GETTING TO ZERO

Qualifying for the race to net zero: The labour market challenge

An assessment of the labour market challenge of the transition to net zero emissions, and a plan for how to plug the green skills gap in the UK.
Ted Christie-Miller, Alex Luke
July 5, 2021
Qualifying for the race to net zero: The labour market challenge
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“As Britain emerges from the economic trauma of this pandemic there is not a moment to waste. Onward has laid out in stark detail how ill prepared the British workforce is to meet the net zero skills challenge. Government must step up and skill up Britain to create a green recovery with better paid, secure jobs.”

Rt Hon Caroline Flint, co-chair of the Getting to Zero commission

 

Green jobs will be better paid and higher skilled, but policy changes are needed to ensure the labour market can harness them.

Radical policies will be required to retrain or upskill millions of workers in both high-tech STEM roles and low- and medium-skilled technical qualifications to meet the labour market challenge of net zero. But if ministers take action quickly, they can meet the Prime Minister’s pledge to deliver a “Green Industrial Revolution” that disproportionately boosts wages in the North of England.

In this new report, ‘Qualifying for the Race to Net Zero’, we estimate that 3.2 million workers need to boost their skills for the green transition. In some carbon intensive industries, such as construction, nearly a third of the workforce is underskilled for equivalent net zero roles. The average skill requirement of a job in a carbon-intensive industry is 46% lower than the average net zero job, and net zero workers have qualification levels that are on average 24% higher than carbon-intensive workers.

However there is considerable prize if ministers get the policies right. Wages in net zero jobs, which average £37,195 per year, pay an 18% premium compared to the national average or 30% compared to carbon intensive jobs. Net zero industries also have a smaller gender pay gap than the national average, with male salaries 17% higher than females, compared to 21% nationwide.

Some parts of the country are more exposed to the skills shift than others. The regions which stand to disproportionately benefit from net zero are the North West and Yorkshire and the Humber. These regions make up 24% and 18% of areas which are in the top quintile for industrial emissions abatement potential and have a higher than average skill level within the workforce. 

This programme is kindly supported by the European Climate Foundation and Purpose Foundation.

Problems with net zero skills and jobs

Recommendations

There is a significant skills gap in the UK. The average skill level of net zero jobs is 26% higher than the current average occupational skill level in the UK

To fulfil the 2030 target, the UK needs 170,000 more workers to qualify each year than currently do so in domestic retrofit, renewable heat and electric vehicle manufacturing and infrastructure.

Apprenticeships are a key route into these industries, but currently there are few routes available. There is also a severe gender imbalance in these industries.

The UK needs to bolster its domestic engineering capability to achieve net zero.

The statistics used to measure job creation and economic activity are outdated and fail to reflect the move to a net zero economy.

The list of free qualifications under the Lifetime Skills Guarantee fails to include crucial training for the net zero transition, such as domestic retrofit and electric vehicle engineering.

More than 3 million people are in need of upskilling for the transition to net zero emissions, with some regions particularly affected.

  1. Introduce a Green Human Capital Tax Credit. This would encourage employers to invest in the skills of their employees, and help to address the skills gap that exists in the UK.
  2. Develop new vocational qualification standards aligned with net zero. New Apprenticeship Standards, T Levels and Degree Apprenticeships should be created to provide net-zero industries with the opportunity to grow their workforces.
  3. Fund 2,800 PhDs aligned with net zero. These would echo the 2018 AI Sector Deal and would help to address the acute high-level engineering skills gap that exists in the UK, bolstering the skilled net zero workforce.
  4. Review the free qualifications offered within the Lifetime Skills Guarantee. These qualifications should be reviewed to ensure the key qualifications required for buildings retrofit are included, helping to realise the estimated 900,000 – 1.3 million new jobs that will be required in this space by 2030.
  5. Establish a number of prestigious Net Zero Academies. These academies would help to address the low skills penetration in regions which also suffer from a high proportion of jobs in carbon-intensive industries, and are thus at particular threat from the transition.

 

Problems with net zero skills and jobs

There is a significant skills gap in the UK. The average skill level of net zero jobs is 26% higher than the current average occupational skill level in the UK

To fulfil the 2030 target, the UK needs 170,000 more workers to qualify each year than currently do so in domestic retrofit, renewable heat and electric vehicle manufacturing and infrastructure.

Apprenticeships are a key route into these industries, but currently there are few routes available. There is also a severe gender imbalance in these industries.

The UK needs to bolster its domestic engineering capability to achieve net zero.

The statistics used to measure job creation and economic activity are outdated and fail to reflect the move to a net zero economy.

The list of free qualifications under the Lifetime Skills Guarantee fails to include crucial training for the net zero transition, such as domestic retrofit and electric vehicle engineering.

More than 3 million people are in need of upskilling for the transition to net zero emissions, with some regions particularly affected.

Recommendations

  1. Introduce a Green Human Capital Tax Credit. This would encourage employers to invest in the skills of their employees, and help to address the skills gap that exists in the UK.
  2. Develop new vocational qualification standards aligned with net zero. New Apprenticeship Standards, T Levels and Degree Apprenticeships should be created to provide net-zero industries with the opportunity to grow their workforces.
  3. Fund 2,800 PhDs aligned with net zero. These would echo the 2018 AI Sector Deal and would help to address the acute high-level engineering skills gap that exists in the UK, bolstering the skilled net zero workforce.
  4. Review the free qualifications offered within the Lifetime Skills Guarantee. These qualifications should be reviewed to ensure the key qualifications required for buildings retrofit are included, helping to realise the estimated 900,000 – 1.3 million new jobs that will be required in this space by 2030.
  5. Establish a number of prestigious Net Zero Academies. These academies would help to address the low skills penetration in regions which also suffer from a high proportion of jobs in carbon-intensive industries, and are thus at particular threat from the transition.

 

If ministers succeed in their ambitions, the UK economy will in the next few decades undergo a profound shift from carbon intensity to carbon neutrality. But for this to happen, the workers that make up the economy will have to retrain, upskill and be supported into fundamentally new jobs. For this to be delivered, we will require bold action, and serious political will.

Siobahn Baillie, MP for Stroud, referenced the report in the House of Commons on November 15th 2021:


 

This report is produced as part of our Getting to Zero research programme.

Getting to Zero

Practical and popular ways to decarbonise the economy.

Established a year before COP26, Onward’s Getting to Zero programme is dedicated to developing practical and politically possible ways for the UK to meet its net zero ambitions and lead the world in decarbonisation.

Read more in Getting to Zero: Greening the Giants | Green Shoots

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