NAT/933

Towards a just transition legislative proposal and EU policy tools
that enable a more social European Green Deal

OPINION

Section for Agriculture, Rural Development and the Environment

Towards a just transition legislative proposal and EU policy tools that enable a more social European Green Deal

(own-initiative opinion)

Rapporteur: Dirk BERGRATH

1.Conclusions and recommendations

The EESC:

1.1Highlights the importance of the just transition in the EU in line with the strategic priorities and political guidelines of the European Commission for 2024-2029. The just transition will have a particular impact on the world of work, affecting sectors, regions, jobs and skills (including gender aspect, intergenerational aspect and vulnerable groups), welfare, cooperation between Member States, governance, business and enterprises (notably SMEs) and funding and investment.

1.2Emphasises the need for a comprehensive policy package for the world of work which integrates existing EU-level tools and gives sufficient leeway for Member States to adopt appropriate solutions at the national and regional levels. This may include reforms and revisions of existing legislation and recommendations.

1.3Calls for a just transition policy package for the world of work through anticipation and management of change, with social dialogue and collective bargaining as leading principles 1 .

This policy package should include measures such as:

·conducting mapping of skills needs and strategies;

·establishing and implementing appropriate skills development programmes;

·establishing meaningful and enforceable access to fully compensated training hours for all workers;

·ensuring that effective systems of participation and effective information and consultation of workers at company level are put in place in accordance with applicable rules;

·integrating just transition initiatives in the implementation of the European Pillar of Social Rights (EPSR) and the European Semester;

·creating strong incentives for companies to: prioritise the upskilling of current employees to fill skills gaps; to develop, publish and regularly update company transition plans that anticipate change and develop strategies to manage the possible impacts; and encourage increased apprenticeship and training levy contributions in accordance with national models to partially fund the training of workers at regional level.

1.4Recommends granular mapping activities to ensure awareness of the challenges and opportunities of the transition at EU, national and regional level now and in the future. Policymakers at appropriate levels and companies must build on this knowledge to develop comprehensive transition plans and skills strategies in collaboration with social partners and other stakeholders and monitor progress. The Just Transition Observatory, established by the European Commission, can lead the mapping of policies and best practices and support Member States with data and monitoring.

1.5Calls on the European Commission and Member States to ensure adequate funding by scaling up the Just Transition Fund and Social Climate Fund, aligning them with other EU funds contributing to just transition objectives, and bolstering and linking other methods of funding and mobilising private finance for the transition.

2.Introduction

2.1The European Green Deal sets out the European Union’s legally binding commitment to an emissions reduction of 55% by 2030 and climate neutrality by 2050. The Communication from the Commission on the European Green Deal states that the transition must be just and inclusive and put people first, with special attention on the regions, industries and workers who will face the greatest challenges 2 . To ‘pursue a just and fair climate transition with the aim of staying competitive globally and increasing our energy sovereignty’ is also one of the priorities of the European Council for 2024-2029 3 .

2.2The Commission’s Communication on Europe’s 2040 climate target presents a 90% net GHG emissions reduction compared to 1990 levels. The EESC supports the recommended target of 90% by 2040, as it aligns with the science on Europe’s fair share of the 1.5℃ goal, but stresses that coordinated action across all sectors is crucial in achieving the 2040 target. At the same time, it emphasises that the target is demanding and can only be achieved if enabling policies are in place to ensure the competitiveness of European industries and a just transition through utilising all zero and low-carbon technologies cost-effectively 4 . Redistributive measures will be essential to address social impacts so that no one is left behind 5 .

2.3The transition will bring new opportunities and serious challenges for business and job creation, and for workers at all skill levels, but will benefit some regions more than others. EU cohesion policy and national measures will continue to play an essential role in supporting the regions most affected by the transition 6 . An estimated 40% of workers in the EU will be directly impacted by the transition 7 .

