Skills-based and regionally explicit labor market exposure to the low-carbon transition in Europe

Abstract

Transitioning to a low-carbon economy leads to shifts in the labor market. Yet, an effective policy response to such shifts is currently limited by knowledge gaps on the occupations at risk, their skill profiles, and their regional and sectoral distributions. Here, based on a novel classification of occupational exposure covering 3,008 occupations and 13,500 skills, we map the labor market exposure to the low-carbon transition across European regions and sectors using granular labor force surveys. We find that workers in high-carbon jobs lacking industry decarbonization options (at-risk jobs) have significantly fewer skills and that their skills are less transversal compared with low-carbon or neutral jobs, which may inhibit switching to in-demand occupations. Moreover, large variations between regions and sectors can be expected. For example, while at-risk jobs are most frequent in the mining sector in relative terms (11%), the manufacturing sector is most affected in absolute terms (0.9 M). Crucially, our approach shows that effective deployment of industry decarbonization options helps reduce the number of at-risk workers from 6.2 to 2.3 M. Finally, we show that, among European countries with available data, Germany and Hungary face a particular challenge with a disproportionately high share of their workforce at risk, combined with low public support via the EU Just Transition Fund. Responding to these national and regional labor market impacts is critical to avoid policy backlash.