Strategic workforce planning for retraining and upskilling is essential to stabilise employment in the energy sector

Moving to renewables will create new jobs, but will also drive unemployment in the short-term

In each economic development stage, the employment market faces complexity and challenges. The transition period from conventional energy to renewable energy, likewise, will not be immune. In the short-term, a lack of skills will drive unemployment; then, in the medium-term, the onset of bankruptcies among companies that fail to survive at the ‘shakeout’ stage; and in the long-term, the adoption of large-scale automation replaces the human workforce.

1. In the short-term: a skills gap between conventional energy and renewable energy sectors. Numerous studies provide job measure methodologies for the direct employment effect of the rising renewable energy sector when new jobs are created through the manufacturing of equipment, construction and installation, and operation and maintenance processes. In this process, large numbers of new jobs will be directly linked to the production process of the renewable energy sector. However, we are facing the fact that renewable energy related skills may not be developed in a short period of time, and job losses will be observed in the conventional energy sector.

2. In the medium-term: an economy-wide indirect and induced employment effect alongside the ‘shakeout’ phase of an industry life cycle. Over the medium term, the development of the renewable energy sector will impact the whole value chain. There will be economies of scale, a decrease in production costs and labour migration worldwide. In contrast, carbon-intensive firms may go bankrupt, which leads to job losses. Also, job losses may occur within the renewable energy value chain. They may experience a ‘shakeout’ because of a slowing down in the growth of revenue and profit that results in the natural elimination of businesses.

3. In the long-term: new investment opportunities in competition with automation impact. Over time, firms will have opportunities to upgrade their production processes. Primarily skilled workers will be required, followed by automation replacing low-productivity labour. This process has already been demonstrated in existing sectors, such as retail services, leaving a question of how to maintain welfare gain from the innovations being introduced.

5 strategies for retraining and upskilling in the Energy Sector

Through our analysis, we recognise that employment challenges run through the whole energy transition process, along with various economic uncertainties that could halt industry development. In order to tackle employment volatility and ensure continuous labour market welfare is delivered, the following five workforce training strategies should be addressed:

1. Establish a partnership with learning and training providers. The energy transition will take decades, during which retraining and upskilling will be continuously requested. Organisations have an increasing trend of outsourcing their learning and development (L&D) services and developing sustained partnerships with training providers and other education providers. In contrast to using the time of internal L&D leaders to organise complex training programs, building a partnership with learning and training providers enables organisations to meet the increasing demand of training needs. It also allows them flexibility to have multiple subjects of expertise available for study.

2. Retraining programs should be localised to strengthen local manufacturing capacity. The local government’s role in manufacturing skills training should be emphasised to encourage local manufacturing activities and provide a competitive advantage for the local economy and employment in the manufacturing process. Numerous studies find that the development of the renewable energy sector may be delayed because of a lack of local skilled workers. In addition, developing a safety-first manufacturing culture through training programs is also crucial.

3. Provide remote learning programs for rural areas. The recruitment and retention of workers in rural areas is challenging because of the lack of training programs. Linking renewable energy to rural development can stimulate economic growth and provide more local jobs. In this situation, flexible remote teaching and learning platforms can significantly balance the gap between urban and rural employee training levels. Moreover, job transfers for agricultural workers in rural areas may be in demand, with Faethm’s role-specific skills analysis and job corridor insights able to inform a targeted training program.

4. Link corporate training programs with financial strategies to maximise long-term value. Organizations with continuous training programs regarding environmental protections are likely to access external financing, which enhances business continuation and labour retention. For instance, an increasing number of banks provide financing support for social sustainability related activities within agricultural training programs to increase the uptake of new technology and efficient farming practices. The benefit of having a long-term learning and training plan is twofold. Not only it can generate training funding through sustainable finance from the government or banks, but also it sends a positive signal externally, which is conducive to long-term development.

5. Develop concrete predictions and plans for technology adoption in various industries and regions. Studies suggest that we can focus on relatively mature and proven renewable energy technologies at the current development stage as these technologies are less likely to experience shocks to employment. Therefore, governments and organisations should systematically explore the technology adoption curves of different industries, value chains and regions.