Structural Change of the Employment and Active Employment Policy in Response to the Regulation of Carbon Emissions

Structural Change of the Employment and Active Employment Policy in Response to the Regulation of Carbon Emissions

Gyu-hee Hwang, Won-ho Jeong, Dong-soon Lim, Yong-gil Lee

This study attempts to predict the changes in the industry and employment structure occasioned by the regulation of carbon emissions, and suggests a labor policy capable of responding to such changes. An active employment policy capable of responding to the possible reduction of production and employment caused by the regulation of carbon emissions can be regarded as one that can simultaneously achieve carbon reduction and stable employment. In essence

, while

the

regulation of

carbon emissions

negatively affects employment by restricting industrial production activity levels, an active employment policy appears to greatly relieve the employment effect that serves as the key management index for the economy.

The redistribution of employment from energy intensive fields such as those related to the manufacturing sector to industrial fields at the center of the service industry necessitates an employment policy that considers the qualitative aspect of employment.

First of all, unlike BAU(business as usual), which assumes the presence of no regulation of carbon emissions, this study incorporates the regulation of 5% of the manufacturing sector and 3%

of the power generation sector by 2013, and 10% of the manufacturing and 5% of the power generation sectors in 2020. Moreover, the following scenarios are presented:

(S1) Introduction of only the regulation of carbon emissions, with technological advancement maintained at its current level

(S2) Addition to Scenario 1, allowing further advanced technological development and diffusion of renewable energy and energy efficiency in response to regulation.

(S3) Addition to Scenario 2, allowing an active employment policy which resolves the negative effect of Scenario 2 in terms of employment.

(S1) A Contrary to Scenario 1, this scenario allows industrial restructuring: Presupposes the effect of industrial structure changes based on economic growth and the changes in the industrial structure that have taken place in Germany and Japan.

The following change in employment can be ascertained when compared with BAU.

Main items 2013 2020

S1 S2 S3 S1A S1 S2 S3 S1A

carbon emissions regulation

Manufacturing 5%, Power generation 3%

Manufacturing 10%, Power generation 5%

GDP change -0.077 -0.072 -0.076 -0.071 -0.193 -0.174 -0.191 -0.164

Employment

change -0.042 -0.047 -0.036 -0.039 -0.119 -0.135 -0.102 -0.101

carbon emissions -3.564 -3.491 -3.628 -3.545 -6.436 -6.317 -6.424 -6.334

<Differences to BAU by Scenario>

Unit: Change rate compared to BAU(%)

Compared to Scenario 1, which does not account for any active introduction of new technology but maintains the current technology level, Scenario 2 allows for the active introduction of green technology. This results in better GDP but larger employment reduction. Scenario3, which deploys active employment policy in addition to the active introduction of green technology, results in a slowing down of the drop in employment. Scenario 1A, which unlike Scenario 1 incorporates industrial structure changes, wields better results in terms of GDP and employment, a denouement which for the most part stems from the expansion of the service sector and the strengthened pressure applied to the energy intensive manufacturing sector.

Strengthening the regulation of carbon emissions has the potential to bring about a reduction in production and employment. In this regard, an active employment policy that includes the strengthening of education and training should be put in place. Here, the participation of stakeholders, including companies and labor unions, is necessary. Furthermore, this kind of active employment policy could be expanded to help forge a global alliance that goes beyond national boundaries.