeships facilitate mutual learning through collaboration of TVET teachers and in-company trainers. They provide an opportunity for TVET schools to learn about new green technologies used by companies. Finally, apprentices can carry their knowledge between employers and training providers fostering cross-fertilisation that can lead to eco-innovation5 (Cedefop and OECD, 2022[49]; Cedefop, 2022[57]).

Ensuring availability of a sufficient number of trainers with knowledge of the environment and green technologies should be part of adult learning strategies. In some sectors, such as construction, the lack of qualified teachers has been identified as a bottleneck preventing firms from meeting rising demand for green products and services. A survey conducted6 to investigate the cause of trainer shortages revealed that lack of clarity on what knowledge and qualifications are required in green VET training is an important barrier (Erasmus+, 2017[58]). This shows that there is a need for a comprehensive approach to training-of-trainers that includes clear guidance on the knowledge and qualifications needed to deliver green training and a training offer that helps prepare new trainers as well as upskill existing trainers. The BuS.Trainers project is an example of efforts to alleviate the shortage of trainers (see Box 4.12).

Employers may under-provide green skills training compared to the training level that would maximise their productivity and performance of the economy as a whole. The main reasons firms may fail to provide the optimal level of training include (i) information barriers, including underestimation of the returns from training, (ii) liquidity constraints, and (iii) concerns that the employee may leave the company before the investment in training pays off. Moreover, even when the firm provides an appropriate level of training from the business perspective, it may be below the socially optimal7 level of training, because of positive externalities of training related to greater innovation, productivity, and equality concerns (OECD, 2021[59]). In the context of the green transition, the gap between the optimal level of training from the employer and social perspectives is more likely to occur, given that the benefits of climate change action are felt at the social or even global, rather than firm level (OECD, 2021[60]). These considerations may justify policy interventions that encourage employers to provide green skills training.

SMEs are especially likely to under-prepare their employees for the impact of the green transition, given the additional barriers they face in delivering training. SMEs are less likely to provide formal and non-formal training to their employees than large firms. In the EU, almost all (91%) of large firms offered at least one continuing vocational training course in 2015, compared to 77% of medium and 57% of small firms (OECD, 2021[61]). The gap in training provision between SMEs and large firms stems from several barriers faced by SMEs. For example, in addition to the barriers identified above, SMEs have, on average, (i) less time and fewer resources to devote to training, (ii) more limited access to credit, and (iii) often lack the capacity to identify skills requirements and assess the benefits of investing in training (OECD, 2021[61]). The low participation in training rates is likely to lead to lower adoption of green practices and processes by SMEs. This can significantly slow down the “greening” of the economy given that SMEs account for 60% of total employment in the OECD (OECD, 2021[62]). Moreover, in the economy organised into global supply chains, the impact of slower adaptation of green technology falls not only on SMEs, but also hampers the pace of “greening” of large firms that rely on supplies from SMEs (OECD/Cedefop, 2014[12]).

There are five main policy levers, which local and national governments can use to increase employers’ investment in developing green skills at work. The first one is information and guidance. In the context of the green transition, this may entail awareness raising campaigns that aim to inform employers about the new environmental regulations and their labour market implications. The second lever is capacity building of specific actors within firms to help them make more effective and efficient training decisions. The third one are financial incentives such as subsidies, tax incentives, training levies and loans, which help overcome liquidity/credit constraints and align objectives between the firm and society. However, so far, subsidies to stimulate the development of green skills have not been a prominent feature of the policy landscape (Cedefop, 2019[13]). The fourth lever is public provision of training. Finally, governments can also introduce regulations that impose a minimum level of training with a specific content (OECD, 2021[60]). In Ireland, Skillsnet, a public-private network partnership involving the Irish Government, offers a range of services that help firms prepare for the impact of the green transition, including awareness raising, networking opportunities, and a range of free-of-charge workshops, courses, webinars, and mentoring (see Box 4.13).

In addition, governments can offer support that addresses the specific barriers faced by SMEs. To address the limited capacity of SMEs to identify skills needs, governments can offer access to self-assessment tools or more comprehensive, in person, support in assessing firms’ skills gaps relative to current and future needs. That can help businesses apply the general knowledge of environmental policies and green technology to their specific business case (Koirala, 2019[63]). In addition, governments can facilitate collaboration across firms to help SMEs adapt green technology and upskill staff. SME networks can make training more affordable when costs are bundled and benefits shared. In addition, bringing together SMEs and firms at the vanguard of green production can lead to know-how sharing and provide inspiration for SMEs, thus leading to faster adoption of green technology (Cedefop, 2019[13]). In recognition of the specific barriers faced by SMEs, the government of the Netherlands launched the MKB! Dee competition. The project provides subsidies for the best solutions to address challenges in human capital development faced by SMEs, with a particular focus on skills for the green transition (see Box 4.13).

