More resilient labour markets enable better climate response

13 May 2024 Consultancy.uk 4 min. read
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Countries with more resilient labour markets are also some of the world’s most climate-friendly, according to research from London-headquartered strategy advisory firm Whiteshield.

In its annual Global Labour Resilience Index, Whiteshield has demonstrated that countries with the most resilient labour markets tend to also be the greenest. European countries, in particular, are at the very top of the list – and for good reason.

Switzerland, Denmark, and the Netherlands are the top three countries in the index. These advanced economies invest heavily in innovation and renewables, while making huge strides in shifting their economies towards sustainability – and ultimately net-zero emissions goals.

Top 10 countries rankings and scores in GLRI 2024

According to the Whiteshield research, climate action and policy are a catalyst to ‘greening’ the labour market. That means that ambitious action on sustainability and labour market policies tailored to the coming transition go hand-in-hand.

These active labour market policies have proven to be more effective in environments characterised by macroeconomic stability, an open and transparent trade and investment regime, and an enabling business environment operating in countries with high quality institutions.

Climate change adaptation and mitigation efforts remain limited in countries where labour income inequalities are prevalent

The green transition does not need to be a new source of inequality, which is already rampant in countries around the world. Countries that have yet to build strong adaptive capabilities in their labour market, such as India and South Africa, also lag behind in their environmental performance.

This is most apparent in lower-income countries that are disproportionately affected by the negative impacts of climate change. This is also where populations often work in industries that are more susceptible to climate events.

Climate policies aimed at achieving net-zero carbon emissions can amplify inequalities in countries that lack a resilient labour market. For example, countries that have large fossil fuel, industrial, or automotive sectors are obviously susceptible to labour instability when these carbon-heavy industries are inevitably phased out.

Whiteshield analysis reveals the world's most resilient labour markets

“The Global Labour Resilience Index underscores the need for targeted policies and effective institutions to catalyse the ‘greening’ of the labour market amid structural changes in the global economy,” said Raed Safadi, chief economist at Whiteshield.

About the Global Labour Resilience Index

The Global Labour Resilience Index (GLRI) is based on a wide array of metrics and takes into account issues that affect countries around the world, like climate change, migration, and policy changes. The index aims to provide insight that can help countries strengthen their labour markets, with the imperative of transitioning to sustainable economies promising a bumpy ride ahead for the unprepared.

The index splits its attention to structural and cyclical resilience, with a score for each country in both categories:

Switzerland, Denmark and Holland world's more resilient labour markets

Structural resilience means attention and action towards longer-term issues like demographics, macroeconomic stability, trade, and inequality. Cyclical resilience, on the other hand, is built by being well prepared for short-term shocks, being equipped for quick recover, and keeping up with major trends.

A resilient labour market is defined by the researchers as one that generates sustainable demand for a wide range of occupations and supplies quality work. Resilient labour markets are inclusive, sustainable, and able to withstand shocks because of their flexibility and adaptability.

Late last year, Whiteshield released its Global Trade Resilience Index, the firm’s other annual flagship report.