Eight hundred million by 2030. This is not a new climate or energy target set by the international community, but the number of jobs that are expected to be lost by then. This labour squeeze will be caused by robotics and artificial intelligence being applied to all kinds of productive processes. This is what emerges from McKinsey’s substantial research released in December 2017, widely disseminated amongst insiders but essentially ignored by the general public. It is not about a linear process, but a multifaceted phenomenon that is difficult to grasp.

The Mckinsey report states that: “About 50% of work activities globally could be automatable by adapting currently demonstrated technologies, whereas only 5% could fully achieve this.” But we are currently at an intermediate stage and it is noted that – according to the report – penetration of new technologies affecting 60% of production processes occurs at various levels. In some – very few – cases, human labour is fully replaced by technology, whereas in most cases it merely makes it less necessary, thus increasing the required flexibility needed to tackle transformations, with substantial changes in the workplace and in work provision.

It is about dynamics that go beyond the technical feasibility of automation, which is not the only factor influencing its speed and expansion. Reduced development costs, obsolescence of production processes, changes in supply systems and also intrinsic qualities of products and services are all elements that will influence technology penetration dynamics with only one certainty: they will be adopted. Sure enough, McKinsey’s analysis forecasts an increase in global productivity between 0.8 and 1.4% per year thanks to technology applications. These are significant numbers that companies and nations cannot ignore. A dynamic that has never been ignored in over two hundred years of industrial history. 


Circular Safety

Against this backdrop, the circular economy is seen as a lifeline for the labour market, as well as for the environment, but it is an issue often featuring in a context with no broader picture. It is indeed often the case that the circular economy is regarded as a self standing linear phenomenon producing generally positive effects, including work-related upshots. However, before coming to redeeming conclusions a closer look at a few components of the circular economy is required, such as energy, material flows, manufacturing, services and recycling/reusing. 

Energy, even though largely underrated in the debate over the circular economy, is one of the sectors where a paradigm shift is actually happening: from fossil fuels to renewables. Worldwide, the renewable energy sector is developing thanks to a series of characteristics. The first is technological maturity, which has an impact on prices. Last year, in Chile, during an auction that was open to various energy technologies, photovoltaic energy beat coal energy exclusively for price, regardless of any environmental significance. Enel, in this occasion, won at $0.021 per KWh, compared to $0.036 of the coal industry; and in Mexico the price went down even further to $0.018 per KWh. The second driver for renewables is climate, with commitments that must be respected and with Europe leading the way with important targets to be met by 2030. The third key issue is geopolitical stability, and therefore price, which influences the economy greatly: better to produce energy locally. Against this background, there has been a development in research on the labour market, led by by Mark Z. Jacobson from Stanford University with the paper: 100% Clean and Renewable Wind, Water, and Sunlight All-Sector Energy Roadmaps for 139 Countries of the World, that analyses the potential of renewables for job creation, with current technologies, in a scenario characterised by 100% renewables by 2050. Results are pretty clear. Using the JOBS and JEDI models set up by NREL – The US based National Renewable Energy Laboratory – to assess employment and the impact of economic development on renewables, Jacobson and his team managed to determine that, worldwide, the 100% renewable energy scenario by 2050 will produce 51.5 million new stable jobs, with a net increase of 24.3 million, thus considering the 27.2 million employed in the fossil fuel sector that would lose their jobs. Furthermore, energy intensity and costs will be reduced by 42.5% on end uses thanks to energy efficiency. 

Only with energy – it goes without saying – shall we keep far away from the doom and gloom forecast by McKinsey; and this research is a building block showing that the “paradigm shift” can work.