Public Employment Services (PES) can promote a green transition that happens in a fair and inclusive way. The benefits of moving to a climate-neutral and sustainable economy will be felt at society level, while its costs will fall disproportionately on individuals employed in polluting sectors and regions heavily dependent on such jobs. The experience of past transitions shows that if no action is taken, mass layoffs can spill over to other sectors and have detrimental long-term effects on local communities. For example, decades after a mine has shut down, many coal-dependent regions continue to lag socially and economically (World Bank, 2018[65]). For dismissed workers, a layoff may mean a long unemployment spell associated with income loss or significantly lower wages upon re-employment, potentially resulting in negative social and mental health impacts for the worker and his/her family and intergenerational lock-in effect in which poverty is passed on from parents to children.

For example, (Rud et al., 2022[66]) find that miners displaced by the dissolution of the UK coal industry that accelerated in 1980s who found a new job experienced a 40% wage drop in the first year after displacement and their wages remained around 20% below the wages of the control groups 15 year later. The unconditional earnings losses (i.e., including workers who remained unemployed for longer than a year) were even larger (see also (OECD, 2019[67]) for a review of earlier literature and (Vermeulen, 2022[68]) for a discussion of the consequences of the phase-out of coal in mining regions). A comprehensive, targeted, and well-funded strategy that involves a set of active labour market policies (ALMPs) and appropriate income support can help limit the negative socio-economic consequences of the green transition.

PES can help prevent widespread resentment that endangers political support for the green transition. During past transitions, perceived unfairness of policies led to negative socio-economic consequences, combined with a lack of decisive action to overcome economic hardship, led to strong expressions of resentment (OECD, 2017[69]). Such resentment can turn into lack of participation in re-employment programmes at best, or at worst disruptive political movements. There are signs that this mechanism may apply to the green transition. Perceived increases in inequality due to environmental policies is one of the variables most impacting the support for the transition (Dechezleprêtre et al., 2022[70]). PES that anticipate the potential negative impact of the green transition and proactively engage with affected communities and regions can gain the trust of the community and overcome resentment.

PES should anticipate job displacement driven by the green transition and establish coalitions with social partners to target affected workers before they become unemployed. A key lesson from past transitions is that post-layoff services (e.g., ALMPs, income support packages, and social assistance) should be designed before, not after, closures (World Bank, 2021[71]). Proactive initiatives create trust with workers and communities, and, as a result, increases participation in re-skilling courses. In addition, offering some of these services prior to layoffs can help workers explore new employment opportunities before the displacement takes place (OECD, 2019[67]). Employers also tend to favour applications from workers who are still employed (OECD, 2018[8]). Therefore, early intervention maximises chances of re-employment. It may be desirable for PES to engage with workers at the worksite (European Commission, 2020[72]), to maximise outreach and increase the effectiveness of their services. Providing these services on-site requires close collaboration with the employers as well. Bringing on board social partners, who can provide assistance to workers at risk of displacement can also be desirable at this stage. For example, Swedish Job Security Councils provide transition services in the case of collective redundancy, such as advice to employees, individual counselling, career planning, job-search assistance, and retraining (OECD, 2019[67]).

The first step to supporting workers displaced by the green transition is to understand their characteristics and skills. Information about the age, level of education, prior experience, and any employment barriers faced by workers, is essential for designing an effective package of ALMPs and income support. Age of workers at risk of displacement may be a determinant of their eligibility for early retirement. Information about worker’s qualifications, skills and mobility can help determine an appropriate re-employment pathway. One way of collecting such information is through an individual skills assessment that includes both skills developed through formal education and those learnt on-the-job, with the aim of identifying skills transferable to other occupations (European Commission, 2020[72]).