2.4At the same time, there is a risk of backsliding on the EU’s Green Deal goals with an increasing public and political backlash against green policies due to a perception of unfairness of the transition as it stands 8 , 9 , increasing obligations for businesses and contributing to lack of key prerequisites for a stronger business case in Europe 10 . Still, public opinion surveys show that a majority of Europeans support a fair green transition 11 .

2.5It is essential for this transition to be just. The International Labour Organisation’s Guidelines for a Just Transition state that ‘a just transition for all towards an environmentally sustainable economy needs to be well managed and contribute to the goals of decent work for all, social inclusion, and the eradication of poverty’ 12 .

3.Limitations of current EU policy instruments

3.1The EESC welcomes and recognises the numerous existing policy instruments at European level which either directly or indirectly deal with the just transition, but also notes the contradictions and gaps between some policies.

3.2The EESC welcomes the Council Recommendation on ensuring a fair transition towards climate neutrality, but notes that this non-binding recommendation does not offer the comprehensive policy platform that the EU needs to deal with all the impacts 13 . As a result, Member States should be supported in their efforts to implement the Recommendation in line with national contexts.

3.3The Just Transition Mechanism and the proposed Social Climate Fund will be valuable for enhancing and managing a just transition at the regional and sectoral levels. However, they are limited in size and scope, addressing only a small part of the transition process 14 . The financial resources of the Social Climate Fund and the Just Transition Fund will not be enough to fulfil the objectives for which they were designed and they should be used effectively 15 .

3.4To close the gap between EU just transition instruments, the just transition policy framework (JTPF) should enable the full implementation of the Paris Agreement 16 , the United Nations 2030 Agenda for Sustainable Development 17 and its Sustainable Development Goals 18 , the European Pillar of Social Rights and the Long-term Competitiveness Strategy 19 . The ILO Guidelines for a just transition 20 should provide specific options for the formulation, implementation and monitoring of the JTPF 21 .

4.An EU policy package on just transition for the world of work and accompanying tools

4.1The just transition is a complex process that affects much of society, and one policy tool alone is not enough to tackle this challenge. As such, the EESC calls for assessing gaps in the existing policy instruments and, whenever necessary, complementing them with new measures to create a coordinated policy package for the world of work. This package should integrate existing EU-level tools and gives sufficient leeway for Member States to adopt appropriate solutions at the national or regional levels. The proposals below outline the elements of such a policy package.

4.2This policy package should encompass the elements of the world of work in a just transition, taking into account the division of competencies as defined in the Treaties and the role of social partners, namely: sectors, regions, jobs and skills (including gender, intergenerational, and vulnerable group dimensions), welfare, cooperation between Member States, governance, business and enterprises (with a specific focus on SMEs), and funding and investment.

Sectors

4.3A sectoral approach to job quality improvement and monitoring is key 22 . The European Green Deal states that the transition is needed in all sectors, at different times and in varying degrees 23 . However, sectors with higher levels of GHG emissions – such as fossil fuel-based energy sectors like oil, coal, and gas; industry; and transport 24 – will face a more challenging transition. At the same time, innovation is needed to explore decarbonised energy options, energy storage, carbon capture and other technologies that can facilitate the transition. These changes will impact businesses operating within these sectors, their workers, and the regions where they are based, as well as competitiveness and food availability.

Proposals:

·The Commission, in close cooperation with Member States, should co-ordinate a granular mapping to understand which strategic sectors will scale up, transform or scale down and phase out. This mapping should outline appropriate support measures such as EU funding, state aid, welfare, temporary social support and reskilling initiatives to facilitate job-to-job transitions. The mapping should include analysis of the impacts of the transition on employment and skills in the different countries, regions and sectors, including on subcontractors and the downstream value chains 25 . Aligned with the recommendations of the political guidelines 2024-2029, the mapping should also investigate potential negative spillover effects of Europe’s transition, also on other parts of the world to mitigate them through the sectoral and territorial transition plans.

