Talk about an inconvenient truth. The chief executive of Ford last month put a figure on an awkward fact about the shift towards less-polluting automotives: electric vehicles need 40 per cent fewer workers to assemble than cars and trucks powered by petrol, Jim Farley said.
In one sense, he was highlighting what the sector already knew: battery vehicles have fewer parts than those propelled by an internal combustion engine, and so are easier to make. The decarbonised automotive world is less labour-intensive than the fossil fuel-burning one.
The number, though, was at the higher end of industry estimates. The United Auto Workers union in 2018 said about a 10th of union jobs could go as a result of transition. Ford intends to bring more manufacturing in house, which sounds good for its workers, but bad for the supply chain, where smaller companies making exhausts, clutches, gear boxes or radiators already face obsolescence.
Switching the UK’s remaining steel blast furnaces ... for electric arc furnaces, would cut jobs at those sites by 40 to 45 per cent
The automotive sector is an extreme example of how emissions reduction could cut labour intensity. But it won’t be the only one. For a start, as Chris McDonald at the Materials Processing Institute puts it, “as businesses go green they go smart at the same time”. Replacing decades-old processes will mean more automation, digitisation and advanced technology.
Other sectors face a jolt. Switching the UK’s remaining steel blast furnaces – which account for about 15 per cent of the country’s industrial emissions – for electric arc furnaces, would cut jobs at those sites by 40 to 45 per cent, according to Antonius Deelen, former boss of British Steel. That technology is available now. But with Tata Group requesting £1.5 billion (€1.74 billion) in government subsidies to decarbonise the Port Talbot steelworks in Wales, Deelen believes the possible job losses have hindered progress despite the fact that, ultimately, “it’s the only way for the industry to survive”.
What will the easing of bankers’ pay restrictions do for competition dynamics?
The prospect of such job losses, often in places already struggling economically, suggests false comfort from aggregate “green jobs” predictions. These typically and conveniently show more jobs being created, in renewables or home improvement, than are lost in fossil fuel extraction. They underplay the churn and dislocation that must be managed.
This will be felt regionally or locally, argues Mekala Krishnan at the McKinsey Global Institute, whose global forecast has 200 million jobs created and 185 million lost by 2050. Near-term job creation is also skewed towards so-called “capex jobs”, such as the installation of renewables or retrofitting homes, which then fall away.
At a country or local level, the data is often poor. Alex de Ruyter, at Birmingham City University, analysed the transition in UK car-making and concluded “there is a lack of understanding of which firms are in the supply chain and how exposed those firms are”. Job-creation figures, meanwhile, rely on assumptions about how much of a new technology supply chain a country will capture, such as automotive battery technology or green hydrogen for industrial processes.
We don’t have systems in place to invest in worker skills...[or] to support workers who are dislocated from incumbent sectors
The rebirth of US industrial policy and the domestic manufacturing requirements embedded in the subsidies of the Inflation Reduction Act has upped the ante for European industry, already struggling to break its reliance on cheap Russian energy. The UK, despite countless strategy papers, has fallen behind in key areas such as hydrogen, and seems incapable of setting long-term policy and sticking to it.
The irony is that warnings are mounting that everything from home insulation to renewables installation to battery minerals extraction faces shortages of skilled workers. This raises the unappealing prospect that transition could be slowed both by fears of job losses and by labour shortfalls. Policy to bridge that gap looks generally inadequate. The UK government set a target of creating two million “green jobs” by 2030 without defining what it meant, how they would be delivered, or where. It has yet to act on its own taskforce’s recommendation to create a new body to oversee workforce transition or map skills needs.
In the US, more resources for training and skills were one thing that didn’t make it into the Inflation Reduction Act, notes Jason Walsh at the BlueGreen Alliance, a coalition of unionised labour and environmental groups.
“We don’t have systems in place to invest in worker skills...[or] to support workers who are dislocated from incumbent sectors,” he says. “It’s a big gap.”
The truth is that the net zero transition is not just a financial and technological challenge. It is a social one. – Copyright The Financial Times Limited 2022