Information about proximity of occupations and career transition pathways can guide the advice provided by PES. A major challenge faced by PES is matching displaced workers with new opportunities in a way that leverages their existing skills (European Commission, 2021[7]). The costs of the green transition in terms of time and forgone earnings are minimised when the skills acquired in previous occupations are utilised as much as possible in the new job. For this purpose, the Ministry for Ecological Transition and the Labour Ministry in France developed a tool that identifies occupations at risk of displacement, “green” and “greening occupations”, and pathways for occupational transitions. Digital tools can help identify occupations with similar skillset requirements in a more systematic way. For example, Nesta, an innovation foundation based in the UK, used machine learning to create a map that captures similarities between occupations. It also identifies “viable transitions”, i.e., roles that require similar skills, education, and level of experience, as well as “desirable transitions” which is a sub-set of “viable transitions” that lead to jobs with comparable or higher pay (see Box 4.5). While this tool is at an early stage of development, it is an illustration of how PES could use data to inform the career transition of workers in polluting occupations.

PES need to be aware of current and future labour market demand at the local level to guide workers towards sustainable employment. It is important to consider the demand for occupations at the local level, given that the mobility of some workers might be limited. Not all career transition pathways attainable in terms of skills and qualifications are feasible in the local labour market. Moreover, it is important to consider the long-term prospects of the occupation. While finding employment in the same or similar occupation may be the easiest option, such employment may not be sustainable. Experiences from past transitions shows that, for example, transferring a redundant miner to other mining operations was successful only in the short-run, but was no longer possible once large-scale mine closures took place (World Bank, 2021[71]). Renewable energy markets require mining for rare earths; however, such mining might not be in the same geographic location. Even so, it will not provide as many jobs as coal. In the context of the green transition, the displacement of workers is not a one-off event, limited to a particular company, but is a process that significantly reduces demand for some occupations. Therefore, placing a worker in a similar job, while easy, may end in another redundancy. Depending on individual worker characteristics, re-skilling into another occupation that leads to more sustainable employment, while more demanding in the short run, may be a good investment from an individual and public finance perspective.

Support measures are more likely to be effective if they are developed through collaboration between PES and employers. In the context of simultaneous job losses and job creation driven by the green transition, collaboration between PES and employers can help identify employment reallocation opportunities. For example, in the automotive industry, the push for green transportation leads to job losses in the production of combustion engine cars and job creation in electric and hydrogen-fuelled cars, with many skills being transferable. Therefore, helping workers previously involved in the production of fossil-fuelled cars transition into green employment in the automotive industry can significantly lower adjustment costs for workers and communities. For example, in Germany the federal government responded to the planned transformation of automotive suppliers by negotiating a package of subsidies and retraining facilitation for 30 000 employees, instead of the planned layoffs and hiring of new staff with new skills (BusinessEurope, 2021[26]).

An individualised transition pathway maximises the chances of sustainable re-employment. The green transition will significantly reduce the demand for some occupations in a geographically concentrated way. Therefore, it is important that displaced workers consider a broad range of new employment opportunities, including those that require changing sector, region, developing new skills, or a combination thereof. PES can support workers in identifying the new employment opportunity by (i) helping workers reflect on their skills, (ii) supporting them in exploring employment opportunities that they might have not considered otherwise, and (iii) directing them towards careers with better long-term prospects. Subsequently, once the new employment opportunities have been identified, PES can support the transition process by offering an individualised upskilling and re-employment pathway tailored to workers’ needs. The package of services may include counselling, training, placement services, and relocation assistance, among others (European Commission, 2020[72]). See Box 4.15 for examples of services offered to workers displaced by coal phase-out in Canada and Spain.

Additional safety nets could help sustain family finances in a situation where regular legislation is insufficient. Financial support programmes for workers displaced by the green transition are a common feature of support packages, see examples in Alberta, Canada (Box 4.15), Germany (Box 4.14), and Spain (Box 4.15). Workers need to be informed about the benefits that they are eligible for and the application process. Trade unions may be well-placed to support workers in this process. The relevant institution could consider processing applications for benefits at the workplace, which is a more sensitive way of handling this process that may be difficult for some individuals (European Commission, 2020[72]).

Welfare benefits would ideally be designed to better incentivise re-employment. To achieve that, welfare benefits can be designed in conjunction with activation measures (OECD, 2019[67]). Income support can be complemented by travel assistance to support seeking employment and relocation assistance for workers who move to start a new job, see example in Alberta, Canada (Box 4.15). The duration and eligibility criteria for welfare benefits would ideally be set to minimise the disincentives to returning to work, while ensuring a sufficient standard of living. If early retirement schemes are put in place, they could be designed to reduce financial penalties for combining income from work and pension.