·Transition pathways and job-to-job transition plans should be developed in cooperation with social partners and collective bargaining.

·Reciprocity and global commitments, including international trade agreements, should be considered when considering sectoral plans.

Territories

4.4As some sectors are phased out, the territories that rely on them will be heavily impacted, at different moments and to varying degrees. Affected territories will need to restructure and diversify their economies towards new economic activities, prepare the labour force for emerging change and future jobs and maintain social cohesion 26 . EU workers should have the freedom to stay 27  and access local high-quality productive jobs that contribute to the development and wellbeing of their local communities, especially considering rural areas. This requires creating a favourable environment that supports structural changes in existing enterprises as well as investment and job creation for the green transition.

Proposals:

·The European Commission and Member States should ensure that territories have place-based transition pathways, developed in collaboration with local authorities and social partners at the appropriate level, and sectoral transition plans which ensure alternative employment options and training. Member States should support community-led initiatives and ensure broad consultation of local residents and civil society.

Jobs and skills

4.5In the transition, there will be a substantial decrease in jobs in certain sectors and a transformation of job profiles and skills requirements in others. There could be an overall positive effect on the number of jobs with policies delivering the 2030 target of a 55% reduction in GHG emissions 28 . The most pronounced process would be job substitutions and/or job redefinition. This process will depend on the national context as well as the point of departure.

Proposals:

·The European Commission and the Member States should work towards a common understanding and develop guidelines for quality jobs, job security and working conditions in green jobs. They should also facilitate exchanges among Member States to promote good practices and showcase how the EU social acquis is implemented at the national level. The EESC welcomes the Commission’s intention to develop, together with social partners, a Quality Jobs Roadmap as proposed in the political guidelines for 2024-2029 29 and invites the Commission to consider the proposals made in this opinion.

·Use of up-to-date labour market and skills intelligence and foresight at regional, sectoral and occupational levels allows for identifying and forecasting of occupation-specific and transversal skills needs and adapting curricula accordingly to meet short- and long-term needs 30 .

·Member States should develop and promote upskilling and reskilling strategies to increase adult participation in training for the new skills and jobs of the transition. They should also update vocational education and training (VET) curricula and programmes and foster closer partnerships between education and training actors and SMEs, Work Integration Social Enterprises (WISEs) and social partners according to the national model of VET governance and practice. Finally, they should introduce or strengthen support schemes for apprenticeships, paid traineeships and job-shadowing schemes with a strong training component, in particular in micro-, small and medium-size enterprises, including those contributing to climate and environmental objectives and in sectors facing skill shortages. These schemes should be subject to national or regional monitoring and evaluation and should aim at safeguarding job quality 31 .

·Provide adequate incentives for SMEs to invest in upskilling and reskilling and to foster a lifelong learning culture for entrepreneurs and workers, including through micro-credentials.

·Promote networking among SMEs for knowledge sharing.

·Promote social dialogue on the basis of good practices to provide people who are employed or between jobs with support for shorter or longer training courses to develop their skills. This could be considered for the new Pact for European Social Dialogue proposed for early 2025 32 , 33 .

·Just transition should be integrated into national skills strategies, integrating proposals from the Commission’s ‘European Skills Agenda’ and ‘Updated New Industrial Strategy’. Skills partnerships under the Pact for Skills will also be an important lever 34 .

·Skills strategies should address pre-existing gender inequalities and ensure that policies for the just transition actively improve gender equality 35 , 36 . Special attention should also be paid to impacts in job changes or loss for social groups at risk of exclusion from the labour market, such as persons with disabilities, older persons, migrants or the long-term unemployed.

·The EESC invites the European Commission to consider the above points for the next revision of the European Pillar of Social Rights Action Plan.

