OECD’s Employment Outlook stresses collective bargaining for a just transition

The 2024 Employment Outlook provides evidence of worsening wages and job opportunities in the move from high emission to green industries and makes a strong case for collective bargaining to achieve a socially just transition to a net-zero economy.

It shows that workers from high emission industries are relatively well-paid, tend to have stable jobs and are much more likely to be covered by a collective bargaining agreement. If they lose their job, they find it more difficult to find a new and stable job, and are often forced to accept wage cuts and move occupation or region.

The OECD found that workers displaced from high-emission industries lose up to 40% of average annual earnings compared to 30% for workers displaced from low-emission industries (over the six years following dismissal).

On the other side of the equation, the OECD finds that low and medium skilled jobs in demand because of the green transition offer lower pay and poorer working conditions, with workers less likely to be covered by collective bargaining.

 These findings support the case for collective bargaining as an indispensable part of a just transition, and the OECD Employment Outlook rightly makes the case for collective bargaining very clearly: 

• “initiatives to foster collective bargaining and social dialogue in these (green-driven) industries and companies would therefore play an important role and may improve their attractiveness for low and medium-skilled workers”.
• “minimum wages and collectively negotiated wage floors can further play an important role in limiting re-employment wage losses by ensuring that the proceeds of productive labour are effectively shared with workers, especially those with weak bargaining position.”.
• “Social plans and transition initiatives (…) typically operate through coordinated efforts between employers and worker representatives (…) to reduce the number of dismissals and, particularly, mitigate their negative consequences for workers. Some of these efforts also aim to create structured pathways for displaced workers that can significantly increase their re-employment chances”.

“The OECD’s Employment Outlook makes the key point on the Just Transition: addressing the social impact of the net- zero transition is not only the right thing to do, it is also essential to ensuring public support for the transition to move forward” says Veronica Nilsson.

TUAC also welcomes the OECD’s analysis showing that there is no trade-off between wages catching up with the purchasing power lost over the past years and price stability. The OECD Employment Outlook states “As real wages are recovering some of the lost ground, profits are beginning to buffer some of the increase in labour costs. Yet, in many countries, there is room for profits to absorb further wage increases, especially as there are no signs of price-wage spiral.”

For more on the OECD Employment Outlook see https://www.oecd.org/en/publications/oecd-employment-outlook-2024_ac8b3538-en.html