A lot is being said about the emerging new economic model known as the green economy, which, in a nutshell, is an economic system based on environmental principles.
It denotes, among others, a huge investment in infrastructure, such as decoupling from fossil fuels to clean energy and having transport systems with zero emissions.
Beyond that, however, an inclusive green economy is meant to go much further than just minimising the risks to the environment and maximising resource efficiency. The improvement of the overall well-being of people and the building of social equity is also central to a successful green transition.
This transition is a priority for the government, as reflected in this administration’s electoral manifesto. The same applies to the reforms and investments in the recovery and resilience plan consisting of 17 investments and 30 reforms. These will, in turn, be supported by €316.4 million in grants, with 53.8 per cent going to support climate objectives.
As an administration, we believe we can transition our economy to become a prime mover for sustainability, while still positioning ourselves to face the challenges of climate change, the scarcity of resources and the economic disruptions which events such as a pandemic, or international strife, tend to deliver.
In this regard, the European Green Deal (EGD) launched by the European Commission has become the road map for all EU member states.
This European Green Deal is meant to serve as a new growth strategy that aims to transform the EU into a fair and prosperous society, with a modern, resource-efficient and competitive economy.
Having said that, this transition must always put people first, while paying further attention to vulnerable regions, to industries that may be hit hard and to workers who would need to transition to other occupations. As European Commission president Ursula Von der Leyen said, the transition should be “just and inclusive”.
The Green Deal, rightly so, also identified the possible social implications in eight macro-areas of the EGD, this in order to ensure a “just and inclusive” transition. Two fundamental principles are clearly stated.
Firstly, the transition has to lead to an economy characterised by zero net emissions of greenhouse gases and that economic growth is not dependent on resource use.
Secondly, that human capital is protected in terms of healthy living and well-being.
We have to make sure that the cost of the transition to a green economy is not borne by the vulnerable- Michael Falzon
Having said this, the potential difficulty of combining economic growth, environment protection and social fairness is extremely challenging. In particular, one has to watch out for the possible trade-offs that may arise, which, in turn, could weaken social cohesion.
Putting it bluntly, we have to make sure that the cost of the transition is not borne by the vulnerable.
While the strategies put forward are important and relevant, other aspects of social policy seem, however, to have been left by the wayside, such as the notion of ‘inequality’ in terms of, for example, the gender pay gap.
Moreover, little reference has been made to the importance of implementing social security. The emphasis seems to be mostly on policy areas with the greatest potential to provide workers with the skills needed for the new economic model. On the other side, little or no emphasis was made on the broader distributional effects of climate policy and more general social protection and social inclusion.
Given the challenges at hand, policies will inevitably be intrusive and, therefore, they are likely to have substantial side effects, including distributional effects on those in vulnerable situations, such as those with budget constraints and others.
To combat increasing inequalities and to improve the political acceptability of decarbonisation, these effects need to be addressed, while the public, especially workers, need to participate actively in policy formulation, if the transition is to succeed.
While the marked sectorial focus of a just transition in the EGD and the emphasis on social investment-oriented policies are important, they are only partially consistent with the notion of a just transition. The International Labour Organisation makes it clear that these two elements should be firmly placed within strong social protection systems, guaranteeing social rights to all citizens.
In this situation, targeted social provisions during transition should not be an alternative to universal social rights.
Indeed, social investment policies should be in addition to basic protection and social inclusion. There needs to be a clear move to place the European Pillar of Social Rights at the heart of the Green Deal.
This is consistent with the position taken by this administration that there should not be any trade-off between climate policy and social equity. The people should and must come first.
Michael Falzon is Minister for Social Policy and Children’s Rights.