The transition has to come faster, can it still be just?

Along with climate change and digitalisation, the Russian invasion forces the European economy to change faster than it would like, putting companies and workers in a vulnerable position.

The task that lies ahead for European policymakers is daunting. What do they have to consider to ensure that the transition will be just?

The EU itself has created the so-called “Just Transition Mechanism”, which consists of a variety of financing instruments to provide grants or credit to companies, workers, and public authorities to help them adapt to climate change.

In total, the EU will invest a little more than €20 billion via this mechanism over the 2021-2027 period. This amounts to about €3 billion per year, or €6-7 per person per year. Even if this money is used in a very wise and targeted manner, this is nowhere near enough to ensure that no one will be left behind.

More approaches will be needed.

Regional competences

Ulrich Hilpert, professor of comparative government at the university of Jena, argues that regions and company clusters should focus on their competences to rethink what they are good at.

“You don’t have to think about your product; you have to think about your competences and how you can apply them in the new circumstances,” Hilpert told EURACTIV, invoking the example of a cluster of embroidery companies that have moved on from textile manufacturing to use their embroidery skills in construction technology and for medical equipment.

In light of the recently announced ban on the internal combustion engine, he advised companies in the large cluster around the European car industries to not define themselves as car producers but to focus on their competence in building machines.

Still, not every company in the cluster around the internal combustion engine is likely to survive, and some workers will lose their jobs on the way.

Skills and industrial policy

That is why, on an EU level, there is a lot of talk about skills. “Up-skilling” and “re-skilling” is the name of the game in Brussels. In 2020, EU leaders set themselves the goal that, by 2030, 60% of all adults in the EU should participate in training every year.

“Now more than ever, people need to develop their skillsets throughout their professional lives to meet the demands of a fast-changing labour market,” EU Commissioner for social affairs Nicolas Schmit said.

However, the focus on skills is not necessarily the right one, according to Stephanie Albrecht-Suliak, who heads the department for political and international affairs at IGBCE, a German trade union for the chemistry, mining, and energy industry.

“Skills will only really become relevant when we know how exactly the transition will transform the work,” she told EURACTIV.

“Before that, politics has to define the goals of the transition and a path towards it,” she added.

“We need investments into the technologies and sectors of the future and specific roadmaps,” Albrecht-Suliak said, arguing for a much more forceful industrial policy.

The role of trade unions

However, she also sees a role for workers’ representatives, for example, when companies design their own roadmaps to weather the transition. In large German companies, workers have representatives at the board level who can help guide the company through the transition while guaranteeing that their voice is heard.

This phenomenon is less developed at a European level, but there are around 1200 “European Works Councils”, where workers can discuss these issues with the management.

The European trade union industriAll recently published a manifesto, saying that “an inclusive and just transition can only be achieved if workers and representatives have their say.”

However, giving workers more influence does not guarantee they will necessarily want to push for a green transition, especially if they work directly in the fossil fuel sector.

“It is not always self-evident for workers why the transition has to happen so fast and why exactly their company should be concerned by it,” Albrecht-Suliak told EURACTIV, giving the example of coal workers.

According to her, it is the role of trade unions to make such workers come along with the green transition anyway, while politics has to guarantee that there will be good work in the same region.

Geopolitics supercharge the transition and its problems

How difficult this is can now be seen in the example of the oil refinery in Schwedt in Eastern Germany. In this region, people have had bad experiences with structural transitions since the fall of the iron curtain. They are, therefore, much more suspicious of further structural changes, according to Albrecht-Suliak.

Due to the war, the refinery that is currently supplied by Russian oil now has to pivot away from Russian oil very fast, putting in danger more than a thousand jobs.

“There is very little understanding among workers,” Albrecht-Suliak told EURACTIV, explaining that intense negotiations between the trade unions and the government were necessary in this case to ensure that the workers are provided with some sort of perspective.

The example of the oil refinery shows how difficult a truly just transition becomes if, on top of the need to decarbonise, there is a fast reshuffle in supply chains due to geopolitical tensions that have markedly increased over the past years. Europe is in for a wild ride.

[Edited by Alice Taylor]

Read more with Euractiv

Brussels approves €152 million Saxony-Czechia catchup-scheme

The European Commission has approved a multi-year €152 million Interreg programme meant to foster cooperation and development between the German state of Saxony and Czechia.