OECD countries are adopting ambitious climate change mitigation policies aimed at achieving net-zero greenhouse gas emissions by 2050. In Europe, these efforts are supported by the European Green Deal, the European Union (EU)’s plan to make Europe climate‑neutral by 2050. National and international initiatives to combat and adapt to climate change will have profound impacts on labour markets. While the net effect on job quantity will be modest, jobs will be lost in shrinking emission-intensive industries, others will be created in expanding low-emission activities, and many jobs will be transformed as tasks and working methods become greener. Major reallocations are expected both within and across certain sectors and regions, and these reallocations will likely come with challenges.
The OECD Employment Outlook 2024 (OECD, 2024[1]) shows that across the OECD, about 20% of the workforce is employed in green-driven occupations – i.e. occupations that will likely grow thanks to the net-zero transition. Green-driven jobs, also referred to in this report as jobs for the green transition, include not only new roles that emerge due to the green transition, but also existing ones whose required skills and tasks will be modified because of the transition, as well as those involved in the production of goods and services essential to lower-emission activities. Skills required in these jobs are referred in this report as skills for the green transition. Green-driven occupations are heterogenous: high-skill green-driven jobs usually pay higher than average wages, but low-skilled, green-driven jobs tend to have worse job quality than other low-skilled jobs, suggesting that currently they may be a relatively unattractive option for low-skilled workers. It also shows that job displacement from high-emission industries is costly: workers in shrinking high-emission industries face 24% larger earnings losses over six years after job displacement than those dismissed in other industries (partly because firms in high-emission industries pay relatively high wages given worker skills and partly because of the specific characteristics of these workers who tend to be older and less educated). Furthermore, while most high-skilled emission-intensive jobs share similar skills requirements with occupations in non-polluting industries, this is not the case for low-skilled jobs.
Public policies are necessary to address these challenges, permit an efficient reallocation of workers, and mitigate the economic and social impacts of the green transition. This is key to ensure political acceptability and sustainability of climate change mitigation measures. Most OECD countries already have put in place a range of instruments for managing structural adjustments, but some may need to be adapted, and others should be added. A recent policy brief published by the OECD (2025[2]) outlines the set of policies that governments should have to address the labour and social challenges related to the transition to net zero:
They first need to assess whether existing national labour and social policies are fit for purpose. Such stress-test exercises should consider different scenarios to evaluate the labour market implications of the net zero transition and include specific skills assessment and anticipation exercises to better understand current and future skills needs and supply. Considering these assessments, countries then need to determine whether existing policy instruments are reaching the target populations, whether they need to be expanded or whether resources are sufficient, and whether new instruments are needed. As part of these exercises, consultations with key stakeholders, starting with the social partners, is essential.
Regarding specific policies, governments must prevent widespread job displacement and long-term unemployment by helping workers from high emission sectors transition to another job. To this end, training will be crucial, and countries can offer financial incentives for training to workers at risk of job loss as well as targeted career guidance. To prevent job losses, job retention schemes could be used to accompany the restructuring of companies. Additionally, mandating longer notice periods could facilitate the pre‑displacement intervention by employment services. In the event of a company’s closure or downsizing, outplacement services can be provided to assist departing employees find a new job.
Governments should support the lives of impacted workers. Indeed, even with effective preventive measures, some workers will not immediately find another suitable job opportunity. The most important tool to support the income of displaced workers is unemployment insurance. Wage insurance schemes that cover the differences between pre‑displacement and re‑employment wages can also be of interest to help speed up the transition to new jobs when workers are offered lower wages than before displacement.
Finally, it is also important to steer employment choices towards green-related sectors and foster the development of skills for the green transition. Appropriate job search assistance can help direct job seekers towards green-driven jobs, but public employment services staff must be equipped with the right knowledge and skills to adequately guide them during the transition to net-zero. Financial incentives can motivate individuals to undertake green-related training (i.e. training for skills needed in green-driven jobs), encourage employers offer such training to their employees, and incentivise training providers to develop appropriate the training offer. In some cases, however, the areas most affected by the downsizing of emission-intensive industries may have a limited capacity to provide sufficient quality jobs in other sectors in the short term. In those cases, complementary geographical mobility policies might be needed to support relocating workers’ housing needs. More generally, in order to ensure that the net zero transition does not exacerbate regional disparities, place‑based policies, that is intentionally spatially targeted policies that provide higher-level support to a place to improve long-term economic and well-being outcomes (OECD, 2025[3]), may be needed to promote economic development in regions most vulnerable to the net zero transition.
Most OECD countries are still in the early stages of developing comprehensive strategies to address the labour and social challenges of the net-zero transition. So far, none have implemented the full range of policies outlined above. However, several countries have made notable progress, either by developing strategic plans for the green transition, or by introducing targeted initiatives in key areas, laying the groundwork for more comprehensive action. Chapter 2 of this report analyses how Austria, Canada, Flanders (Belgium), Ireland, the Netherlands, and Spain have developed strategies, roadmaps, or action plans in the area of employment and skill policies for the green transition. It provides details on the development, content, implementation, and monitoring and evaluation of these strategies, roadmaps, and action plans, as well as on the governance arrangements that underpin them. Chapter 3 focusses on specific policies and examines how countries have adjusted them for the green transition. First, it examines how countries foster the development of green-related skills, notably by adapting apprenticeships and by encouraging individuals to undertake training for the green transition. Second, it explores how countries try to prevent widespread job displacement by supporting firms to adapt to structural changes brought about by the green transition, and by addressing local employment and skill needs.
Table 1.1 below presents a summary of the different examples presented in the report.