05/11/2021
Climate action and its likely short-term impact on the job market
Politicians across the globe now recognise the imperative of taking action to protect the longevity of our planet but they are understandably less forthright about outlining some of the more immediate implications of this for employment and our lifestyles in general.
Almost everyone accepts that we have to move away from our dependence on fossil fuels to greener energy sources and adjust our own personal living habits in the process although we are less clear what this means. Many of us with families are used to having two or three cars for convenience. In the UK we are also used to travelling abroad frequently for short breaks. Some of these breaks are to long haul destinations and may involve multiple flight connections as part of the journey. If we are to support the planet and our own environment, current levels of consumerism using existing technology surely cannot be sustainable although few politicians categorically state this. Part of the problem has been due to the greater affordability of consumer goods and services due to globalisation.
I am reminded here about the company that makes Hunter Wellington Boots. When I was younger, I grew up with my trusted pair of Hunters that never let me down and happily seemed to last forever. The durability of Hunter wellington boots was legendary but sadly by 2006 the company was placed into administration due to high manufacturing costs and weak sales. Ironically, their very robustness, was part of the problem as each pair of boots seemed to go on and on. The business needed to find a different strategy moving forward and they did. Since 2008, almost all Hunter Boots have now been produced in Asia and the way in which they are made has changed so that they are less durable and long lasting. The colour and design of the boots also changes annually so instead of just choosing between standard green or black colours, you can buy boots with bold logos and numerous colour/pattern options. These changes have placed the company on a much more secure financial footing and sales have risen dramatically. However, in terms of the environment, the company has inadvertently created a much bigger footprint. Instead of holding onto our wellies like a treasured part of the family, we are now changing them almost every season. This is equally true of other consumer items which are also being made in low-cost manufacturing locations like China. Rather than buying goods to last a lifetime, we frequently buy newer versions of the same product to make sure we are in line with the prevailing fashion.
In truth, the level of disposability this has created is not really sustainable as we transition to a greener world. The rising energy costs and energy supply issues we are experiencing point to the fact that bio-fuels and other ecologically sound energy sources are still a long way off from meeting current levels of demand. Ironically, at the same time that President Biden was at Cop 26 to agree targets and strategies to protect the climate, he was also imploring OPEC to ramp up oil production as the world still cannot live without fossil fuels. This may seem contradictory but ramping up production of traditional “brown energy sources” is a way of containing inflationary pressures as well as making good the shortfall from greener alternatives.
Moving away from traditional energy supplies is likely to mean that the cost of most goods and services we purchase will rise, as it will be the new higher cost “green” energy sources that either partially or fully power our manufacturing base as we strive to save our planet. Energy costs will come down in time but only at the point that alternative green energy sources become cheaper and more plentiful. At the same time, Governments are adding strategic taxes to services and products such as long-haul airfares to make frequent travel less attractive.
After the positive news of a rebounding job market as Covid gradually recedes, we must prepare ourselves for a less predictable employment market. Whilst some sectors such as the legal sector which we operate in may be relatively unaffected by the shift to “greener environmental strategies”, there is nothing like a dose of inflation to dampen rampant consumerism. High levels of consumerism creates work and therefore jobs even if its environmental footprint is unacceptable. The economic migration to greener energy sources will inevitably lead to financial pressures on consumers which may or may not be short-term depending on how quickly we can get to our greener world and how quickly the cost of green energy can be brought more into line with existing energy sources.
These issues are the very real dilemmas that politicians face. We can all easily identify the benefit of protecting our planet but what personal sacrifices are we prepared to make ourselves, and at what cost to our lifestyle? In this transition period, we will have to navigate our way through some turbulence which will have an impact on labour markets globally.
There are still opportunities out there for those who want to move but the window of opportunity is closing fast. With inflation likely to quadruple over the next 12-18 months, our standard of living is inevitably going to take a hit. Whilst salaries have been rising recently to tempt people into jobs, employers will simply not be able to swallow rises in national insurance, utilities etc. without passing on the increases to consumers as well as restructuring their workforces so that they can get more from less. Ironically, there are still plenty of experts advising employers to do more for their employees to keep them happy which I absolutely get. However, any changes to the work environment that don’t lead to additional sales or productivity cannot be sustained without some quid pro quo changes elsewhere, and that is usually in the number of people they employ.
All governments must now prioritise climate action and the outcomes from Cop 26 will clearly translate words into actions with some of the consequences we have already talked about. Politicians will gloss over the collateral damage created by the policies we have to follow but there will be consequences, both for us as individuals and our families. A less predictable labour market with the possibility of higher unemployment in the short-term is just one issue that I sense we may have to grapple with.
So there we have it. We know that being greener and cleaner is the right thing to do. We also now have a sense that we need to play our part in this. Instead of jetting off at the drop of a hat to some far-flung destination, we sense we should be doing something more ecologically friendly. Rather than cluttering up our driveway with 2 or 3 cars, perhaps we should be making more use of bicycles especially as many of us now do some of our work from home. However, the aviation and car manufacturing sectors are still critical sectors for the UK economy. We will have to hope that any reduced demand in these areas can be picked up by new “green activities” that can fill any corresponding job gaps. Moving from “Brown” technology to “Green” was always going to be fraught and this has not been helped either by the pressures caused by Covid. As we adapt to being more responsible citizens, we must expect turbulence in the job market for some time to come.
