Can the Circular Economy boost job creation?

Zora Kovacic

The European Union’s Circular Economy plan needs to push circularity beyond waste management in order to realize its job creation potential.

The meaning of the term ‘Circular Economy’ can be interpreted in two different ways: (1) as an alternative economic strategy that includes the integration of agriculture, energy, and water policy and (2) as a specific policy goal that aims to improve the EU approach to waste management.

1. The first definition of ‘Circular Economy’ looks at the potential to change the way that resources are used within the economy. It involves shifting away from the current linear model in which resources enter and exit the economic process, towards a circular model in which resources are reused repeatedly in the economic process.

As a broader concept, the Circular Economy requires a re-organization of the economic process as a whole. Such an important change could have a significant impact on job creation. However, if the entire economic process is to be reorganized and restructured, how can we measure the potential impact that a Circular Economy would have on job creation? We need a more concrete idea of what a ‘significant’ potential impact could be – significant, because changes would incorporate the whole economy, and potential because we cannot be sure about how the economy will change, adapt, and what challenges may emerge.

2. The second definition of ‘Circular Economy’ applies specifically to the EU’s Circular Economy directive, which amends Directive 2008/98/EC on waste.

One of the main goals of the Circular Economy directive is employment growth. The directive reads: “Taking waste policy further can bring significant benefits: sustainable growth and job creation, reduced greenhouse gas emissions, direct savings linked with better waste management practices, and a better environment”.

Job creation has been on top of the agenda in the wake of the 2008 financial crisis. Can the Circular Economy live up to its promises? Jobs in the waste management sector comprised 1% of employment in the EU28 in 2015 (Eurostat, 2017). According to the Eurostat Database, this 1% includes waste collection, treatment and disposal activities as well as in remediation and other waste management services.

The Circular Economy directive goal to boost jobs creation states that “More than 170,000 direct jobs could be created by 2035, most of them impossible to delocalize outside the EU”. 170,000 jobs equates to a 15% increase in employment in the waste management sector in the next 20 years, which corresponds to a mere 0.1% increase in total employment.

Given these low numbers, it is clear that in order to ensure that the Circular Economy really does boost job creation, the strategy must go beyond the waste management sector.

References:

  • European Commission, 2015. Proposal for a Directive of the European Parliament and of the Council amending Directive 2008/98/EC on waste. Brussels, 2.12.2015
  • Eurostat, 2017. Employment by sex, age and detailed economic activity (from 2008 onwards, NACE Rev. 2 two digit level – 1000.
  • European Union, 2017. Quality report of the European Union Labour Force Survey 2015, 2017 Edition. Luxemburg, Publications Office of the European Union.