Completed research project: Green labour market effects

The Swiss labor market plays an important role in successfully transforming Switzerland into a “green open economy”. Professor Rolf Weder’s research project showed that the Swiss labor market has a relatively high green potential. The reason is that the share of employees with skills that are typically needed when an economy is transformed into a “green economy” is relatively large. This conclusion follows from an own empirical appraisal of the green potential of occupations. It is based on the presumption that an occupation has a high green potential if it includes skills needed to perform green tasks -- independently of whether these occupations and associated skills are currently used to complete green tasks, i.e., to develop cleaner processes or environmentally friendly products. It turns out that these occupations mainly require technical skills or an education that focuses on natural sciences and engineering. The approach is, among others, confirmed by the project team who finds that more stringent environmental regulations indeed increase the demand for occupations with a high green potential.

The question is whether the Swiss labour market is prepared for this transition. If there are not enough people with corresponding skills, the costs might be very high. Correspondingly, if certain industries have a hard time finding the right people, they might shift their production to countries with lax environmental regulations. This, in turn, could mean that greenhouse gas emissions in Switzerland might be lowered, but globally still remain high.

The project team, therefore, looks at different Swiss industries regarding their (1) greenhouse gas emission intensity in Switzerland, (2) employment share in occupations with green potential, (3) labour market shortage and (4) international tradability of their products. The authors find that there are only a few industries (e.g., chemicals and chemical products) that show a large share in all four variables and thus may be forced to dislocate their production sites (if other countries are not strengthening their environmental regulations). It is, however, emphasized that heterogeneous effects on different firms within industries are to be expected.

Overall, the Swiss labor market seems relatively well prepared for a green transformation. The challenge remains the availability of technical skills and occupations. This challenge could become bigger with the simultaneous increase in demand for such skills caused by the digital transformation. Thus, it will be important to gradually implement incentive-based instruments in the continuing education policy, promote certifications of individual (“green”) skills and inform pupils and students about the significance of the so-called STEM (science, technology, engineering and mathematics) subjects in the transformation process to a green economy.

Peer-reviewed publications of the research project:

The following working papers are currently under review at different scientific journals:

• Lobsiger, M., & Rutzer, C. (2021a), "Jobs with Green Potential in Switzer­land: Demand and Possible Skills Shortages", WWZ-Working Pa­per, https://ideas.repec.org/p/bsl/wpaper/2021-01.html 
• Lobsiger, M., & Rutzer, C. (2021b), "Green Potential of Europe’s Labour Force: Relative Share and Possible Skills Imbalance", WWZ-Working Paper, https://ideas.repec.org/p/bsl/wpaper/2021-04.html 
• Niggli, M., & Rutzer, C. (2020), "Environmental Policy and Heteroge­neous Labor Market Effects: Evidence from Europe", WWZ-Wor­king Paper, https://ideas.repec.org/p/bsl/wpaper/2020-09.html 
• Rutzer, C., Niggli, M., & Weder, R. (2020), "Estimating the Green Potential of Occupations: A New Approach Applied to the U.S. Labor Mar­ket", WWZ-Working Paper 2020/03, 
  https://ideas.repec.org/p/bsl/wpaper/2020-03.html

We have also experimented with a new, innovative form of knowledge transfer by means of an interactive, web-based analysis. It contains, for example, the green potential for a wide variety of professions:

On this link the following book -- which is a summary of the NFP73 project -- in German language can be downloaded:

Weder, Rolf and Wolfram Kägi (Editors), Umbau der Schweiz in eine “Grüne Wirtschaft”: Herausforderungen für den Arbeitsmarkt, Basel, Mai, 2021.