PES can direct job seekers towards emerging industries and occupations, taking into account the impact of the green transition. It is desirable that, where possible, PES staff orient unemployed people towards sectors and jobs that have positive long-term prospects. This requires career guidance and information based on a thorough demand analysis that reflects the impact of the green transition. For example, in Austria, France, Germany and Spain, the information provided to job seekers includes green jobs and skills, and the impact of the green transition is reflected in the digital tools developed by PES in Austria, Germany, and France (European Commission, 2021[7]).

Existing ALMPs should be adapted to help job seekers to develop green skills. So far, ALMPs offered in OECD countries do not have a specific focus on green skills (Cedefop, 2019[13]). Given the increasing push to reduce emissions, it will become more important to offer unemployed people support in capitalising on new green job opportunities. For example, in the Hauts-de-France region, PES identified increasing demand for jobs in the wind power sector, and in response, directed job seekers towards specialised training in wind turbine maintenance (Cedefop, 2019[13]). In general, adaptation of existing ALMPs can go a long way in achieving a smooth transition (European Commission, 2021[7]). In the case of globalisation, an in-depth analysis concluded that general ALMPs should be relied upon as much as possible, given that issue-specific programmes increase administrative complexity (OECD, 2017[10]). This is likely to hold true in the context of the green transition.

Adaptation and development of training programmes in sectors and occupations where shortages have already materialised could be a priority. Offering support to unemployed people in developing skills in short supply has a triple benefit – (i) it helps them secure employment, (ii) it reduces welfare expenditure for the government and (iii) it addresses the needs of employers. In Austria, labour foundations, a mechanism to respond to mass layoffs and shortages, was activated to address the impact of the green transition (see Box 4.16).

While the creation of demand for green jobs may not be a direct responsibility of PES, placing workers in green jobs has a double-dividend. It supports re-employment of workers, and at the same time, contributes to the achievement of climate goals. Therefore, PES should consider including a green component when designing employment subsidy schemes. For example, in Slovenia, PES designed a pilot subsidy scheme for jobs in the green economy. In Luxemburg, a scheme for young unemployed people that included training and an employment subsidy targeted the green construction sector (see Box 4.17).

PES staff needs to be more aware of the impact of the green transition on the labour market to be able to guide job seekers towards green jobs and offer them relevant training. This can be achieved through a range of measures, from best practice sharing that helps PES offices learn from each other, through short online modules, to more comprehensive training. For example, the French PES (Pôle emploi) has developed online training on green and greening occupations for its staff. It also provides incentives to PES staff to implement innovative practices in supporting the green transition. Best practice examples are then shared on internal websites (European Commission, 2021[7]). Romania has also invested in training of its PES staff. Under a project funded by the European Social Fund, 83 PES staff were trained on the identification of green opportunities and qualifications, and on the measures to encourage employers to create green jobs (European Commission, 2012[80]).

National and local policy makers, as well as practitioners, recognise the potential of the social economy to contribute to a just and inclusive green transition. The social economy refers to organisations and enterprises that are typically driven by societal objectives and tend to follow democratic and participative governance practices (see Box 4.18). Initiatives at the international level, including the OECD Recommendation on the Social and Solidarity Economy and Social Innovation (OECD, 2022[81]) as well as the EU Social Economy Action Plan (European Commission, 2021[82]), acknowledge the role of the social economy in the green transition. Likewise, new policies, strategies and funds are being established in many countries to support the green transition, with the social economy being referenced in circular economy, environmental and rural development policies.

Social economy organisations have been engaged in green value chains acquiring valuable experience. They develop activities to protect the environment as well as to mitigate the consequences of climate change and the degradation of natural ecosystems (International Cooperative Alliance, 2021[83]). They have been involved in: (i) low-carbon and renewable energy systems, (ii) the circular economy, (iii) shortening agricultural supply chains, (iv) encouraging green mobility, (v) the sustainable management of natural resources, (vi) ecological education, (vii) and sustainable finance. Knowledge acquired in these fields can be shared and used to fasten the greening of value chains.

Through their engagement in the green transition, social economy actors can be a source of decent job creation while providing work and training opportunities for vulnerable groups. The social economy can contribute to reconciling economic, environmental and social agendas and advancing “triple dividend” actions, which is a way to improve social justice in the green transition (Osinski et al., 2020[84]). Triple dividend actions can be taken in several areas, such as energy, construction, food and mobility. They enable societies to reduce their ecological footprint while simultaneously creating work opportunities (even for people with low levels of qualification) and making sustainable goods and services more affordable and accessible (Osinski et al., 2020[84]).

