7 Low-carbon Jobs
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Global and domestic climate policy, as well as the resulting shifts in markets and investment, will drive both positive and negative effects on employment in Canada. Ultimately, a clean growth transition can only be successful if the Canadian economy continues to provide quality jobs to Canadians across the country. Data can help us understand and track various trends over time, informing policy decisions that improve outcomes for Canadians. While aggregate effects on employment are important, policy choices must consider challenges at the sectoral, regional, and individual level to protect people at risk of job loss and help more Canadians take advantage of emerging new job opportunities.
Headline Indicator #7: Decoupling Jobs and GHGs
Under a successful transition to a clean growth future, Canadian jobs will continue to increase as GHGs decrease. Our headline indicator for low-carbon jobs is therefore the gap between trends in jobs and GHGs between 2005 and 2018 (Figure 7.1). The metric captures the importance of existing jobs as well as new sources of lower-carbon jobs as Canada reduces its GHG emissions. Over the 2005–2018 period, the aggregate number of jobs grew by 16 per cent while GHGs remained relatively constant (-0.1 per cent).
As long as overall GHGs are declining, it does not matter where the jobs come from. What matters is that Canadians have meaningful and stable employment.
Notably, this indicator does not distinguish between “green” jobs or “brown” jobs, terms often used to describe the labour market transition to a low-carbon economy (ILO, 2016). This is an advantage: there are many challenges associated with labelling specific jobs according to their green credentials but limited benefits. Instead, the decoupling metric values all jobs equally and considers the net effect on employment, accounting for both job losses and gains. As Canada decouples GHGs from GDP growth, many jobs will evolve and increasingly require work relevant to climate change. As long as overall GHGs are declining, it does not matter where the jobs come from. What matters is that Canadians have meaningful and stable employment.
At the same time, however, simply increasing the number of jobs relative to GHG emissions should not necessarily be the sole objective. The goal is to increase the number of jobs and reduce GHGs while also promoting an efficient use of labour. The fact that job growth has been slower than GDP growth (Indicator #1) indicates an increase in labour productivity, which is generally a positive driver of economic growth (Box 7.1). That legitimate limitation does not invalidate the metric we use here; economic growth without employment growth can bring social challenges.
BOX 7.1: LOW-CARBON JOBS AND LABOUR PRODUCTIVITY
If labour is viewed as an input to economic output, using more labour per unit of GDP is inefficient. In fact, slower growth of jobs in comparison to GDP growth indicates an improvement in labour productivity. Increased labour productivity can translate into higher profits, increased wages, new investments, and a larger tax base, supporting economic growth and higher standards of living. Increased automation, for example, may reduce the need for labour in some sectors.
However, new productivity measures are emerging that may justify less efficient employment activities that improve environmental outcomes. The OECD, as part of its green growth indicator work, has been developing a broader measure of Environmentally Adjusted Multifactor Productivity that incorporates labour, capital, and natural resources as inputs and greenhouse gas emissions and air pollution as negative outputs. Fully incorporating environmental considerations into productivity measures could alter determinations of the most efficient use of inputs such as labour, capital, and natural resources.
There may also be societal objectives that justify less efficient employment activities. For example, the 2020 investment by the Canadian government in the clean-up of orphan and abandoned oil and gas wells provides a source of work for service companies affected by the 2020 COVID-19 pandemic restrictions and the drop in oil price. This may be inefficient in terms of the GDP generated per hour worked but will help companies stay afloat and limit layoffs while reducing a costly environmental liability not captured in GDP.
Sources: Anderson (2020); Baldwin et al. (2014); OECD (2017); Winter and Moore (2013).
Provincial decoupling of jobs from GHGs varies substantially. Nova Scotia, Ontario, New Brunswick, Quebec, and P.E.I. have all reduced emissions while maintaining or increasing employment (Figure 7.2). British Columbia, Newfoundland and Labrador, Manitoba, Saskatchewan, and Alberta have likewise increased employment since 2005 but have also seen an increase in GHG emissions.
While these decoupling trends—both at the national and provincial level—generally follow the decoupling trends between GHGs and GDP (Indicator #1), job growth has been slower than GDP growth. Slower job growth is particularly notable in Manitoba, where GDP increased by 34 per cent over the period but jobs only increased by 12 per cent. As noted above, this may be a positive development for economic growth objectives in terms of increased labour productivity. Manitoba had an employment rate of 63 per cent in 2019, above the Canadian average. Employment is not evenly distributed throughout the province, however, with the Parklands and Northern Manitoba region seeing below-average employment rates (Statistics Canada, 2020a).
