Scenario update

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

2. Introduction • An overwhelming stock of literature on SET clearly argues, that there will be more change than continuity; however, changes are quite unclear • Still, bothpolicyandresearchdomainsfromvariousfieldsexploreissuesastheywereindependentfromeachother; maybethisis a rational response • Update of D1.2 WP: Scenarios taking into account results of WPs2-8 as well as partial results of WPs11-19 • This isneither a researchbased on literaturenor a presentationofmodelresults • Explore potential links betweenscenariosand WPs • Welcome yourfeedback/observations SEC

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

4. The transition to a service economy: a sollution? The service sector requires significant amounts of energy and materials, but mostly through intermediate demand and investments – Eurostat study (Schoer et al. 2012) RES = real estateservices EU27 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/es300434c. SEC

5. Global scenariosand European responses Global level European level Threeresponseoptions • Nopolicychange • No additional policy, European policy response remains in a business-as-usual mode, defending the given mode of production & consumption • EcologicalModernization • Economic growth first, achieve eco-efficient production through market-based instruments, “internalizing externalities”, higher flexibility • Sustainabilitytransformation • 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 Global scenarios friendly tough SEC

6. WP2-8: potential drivers/challenges • WP2: showsthatlabourmarketdiscoursesrarelyincorporategreenissues • WP4: highlightsthatcurrentlylabourmarketsarefacedwithstrong polarizationpressureandsketch out potential futurepathways • WP5: investigateshowsocialinvestmentcancontributetolong-term socialsustainabilitygoals, whilecurrentwelfarespendingisdominatedbyshort-term mitigation • WP6: showsthatlabourmarketflexibilityandinnovationarelinked; although pure efficiencyconcernsshouldbebalancedwithsocialconcerns • WP7: assumesthatin health and care servicestherearetwo spheres emerging: formal, more standardised, high-quality services and hidden, semi-formal services of unknown quality SEC

7. WP . . . .

11. WP11-19: twobirdswithonestone? tough/friendly – eco-modernization/sustainabilitytransformation Social services Health care Skill level Skill gap Energy-sector Trans-port Materialmanagement Agricul-ture Housing Quantity

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

13. WP2: Are green considerations part of existing labour market discourses? • labourmarketdiscourses in Hungary, Spain andSlovakiagenerally lack „green“ considerations, partly also in the UK • In these countries thediscourseismostlycaughtup in classicalflexibilityvssecuritydebatesand • „[…] 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)

14. Currentlyonlysmallnumberofgreenskillsandjobs in theexistinglabourmarket … additionally urgent needforbetterdefinitionsanddata (WP2 & 4) WP2 criticallydiscussesthatcurrent large surveysandtaxonomies on goodsjobsandskills, jobsatisfaction, etc … onlyto a very limited extentincludegreenattributesandhardlyallowfor an identificationofgreenjobs & 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, 31f) WP4, using a database on jobadds, showsthat: “[…] 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)

15. Future of Skills – Convergence or Polarization? (WP4) “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 ofexperienceis likely to grow, with implications for the prospects of labour market entrants.” (Beblavy and Veselkova 2014, 18)

16. Potential for refocusing of traditional welfare spending towards ‘social investments’ – can they be made sustainable (green & social)? (WP5) Social investment differs from traditional welfare states with a focus on passive spendingin threeways: 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 labourmarket 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 labourmarket. 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. D5.6

17. 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 long-term 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 are 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 unfavourablebackgrounds 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. D5.6

18. Long-run innovation potential canbefosteredbyincreasedlabourmarketflexibility – althoughsocialconcernsshouldbeadressedaswell (WP6) • “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, p16) • “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, p16)

19. Health and care services at a crossroads? (WP7) “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)