Welfare and social protection systems

4.6Each Member State should be encouraged to review its welfare and social protection systems to ensure they are fit for supporting the green transition and the impacted people in the most efficient way towards sustainable employment and the reduction of poverty and inequality. Social protection contributes to climate change adaptation and mitigation, and also supports the just transition by protecting people’s incomes, health, and jobs and can in turn build public support for the transition 37 .

Proposals:

·The European Commission should integrate just transition initiatives in the implementation of the European Pillar of Social Rights (EPSR) and the European Semester. The EU and its Member States should guarantee the freedom of movement with regard to social security when employees transfer to a different Member State in line with regulation 883/2004.

·Member States should be encouraged to review and adapt, if necessary, their welfare and social protection systems to meet today’s social, environmental and economic challenges to ensure the costs and benefits of the green transition are shared equitably and guarantee high-quality, affordable and accessible services of general interest. Such systems could include, among other things, active labour market policies, unemployment benefits, adequate support for those in or at risk of poverty, minimum wages, eco-vouchers, direct income support, depending on the national context 38 . National authorities should work with nonprofits, social economy enterprises and other social service providers to identify vulnerable households and individuals and support them with temporary measures.

·Social protection systems can be adapted to provide income security, notably during job-to-job transitions, health and care services through adequate social infrastructure, notably in the most affected territories and for the most vulnerable social groups in order to prevent social exclusion and address health and climate-related risks 39 .

·Member States should use targeted and well-designed hiring and transition incentives to accompany labour market mobility across sectors, regions and countries 40 .

Cooperation between Member States

4.7Cooperation is essential to support cohesion and competitiveness rather than a race to the bottom in the EU. Many of the policies required for a just Green Deal are set at national level and will require coordinated efforts from Member States.

Proposals:

·As job losses and gains will not be spread equally across the EU and, as different territories have different strengths in various technologies and skills, industrial policy and cohesion policy should be aligned to boost the EU’s standing as a global economic player for an EU-wide just transition 41 .

·The EU should adopt an industrial strategy in line with just transition objectives which ensures a level playing field. To do so, it may identify strategic industries and value chains and the economic potential of each region and coordinate their contributions to cross-EU value chains 42 , 43 . The IPCEI model could serve as a blueprint 44 .

·Cohesion policy must continue to be an important driver of a just transition in regions heavily reliant on a fossil fuel-based infrastructure. A dedicated EU-level fund, such as the proposed European Competitiveness Fund 45 , can provide grants and loans to develop strategic industrial projects in regions which do not have the fiscal capacity for this investment. Public financial support such as grants, loans and public procurement should comply with social and environmental conditionalities to ensure that public funding is dependent on progress 46 .

·There must be specific support for Member States that underutilise strategic EU funding instruments in innovation and R&D and for scaling industries, especially in fiscally constrained countries.

·At national level, coordinated national plans among different sectors and labour markets must aim at safeguarding quality jobs for the transition, while providing appropriate mechanisms for national social partners to contribute to the process.

Governance

4.8The governance dimension of the just transition cannot be understated. A policy instrument or collection of instruments are not enough to tackle the complexity of the just transition. Trade-offs between policy instruments should be avoided or mitigated by being identified early on.

Proposals:

·A holistic, coordinated and integrated policy approach is at the heart of the JTPF. Social and civic dialogues representative of society and participation of local and regional authorities are the cornerstone to its realisation 47 .

·Build analytical and monitoring tools to help design comprehensive policy packages and track the efficiency of job-to-job transition programmes (reskilling and upskilling measures, transition allowances etc.) 48 .

·The long-term environmental, economic, and social impacts of policies need to be considered systematically at all levels of policymaking, especially in ex-ante evaluations. Policymakers should regularly present the outcomes of evaluations, foresight and monitoring exercises to the public and organise exchanges with social partners, civil society and other stakeholders on outcomes and possible adjustments 49 .

·Policymakers at all levels should provide for the full and meaningful involvement of workers at all levels and their representatives and of companies in all sectors and of all sizes on the anticipation of change and the management of restructuring processes, including those linked to the green transition at all stages of policymaking and implementation 50 .