To consider the linkages between jobs and GHG emissions, we measure GHG-job productivity as the number of jobs per kilotonne of CO2e emitted (Table 7.1). Employment in Quebec, P.E.I., and Ontario is less connected to GHG emissions, while employment in Saskatchewan, Alberta, and Newfoundland and Labrador is more connected to GHG emissions. As noted in Indicator #1, this is due to the greater proportion of emissions-intensive industries, such as oil and gas, in the three latter provinces.
Aggregate measures of employment can mask sectoral, community, and individual challenges. Global and domestic efforts to reduce GHG emissions will drive changes to the economy, which will in turn lead to changes in the nature and type of workers and skills needed. As a result, some sectors, communities, and people could face a higher risk of job loss and a greater need to upskill or retrain to maintain employment or capture new opportunities. A smooth and fair transition requires finding ways to minimize job loss, preparing workers for transition, and ensuring broad access to new opportunities.
To identify sectors likely to experience climate-change-related employment risks or opportunities, we consider four factors: (1) risks from a domestic transition to a low-carbon economy; (2) risks from a global transition to a low-carbon economy; (3) risks from a changing climate; and (4) opportunity from low-carbon transition (Table 7.2). Drawing on a variety of sources, we estimate the order of magnitude of employment risk and opportunity by sector. Further research and scenario analysis are, however, needed to fully understand the complex dynamics of employment risk and opportunity.
For each sector, transition will create both employment opportunities (e.g., increased demand for lower-carbon technologies, products, and services or minerals and metals) and risks (e.g., higher capital and operating costs or reduced product demand and investment). How companies manage risks and adjust to capture opportunities will influence the ultimate net effect on employment. Companies considered vulnerable to climate policy could innovate and diversify product lines, reducing their vulnerability and capturing new market opportunities. Some companies may instead be more likely to pursue cost-cutting strategies that reduce their workforce, while others invest in new technologies that reduce their emissions intensity.
Notably, climate and non-climate market risks interact in both short-term and long-term employment trends. Historically, most dramatic changes in employment come from non-climate factors, including recessions or changes in global commodity prices. Tracking gains and losses in employment by sector over time, combined with an analysis of climate and non-climate factors, can help provide important context for climate-related policy development. A sector that is facing multiple risks may be more vulnerable to employment loss from a low-carbon transition.
Future employment trends will also depend on the growth of new job opportunities. Global and domestic technological trends are shifting markets, with a greater emphasis on big data, artificial intelligence, automation, health technology, clean technology, and consumer goods for growing emerging markets (Manyika, 2017). While these market shifts pose challenges, they also create opportunities for new entrants, as well as incumbents that can adapt and adjust.
This shift in market opportunities is partly reflected in Figure 7.3, which shows the change in employment across Canada’s environmental and clean technology sector. Overall, 73,033 more people were employed in the sector in 2018 than in 2007, accounting for 1.7 per cent of total employment in Canada or 317,085 jobs (Statistics Canada, 2020c). Over three-quarters of workers in the sector are in three provinces: Ontario, Quebec, and British Columbia. Major hydroelectric projects have been an important source of employment growth in engineering and construction, particularly in Newfoundland and Labrador and Manitoba (Statistics Canada, 2020c). Employment increased across all sub-sectors except clean technology manufacturing. However, clean technology manufacturing GDP grew by 20 per cent between 2012 and 2018. The difference between GDP and employment may represent a shift towards less labour-intensive clean technologies or an improvement in labour productivity.
Communities with a high concentration of employment in one sector are most at risk from shocks to employment, which could come from climate impacts (e.g., fires and pine beetle in forestry, drought in agriculture) or shifts in global market conditions (e.g., decreased demand for carbon-intensive goods, climate-related supply chain disruptions). If a large facility or company in the community closes or has significant layoffs, the loss of income can risk broader employment loss. If new employment opportunities are not located in the region, there is a risk of longer-term unemployment and movement out of the community.
Using 2016 data from the Canadian Business Counts—a database which measures employment at the local level for all sectors—we estimate employment concentrations across the first six sectors identified in Table 7.2.1 Figure 7.4 shows the top 20 most concentrated economic regions in terms of employment in a single subsector. Three communities appear twice: Nechako, British Columbia (forestry and wood product manufacturing); Wood Buffalo-Cold Lake, Alberta (oil and gas and specialty trade contractors); and Red Deer, Alberta (support activities for oil and gas and mining, specialty trade contractors). Of the regions shown, only two regions had unemployment rates above 8 per cent in 2019: Southern Nova Scotia (8.3 per cent) and Notre Dame-Central Bonavista Bay, Newfoundland and Labrador (16.8 per cent) (Statistics Canada, 2020a). Both regions concentrate in food manufacturing linked to fish and seafood.
