Public investment for a just green caring transition

“Our results suggest that investing in the green and the care economy is key to a transition to a net zero carbon economy with decent work, increased wellbeing and equality in terms of both class and gender.”

By Professor Özlem Onaran and Dr Cem Oyvat

We have written a new report commissioned by the International Trade Union Confederation (ITUC)  on the employment effects of public investment in the geen economy and the care economy in the emerging economies.

The report investigates the impacts of increased public spending in three areas: i) the care economy, which includes health care, social care, education, and childcare, ii) the green economy, with a focus on renewable energy, energy efficiency and public transport, iii) other public infrastructure, such as social housing, hospitals, care homes or schools. We estimate the effects on the employment of men and women and a country’s national income in eight selected emerging economies (Chile, Colombia, India, Indonesia, the Philippines, South Korea, South Africa, Turkey).  

The report demonstrates the strong employment-creation potential of renewable energy, public transport, other infrastructure, and the care economy. Our results suggest that investing in the green and the care economy is key to a transition to a net zero carbon economy with decent work, increased wellbeing and equality in terms of both class and gender. Public investment must lead the way in these strategic sectors that are good for both people and the planet. These investments are even more urgent after the Covid-19 pandemic. 

A policy mix combining public spending in the care and green economies, and other infrastructure

Furthermore we present the effects of a policy mix combining a repeated increase in public spending in the care and green economies, and other physical infrastructure (e.g., housing, buildings for schools and hospitals), each by 1%-point as a ratio to GDP every year for five years. According to this policy scenario, at the end of five years, cumulative total employment increases by 10.3% in India, 21% in Turkey, 23.8% in Indonesia, 27.8% in Chile, 39.3% in Colombia, 48.9% in South Korea, and 57% in South Africa. On average across eight countries, GDP increases by 37.1%, employment increases by 28.6%, employment of men increases by 25.4%, and employment of women increases by 33.5%.

The findings indicate the potential of the green and care jobs for redeployment, allowing for countries to move away from polluting and carbon-intensive industries by creating new decent formal jobs in sectors with strong benefits for the environment and society.

Starting with high gender gaps in employment, it is found that at the end of this policy stimulus more jobs are created for men than for women, yet higher rates of growth in women’s employment are demonstrated. These findings underline the importance of designing hiring and training policies that ensure the new green and physical infrastructure jobs also employ women and avoid existing occupational segregation patterns, with women concentrated in the care economy and constituting a low share of the green economy.

We analyse the impact of public spending on the primary budget balance and show that some portion of public spending is self-financing. Further funding possibilities for a substantial mobilisation of public spending are discussed, including progressive taxation of income and wealth, national investment banks or monetary policy.

We highlight the strong impacts of these investments on labour productivity in the medium term. Productivity gains create space for higher wages, better working conditions, and a shorter working week with wage compensation. They also help to address concerns regarding the effects of fiscal spending on the balance of payments constraints of emerging economies.

Policy coordination

The coordination of fiscal policies with labour market policies makes the effects of fiscal spending stronger and eases the funding pressures, as higher wages lead to higher tax revenues. Strong pro-labour institutions –particularly, strong, well-coordinated trade unions, equal pay legislation, increased job security, permanent contracts, higher minimum wages, and improved and equitable parental leave are positive policy goals for equality-led and sustainable development. Moreover, labour-market regulation for a shorter working week can promote a rise in gender equality in paid and unpaid work and income, while also facilitating a green transition, as well as higher productivity.  

What can high income countries in the Global North do to facilitate this public investment in the Global South?

International policy coordination can make a further difference, particularly for emerging economies. The effects of public spending are stronger and negative effects on the current account balance are moderated, if policies are implemented simultaneously in all the countries. If large, high-income economies lead the way, their actions create space for small, import-dependent, balance of payments-constrained emerging economies. Managing short-term constraints on the balance of payments requires further policies in terms of capital controls and FDI policies.

Finally, two policies that address further amplified post-pandemic global inequalities stand out: first, the cancellation or restructuring of parts of the debt of developing countries needs to be part of the international development agenda. Secondly, a transfer of technology to support the mass, not-for-profit,global production of key public goods from solar panels, turbines, to batteries for storing renewable energy is the only way to tackle global crises such as climate change in the context of global climate justice.

Conference on 25 May with speakers from the labour movement

We will present the report’s findings  on May 25 at 16:00-20:00 at the University of Greenwich, and researchers from the labour movement across the world and Britain will discuss the findings. The speakers at the event include:  

  • Evelyn Astor (ITUC),  
  • Ronald Janssen (Trade Union Advisory Committee to the OECD),  
  • David Kucera (International Labour Organization),  
  • Geoff Tily (TUC),  
  • Boitumelo Molete (COSATU),  
  • Gonzalo Hernández Jiménez (former Deputy Finance Minister, Colombia), 
  • İpek İlkkaracan (İstanbul Technical University),  
  • Özlem Onaran (UoG)
  • Cem Oyvat (UoG),  

You can register for the event here. If you are unable to attend in person, the event is available online as well.   

  • Özlem Onaran is Prof. of Ecomomics, and Co-director of University of Greenwich (UoG) Centre of Political Economy, Governance, Finance and Accountability (PEGFA)
  • Dr Cem Oyvat, Senior Lecturer in Economics, University of Greenwhich, Political Economy, Governance, Finance and Accountability (PEGFA).
  • The Conference: “Public investment in the care & green economy: emerging economies” takes place on May 25th at the University of Greenwich – Queen Anne building, Old Royal Naval College, Park Row, London, SE10 9BD. Register here.
Featured image: The Old Royal Naval College at the University of Greenwich, designed by Christopher Wren and built between 1696 and 1712. Photo credit: Rapid Spin under Attribution-NoDerivs 2.0 Generic (CC BY-ND 2.0)

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