·Participation in policymaking should empower and enable individuals, civil society, social partners and stakeholders to contribute to designing and implementing relevant solutions at appropriate levels. Special attention should be paid to seeking the opinion of representatives of vulnerable/underrepresented groups 51 .

·Policy approaches must coordinate policymaking at all levels and across all relevant policy areas, including research and innovation. Vertically, this means encouraging regional and local authorities to play an active role in the planning and development, implementation and monitoring of fair transition policies. Horizontally, policymakers must collaborate across policy topic areas to identify gaps, overlaps, trade-offs and synergies between policy options. Identification of such elements is supported through developing and mainstreaming the use of robust and transparent employment, social and distributional (ex ante) impact assessments 52 .

Proposals specifically at EU level:

·While acknowledging that the Energy Governance Regulation and European Climate Law 53 have recently been adopted and updated, future revisions, as indicated in the mission letter to Commissioner-designate for Energy and Housing, could explore incorporating just transition objectives into multi-level governance structures. This includes ensuring alignment of National Energy and Climate Plans (NECPs) with social and civic dialogue on just transition priorities, as well as enhancing their integration with other policy areas, such as the Common Agricultural Policy 54 .

·The EU Just Transition Observatory should monitor the EU’s just transition process including national policies and strategies based on EU-level guidelines, e.g. in the European Semester and National Energy and Climate Plans 55 , with social partners and civil society included in developing a set of indicators for monitoring. The Observatory should also contribute for an up-to-date labour market and skills intelligence and foresight, identifying and forecasting occupation-specific and transversal skills needs 56 . This should be done with regular exchanges with policymakers at the national and regional levels.

·To enable horizontal coordination, the EESC proposes using EU Policy Labs led by the Commission’s Joint Research Centre to bring together a diverse group of directorates-general early in the policymaking process to approach policy problems through a cross-departmental perspective 57 .

·To embed public participation more strongly and meaningfully in the policy process, the EESC recommends setting up a scoreboard showing which proposals by citizens were taken up and, where they were not taken up, the reasons why.

Proposals specifically at national level:

·To deliver on the needs of the just transition outlined in the other sections, Member States should strengthen the operational capacities of the relevant public services to provide effective guidance and support for implementing fair transition policies 58 .

·Existing legislation providing for information and consultation rights needs to be effectively implemented at a national level.

Business and enterprises

4.9Business and enterprises (with a specific focus on SMEs) as drivers of the transition.

Proposals:

·To promote entrepreneurship, particularly in regions facing transition challenges and in sectors promoting climate and environmental objectives, paying special attention to women’s entrepreneurship, support should combine financial measures, including grants, loans or equity, with non-financial measures, including training and advisory services, tailored to each phase of the business lifecycle; support should be inclusive and accessible to underrepresented and disadvantaged groups 59 . Appropriate conditions for investment and setting up businesses are essential for effective support for entrepreneurship.

·Member States should facilitate access to finance and markets for micro-, small and medium-sized enterprises, particularly those that contribute to climate and environmental objectives with special attention to social economy enterprises, to stimulate the creation of quality jobs for all. There should be a particular focus on the territories most affected by the transition and sectors which support the objectives of the transition 60 .

·Capacity-building of employers’ organisations representing SMEs to: 1) play the advisor role on how to make business models greener and more sustainable; 2) play the social partner role towards policymakers and in social dialogue.

·Diversified business models, including circular and cooperative systems such as steward ownership, may be encouraged to enhance democracy at work.

·Promote private sector integration of just transition strategies into their decarbonisation efforts with the timely and effective involvement of trade unions. By implementing these strategies, companies can anticipate the effects of the green transition on their operations and workforce and identify new opportunities.

Funding and investment

4.10The EESC is convinced that adequate investment is fundamental to the realisation of the JTPF. The EESC emphasises the need for a better allocation and efficient use of available funds.

