Wednesday, September 19, 2012

We Want Green Jobs

When Apple launched the iPhone 5 this month, one message was clear: "Leaner and Smarter". This is a motto that excites many in Government today, amidst attempts to speed up economic recovery and design ways towards leaner and smarter economies. Governments world-wide are under severe pressure to create jobs (the likes of Steve and others), considering in particular shocking youth unemployment rates. As they pursue new policies, could the prospect of 'green jobs' point to the sustainable solutions they need?

Manufacturing provides a complex and challenging example of what might be. At a time of global financial crisis in 2009, The Economist announced "the collapse of manufacturing" in a front page article. It highlighted the difficulties government programmes face in keeping up with the constantly changing challenges of manufacturing. The historical trend has been one of automation, and manufacturing is not nearly as labour intensive as agriculture. More importantly, the nature of manufacturing and what gets manufactured is changing (or has to change) dramatically.

Business tends to look at employment from a "glass is half full" perspective ("we employ x thousand people"), whereas governments look at it from a "glass is half empty" perspective ("n-x thousand are unemployed"). Views at factory level are very different from views at national level, causing varying degrees of emphasis on number of jobs, productivity and quality of work. But the green agenda poses new challenges that cut across old divides, challenges that question the very existence of certain industries should they continue with business-as-usual (BAU). The International Labour Organisation (ILO) reflects this alternative view of what might be in its new report Working Towards Sustainable Development.

The ILO report states the likely losses in jobs, economic output and productivity over the coming 2-4 decades should we continue with BAU. Such a scenario includes a tripling of global annual resource extraction - fossil fuels and others - by 2050. The alternative scenario of more sustainable business models and greening national economies includes, most studies agree today, the prospect of net gains in employment. Areas that hold great potential include environmental goods and services, which in both the USA and Brazil already employed around 3 million people by 2010. Studies on the expected impacts of new energy efficiency standards for appliances and equipment in the USA suggest these are likely to include 6000 new manufacturing jobs for every 100 000 net jobs created.

Needless to say, there are degrees of greenness. And 'green jobs' are also expected to be "decent", including adequate incomes, social protection and workers' rights. Examining green job prospects, economists consider employment from the following perspectives:

  • output perspective: sectors and industries that produce green goods and services;
  • process perspective: sectors that contribute to greening;
  • direct employment;
  • indirect employment (e.g. at suppliers); and
  • induced effects (further employment thanks to additional spending by those who benefited from the above).

With these considerations goes analysis of the numbers of workers that would need to change jobs, move within or between sectors, wage impacts as well as skill and training requirements.

In view of their intensive use of energy and natural resources, a green transformation is especially critical for manufacturing subsectors such as iron & steel, aluminium, cement, pulp & paper and electrical & electronic goods. The goal has to be closed-loop manufacturing, including radical improvements in design, resource efficiency and remanufacturing. With this goes the need for supportive infrastructure to facilitate product take-back and recycling, all of which will serve to create new, greener jobs in an expanded value chain.

While smaller enterprises (SMEs) remain the biggest employers, major corporations have a special responsibility considering the economies-of-scale they control (cf table below). Some manufacturers have established initiatives from which others can learn. 3M's Pollution Prevention Pays programme, started in 1975, has saved the company nearly US$ 1,4 billion. Its success depends on the engagement and voluntary participation of employees, who initiate projects that are awarded based on criteria such as energy efficiency gains. Its innovation has a ripple effect in the value chain. 3M aims to have its suppliers world-wide reviewed to drive conformance with its environment and social standards by 2015.

Based on life cycle analysis (LCA), Apple reports that its carbon footprint is dominated by 61 percent of emissions associated with manufacturing (incl raw material extraction and product assembly) and 30 percent of emissions associated with the use of its products. Leaner products require less material to produce and generate fewer carbon emissions. The application of a full environmental and social LCA by Apple would bring additional insights, including its ability to support the "decent" aspect of green jobs. A German environmental and social LCA study of the life of a laptop computer has for example shown overlap between environmental and social hot spots. The latter related to conditions in the mining and production stages of the value chain. These may be far removed from increasingly connected Apple users, but they may well expect their iconic supplier and its industry peers to join the drive for green, decent jobs.

"I think we do have a responsibility to create jobs." - Apple CEO Tim Cook 
in an interview with Bloomberg Businessweek, December 2012.

Table: Profiles of some global manufacturing firms (among top ten producers in five sectors)
Source: www.forbes.com, www.ft.com and annual reports 2011

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