What are green jobs and how can they be supported?
13 Nov 2023
Ben Brindle, Former Research Economist (Fellow)
This blog was originally published on the website of Adzuna, one of the largest online job search engines in the UK.
Green jobs are back in the spotlight, but how many green jobs actually are there and how can we support their growth? The recent announcement from Labour leader Sir Keir Starmer to introduce a “British jobs bonus” should the party win the next general election has thrown the spotlight back onto the transition to climate neutrality, or “net zero”.
The scheme – which will play a key role in meeting their target of producing all electricity from low-carbon sources by 2030 under the proposed Green Prosperity Plan – would pay renewable energy companies up to £2.5bn across five years if they invest in “good jobs and supply chains”. Labour claim that it could attract up to 65,000 green jobs by 2030.
But reaching net zero won’t just impact the energy sector, it will require the decarbonisation of processes across the entire economy, and with it the creation of green jobs. It is therefore worth asking how many green jobs there are in the UK at the moment and what they look like.
What is a green job?
Before we can think about the prevalence and characteristics of green jobs, we first need to look at how they are defined. There is little consensus on the definition of green jobs, which makes comparison of research difficult, but broadly speaking there are two key methods that have been used: the “top-down” and “bottom-up” approaches.
The top-down approach only considers jobs which are directly relevant to the net-zero transition. It is an industry-level analysis that classifies only certain sectors as being green, counting all those employed in these industries as working in green jobs. The Environmental Goods and Services Sector is one such categorisation: Used by the ONS and the EU’s Eurostat, it comprises industries which typically focus on reducing harmful environmental impacts and in conserving and maintaining natural resources.
By contrast, the bottom-up approach designates jobs as green according to their occupation-specific characteristics. This information is derived from databases which detail the task and skill requirements of jobs, such as the US O*NET.
There are also different approaches to analysing green jobs. While some studies look at vacancies, and therefore focus more on the availability of green jobs, others examine occupations, which refer to those jobs actually filled in the economy.
How many jobs are green?
When it comes to jobs advertised, only a small share are green. A top-down analysis of 2021 job adverts by Nesta found this figure to be 3%, while only 1.2% (or around 124,600) of adverts listed between July 2020 and June 2021 were classified as green in a PwC analysis. Similarly, a study by LSE using the bottom-up approach found the that the proportion of green jobs advertised averaged 1.4% between 2012 and 2021 (equating to 490,000 jobs). However, the share advertised actually declined over this period, from 1.8% in 2012 to 1.1% in 2018, before rising to 1.6% in 2021. This decline coincided with the removal of funding for various demand- and supply-side energy schemes from 2012/13.
By contrast, a Resolution Foundation analysis of the Labour Force Survey estimated that 13.5% of jobs in the UK labour market can be considered green, although this evaluation – which relies on the bottom-up approach – uses a more liberal definition of green jobs.
What do green jobs look like?
Unsurprisingly, research has generally found green jobs to be more prevalent (relative to their size) in the energy, construction, and manufacturing sectors, while they are less common in the education and health sectors. However, when it comes to occupations there is a vast array of job titles, ranging from heating engineers to software developers under the top-down approach, and refuse and salvage collectors to large goods vehicle drivers under the bottom-up approach.
Given this, it is perhaps better to consider the types of skills in these occupations. Here a clear pattern develops: green jobs are more skill-intensive than other jobs. LSE find that these jobs are more likely to require a range of key skills – including technical, managerial, social, cognitive, and IT skills – while the Resolution Foundation show that green jobs comprise a greater degree of non-routine analytical personal tasks. Interestingly, these results – which are mirrored in US studies – suggest that green jobs are at less risk of automation.
Green job salaries
However, they appear to only have a small wage premium at most. Although a straight comparison of wages between green jobs and other jobs shows that they are better paid – even after controlling for education and experience – this largely reflects the fact that they tend to be higher skill occupations. But when the Centre for Economic Performance examined differences within occupations they found only a small wage premium, while LSE did not find one at all. In other words, a green finance job might pay better wages than most other jobs, but no better than a non-green finance job.
Finally, when it comes to the location of green jobs the answer is dependent on which definition is used. When looking at job adverts under the top-down approach, Scotland, the North West, and the South West are the areas with the highest share of green jobs, with roles in Scotland linked to the water industry and roles in the South West to waste-based biodiesel and renewables. In contrast, studies which use the bottom-up approach have identified a range of different areas as having highest proportion of green jobs – from Wales to the South East – while one study found they were evenly spatially distributed.
How can policymakers increase the number of green jobs?
As discussed above, green jobs form only a small portion of employment in the UK. This begs the question of why are there not more and how can this figure be increased.
One way, as noted by Nesta, is for policymakers to increase their availability by directly investing in green projects and infrastructure. The Labour Party’s proposed Green Prosperity Plan is one such intervention: the policy would spend up to £28bn a year to tackle climate change – an amount which is proportionately seven times bigger than the US’s Inflation Reduction Act – although this has recently been scaled back. It also includes a pledge to create a state-owned energy company based in Scotland.
Meanwhile the Conservative Party recently announced a number of policies as part of its “Green Day”, and the Energy Bill – which looks to fund the development of hydrogen energy, in turn creating 100,000 green jobs by 2050 – is currently making its way through parliament.
Incentivise the private sector
Any transition to net zero is likely to also need the mobilisation of the private sector. This presents another opportunity to create green jobs, via decisive signals from policymakers. One such option would be to incentivise employers to create green jobs, which Nesta suggest could be implemented by subsidising National Insurance contributions for green jobs, in turn motivating employers to make existing jobs more environmentally friendly.
Another would be to re-introduce incentives similar to those in the early 2010s which prompt consumers to make energy-saving changes to their homes, such as the installation of heat pumps. Such schemes would increase the demand for green skills and encourage suppliers to reskill.
Related to this, policymakers could support the transition by supporting lifetime training so that the workforce has the skills required in a net zero economy. This reskilling could focus in particular on people working in occupations which directly contribute to climate change and are most likely to be wound down, such as coal mining operatives, and on areas which have the highest concentration of emissions-producing jobs, such as Barrow-in-Furness. To achieve maximum impact, this area-specific reskilling could be combined with direct interventions that create green jobs in these locations.
It is clear that there is a long way to go before the UK reaches climate neutrality, but with the net zero target written into law, policymakers will need to make huge changes to the country’s economic landscape. Supporting the movement towards green jobs is one such way to ensure that there are opportunities throughout the transition and that public support stays high over the next three decades.
Any views expressed are those of the author and not necessarily those of the Institute as a whole.