Proposals:

·A European investment plan for a green transition is needed at scale with the investment needs estimated in the Commission’s strategies. The huge investment needs also require a stronger focus on public investments to accelerate the transition. In this respect, the EESC notes with interest the proposed European Competitiveness Fund, announced by the EC.

·Investment needs to be targeted to the territories and individuals and vulnerable social groups who will be most impacted by the transition. These investments need to be productive and sustainable.

·Conditionalities may be considered to ensure the funds are distributed accordingly. This could apply ex ante use of the ‘do no significant harm’ principle, ‘do no harm to cohesion’ principle, and the creation and use of a ‘do no social harm’ principle, followed by an ex post demonstration of conditions met to access remaining funds. The discussion of the need to create a 'do no social harm' principle could be held amongst relevant stakeholders.

·EU-level funds should be coordinated through a strategic framework which connects their goals and simplifies Member States’ understanding of options. Additionally, in line with the political guidelines to increase funding for a just transition, the Just Transition Fund and Social Climate Fund may be expanded, Member States should foster socially responsible public procurement practices, including via social award criteria creating opportunities for the people most affected by the green transition, while also promoting green award criteria 61 .

·Member States will also need budgetary scope to invest in and implement the transition. Regarding the recently reformed economic governance framework, the Committee underlines that further initiatives might be necessary to make sure that sufficient private and public capital is mobilised for the green transition and social cohesion 62 .

·Member States should assess and adapt taxation systems in view of the challenges arising from the transition, notably by shifting the tax burden away from labour and reducing the tax wedge for low- and middle-income groups towards other sources contributing to climate and environmental objectives 63 .

A just transition policy package for the world of work

4.11The EESC calls for the establishment of a European policy package for just transition in the world of work through anticipation and management of change, with social dialogue and collective bargaining as leading principles 64 . This package should incorporate the relevant proposals directed at Member States and specifically should include:

·A mapping of skills needs and strategies alongside rigorous socio-economic impact assessments at national, sectoral, regional and local level with sufficiently resourced skills experts, with regional monitoring and support facilities to support companies, in particular SMEs, and workers in achieving these aims. This mapping should be conducted by social partners and governments at respective levels.

·The establishment and implementation of appropriate skills development programmes at each of the levels above that enable workers, young people, the unemployed, and other vulnerable groups (older people, people with disabilities, migrants, etc.) to review their skills and update their career orientations, strengthen their employability and mobility and make professional transitions that are feasible and desirable. 

·Establish meaningful and enforceable access to fully compensated training hours for all workers, through measures such as wage replacement benefits, and irrespective of the type of contract, during working time, with specific access measures for women and vulnerable groups.

·Ensure that effective systems of participation and effective information and consultation of workers at company level are put in place in accordance with applicable rules. Also ensure that collective bargaining coverage is strengthened, especially in emerging sectors and in line with the requirements of the Minimum Wage Directive.

·Integration of just transition initiatives in the implementation of the European Pillar of Social Rights (EPSR) and the European Semester. The EU and its Member States should guarantee the freedom of movement with regard to social security when employees transfer to a different Member State in line with regulation 883/2004.

·Creation of strong incentives for companies to: prioritise the upskilling of current employees to fill skills gaps; to develop, publish and regularly update company transition plans that anticipate change and develop strategies to manage the possible impacts; and encourage increased apprenticeship and training levy contributions in accordance with national models to partially fund the training of workers at regional level.

·The anticipation, preparation and management of restructuring must be coordinated with the relevant public authorities and stakeholders, each in their capacity and competence, and at an appropriate moment. This should ensure the development of job-to-job transition pathways with an emphasis on protecting workers’ rights to remain in their region and respecting their choice to remain in their sector.

Brussels, 13 November 2024.

The president of the Section for Agriculture, Rural Development and the Environment

Peter SCHMIDT

_____________

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