Employment concentrations can help to identify communities at risk, as well as those positioned to capture new opportunities. For example, Northern Saskatchewan’s employment concentration in mining (mainly uranium) may lead to employment gains if the global low-carbon transition favours nuclear power. Indigenous governments may also be able to capture new employment opportunities in transition (Box 7.2). In general, however, greater economic diversification reduces community risk.
Box 7.2: Indigenous-led Clean Growth Projects Provide Employment Opportunities
Indigenous communities have been significantly involved in over 150 large renewable energy projects in Canada, as well as numerous smaller community energy projects. These initiatives are helping to provide sources of employment while improving energy independence and reducing health risks from diesel use. The Dokis First Nation in north-central Ontario, for example, created its own land code under the First Nations Land Management Act, allowing it to move forward with the Okikendawt run-of-river hydro project in partnership with an independent renewable energy producer—Hydroméga.
There are many other examples of Indigenous people driving clean energy and nature-based climate solutions, supported by organizations such as Indigenous Climate Action, Indigenous Clean Energy and the Indigenous Circle of Experts.
Sources: Indigenous Climate Action (2020); Indigenous Clean Energy (2020); Indigenous Circle of Experts (2020); INAC (2016).
Unemployment and underemployment are closely linked to education and skills. Those without a high school diploma have historically faced higher levels and longer durations of unemployment (Statistics Canada, 2020d). Age and gender also matter, with younger males generally at greater risk of job loss (though the 2020 COVID-19 recession has affected more women than men) (Lundy, 2020). Indigenous people also face higher levels of unemployment and have higher proportions of people working in occupations that could be at risk, such as natural resource production and trades (Statistics Canada, 2019; 2020b).
Clean growth implies significant changes to the structure of our economies over time. Workers that have the skills to adjust to new types of work or capture emerging employment opportunities will face lower risk through transition. Those with a skills mismatch will face greater risk unless they are able to adapt and reskill quickly. Studies looking at the employment impact of automation, for example, identify occupations at risk by assessing whether the skills of those occupations are transferrable to occupations at lower risk (Conference Board of Canada, 2019).
The Alberta-based organization Iron & Earth focuses on supporting the transition of skilled tradespeople from oil and gas to renewable energy. They conducted a 2016 survey of oil and gas workers that found strong interest in retraining opportunities in solar power and heating, wind power, and geothermal energy, where there is already a close match with existing skillsets. Iron & Earth recommends both short-term training programs and updated apprenticeship programs to support effective transition (Iron & Earth, 2016). The success of such programs, however, depends on the availability of jobs for those that invest in retraining.
For many, success will be about more than employment levels. The quality of work also matters. For some, quality will mean the level of income provided. Sectors such as mining, quarrying, and oil and gas extraction have tended to provide higher average earnings than other sectors. For others, a quality job means security and benefits. A growing number of younger Canadians are also interested in meaningful work that supports a greater purpose and jobs that provide learning opportunities (Weikle, 2019). In Iron & Earth’s survey of oil and gas workers, 59 per cent said that they were willing to take a pay cut to transition to renewable energy and 74 per cent said they were interested in boosting the environmental health and well-being of their children and future generations (Iron & Earth, 2016).
To minimize job loss and maximize job gain through low-carbon transition, we need a more detailed understanding of sectoral, regional, community, and individual vulnerabilities. We also need a better sense of future knowledge and skill requirements, employment and skills transformation trends, and emerging employment opportunities. Data availability on employment is generally good, though it can be difficult to find disaggregated details in smaller provinces and the territories, and we encounter the same challenge identified in Indicator #1 in terms of matching employment data with GHG data. We have provided some insight on employment vulnerabilities, but a deeper dive—particularly in communities and regions with a high concentration of employment in one sector—could better inform future policy development.
- We exclude the Finance and Insurance category, as well as Professional, Scientific and Technical Services, as there is significant diversity within the sectors that makes them unlikely to all simultaneously be affected (beyond a general economic downturn) and they are concentrated in larger metropolitan areas more likely to see growth in a range of new employment opportunities.