In many OECD regions, skills systems are not ready for the re-skilling needs brought by the green transition and other megatrends. Local skills systems are often already struggling to keep up with the changing labour markets. Individuals who need training the most, tend to be the least likely to get it. The green transition will put further strain on local skills systems, and if no action is taken, the achievement of climate goals may be hindered by the shortage of green skills. At the same time, the benefits and the costs of the green transition are distributed unequally across individuals. So far, the green transition has been skill-biased, with workers in green-task jobs being predominantly high skilled and highly educated. The opposite is true for workers at risk of displacement. Therefore, without appropriate guidance and access to training for disadvantaged groups, the green transition could exacerbate social inequality.

Despite the prominence of the green transition in the public discourse, skills and labour market policies to address the impact of environmental policies are limited. Most efforts focus on workers at risk of displacement, in particular those employed in mining and coal power generation. Even here, regions differ in how advanced the phase-out of coal and associated policies are. Regions with a high concentration of polluting jobs that have not yet developed strategies for supporting workers at risk of displacement will need to step up their efforts. Acting fast can reduce the cost of the green transition and minimise social resentment. It is also important to recognise that policies to support displaced workers will need to be extended to other affected sectors, such as manufacturing and transport.

Additional research and digital tools could help support displaced workers more effectively. Training institutions and PES need better tools to assess transferable skills and help workers identify new career opportunities, including in different occupations and sectors (see Table 4.1). More research is also needed to understand which ALMPs work for individuals with different characteristics. While PES tend to use profiling tools to identify job seekers at highest risk of long-term unemployment and ALMPs are often evaluated, less is known about which ALMPs are most effective for specific job seeker groups.

In terms of preparing workers to capture the benefits of the green transition, progress has been limited. Environmental policies that drive the demand for green skills were mostly developed in isolation from skills and labour market policies that drive their supply. Existing programmes typically respond to skills shortages that have already materialised, instead of anticipating future demand for green skills. In many OECD countries, more can be done to ensure that local skills systems are prepared to support the green transition. That includes availability of timely and reliable labour market intelligence, appropriate career guidance, and access to training that supports the development of green skills. However, action needs to go beyond publicly provided services and requires strong engagement of employers. Local and national governments should send a coherent message and ensure clarity on the long-term evolution of climate regulation to create an environment that encourages investment in green skills. In addition, special attention, in the form of awareness raising and targeted services, could help groups that are under-represented in green jobs, such as women, and those groups that are least likely to train, such as low-skilled individuals or older workers.

Better information about the types of skills that will be needed in a green economy and new approaches to training delivery could help more workers reap the benefits of the green transition. A better understanding of the relevance of different green skills and of where green skills shortages or mismatches exist in local labour markets is crucial for designing effective policy. Furthermore, better information and analysis of possible skills and career transitions of workers based on their skillset and the similarity to the skills required in green or non-polluting jobs can support more effective and fair labour market outcomes. It is also important to explore the barriers that women face in accessing green occupations, for example, in terms of participation in STEM. Finally, effective communication channels and new methods of training delivery adapted to the challenges faced by vulnerable groups are necessary to ensure that the green transition does not leave disadvantaged workers further behind.


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← 1. OECD/Eurocities survey on adult learning systems in cities and regions, 2021.

← 2. When skills are approximated by measuring the changes in demand for occupations, it is not always clear what qualification or field of study is most appropriate to meet the skills needs in the identified occupations. Using qualification or field of study as a proxy for skills also comes with challenges. This approach leads to results that are more easily applied to planning in the education system, but the demand for educational credentials is not always easily translated into the demand for skills required on the job (OECD, 2016[23]).

← 3. Based on an online survey carried out in 2020 by the OECD in Chile, France, Germany, Italy, New Zealand, and the United States.

← 4. How much employers can influence the curricula of schools depends on the national or regional system.

← 5. It must be noted that some countries strictly separate the apprentice’s time in training and on the job. Therefore, the possibility of cross-fertilisation depends on regional or national systems.

← 6. The survey, conducted by Erasmus+, aimed to identify green skill gaps for trainers in efficiency energy and renewable energy sources in the construction industry. Participating country: Italy, Spain, Greece, Portugal, and Malta.

← 7. Private optimum, i.e., the point where benefits to those engage in the private transition are maximised, can differ from the social optimum, i.e., the point where benefits to the society are maximised, when the transition has externalities.

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