Things get complicated when we consider material flows. For some, such as metals like steel and aluminium, the circular system is already working. In terms of employment, however, the picture becomes less rosy. In these already non-labour intensive sectors, the advent of Industry 4.0 is impacting labour massively, whether processes belong to the circular economy or not. The new plant built by Voestalpine – an Austrian iron and steel company – in Leoben, a small town to the southeast of Vienna, employs only fourteen people to make half a million tonnes of special steels every year. In the 60s, a similar facility would employ 1,000 people. And only three engineers manage the seven-hundred-metre-long production line, the others are administrative staff. “Steel creates jobs… yeah, right. Forget that!” Wolfgang Eder – Voestalpine’s CEO – tells Bloomberg. “In the long term, we will lose most traditional workers: people operating in the heat and dirt of coke ovens and blast furnaces. Everything will be automated.”

And the same goes for other manufacturing sectors of today’s circular economy such as fine chemistry, the bioeconomy, and the agricultural sector (that over the last half century has already lost a huge number of workers.) Indeed, non-food agriculture is already able to grow crops to obtain energy or manufacture low labour-intensive crops, thanks to precision agriculture. In the Po Valley, maize is sown recording, through GPS coordinates, the position of every seed, which makes for exact fertilisation – carried out with residual digestate from biogas production – and equally precise irrigation, saving 30% of water. All this with just one worker. Therefore, offsetting the impacts of automation, as speculated by McKinsey, is still far off.


Circular Parallelism

The circular economy’s current development – necessary to protect our planet’s resources and therefore life in the biosphere, including that of humans – must go through the addition of sustainable and circular practices in today’s processes and production chains which foster the damage we are trying to fight, while keeping a certain employment threshold. In other words, to be successful, we should introduce a tangible economic parity in the current economic context that has led us to the highest atmospheric C02 concentrations of the past 800,000 years – 406.99 ppm of CO2 in August 2018. Hence, the circular economy elements must have the same price as those of the fossil-based linear ones, otherwise they will not be used. Paradoxically, the circular economy is currently being crushed in the grip of employment that is subject to the rules of well-established supply chains, where the number of workers is dramatically reduced and productivity increased and the only way of creating employment is through the creation of new sectors. This is confirmed by a European Commission study on the circular economy and employment, Impacts of Circular Economy Policies on the Labour Market of May 2018; whereby within the European Union 650,000-700,000 new jobs are expected by 2013, with an increment of 0.3%. “Employment – researchers claim – follows the same trend as GDP because production data are the drivers of labour demand. And the increment will be mostly led by the waste management sector in order to meet the increased demand for recycled materials.” Therefore, the development of employment is still linked to the creation of new products and processes, in exactly the same way as it happened during Fordism. New production methodologies for new products create new jobs.

From a closer look at the research carried out by the European Commission it has emerged that the impact of the circular economy on the labour market confirms substantial stability in the creation of new employment in the more mature sectors such as agriculture, chemistry, metals, fuels and plastics; a slight decrease in electronics, in motor vehicles and transport; a limited increase in manufacturing, utilities and installation/repair; a considerable drop in the construction sector; and an increase in services as well as a staggering growth in waste. Seeing as waste and waste service related employment could not exactly excel in terms of job quality, we are left wondering whether green jobs are synonymous with good jobs. This is a question posed by a recent report on jobs in the circular economy Waste Management in Europe. Good Jobs in the Circular Economy? drawn up in December 2017 by EPSU (European Public Service Unions) that reads, “In the wake of the enthusiasm for job creation, the debate over conditions and payment is often brushed aside. To date, little has been written about the quality of these jobs and on what a transition towards a circular economy entails with reference to changes of skills and job delocalisation. It is about mainly low-paid and low-skilled jobs including over half a million people employed in waste collection.”

In any case, these very jobs could also be at risk as technological innovation may also cover the waste sector. Robots for the separation of various types of waste are already on the market. These machines possess artificial intelligence and sensory technology for the independent recognition of different and new types of waste.


Circular Capital

In a substantial “coexistence” between the current neoliberal capitalist economic model, based on neoclassic economic axioms, and those proposed by the circular economy 1.0, the latter seems to have to conform to the former if it is to introduce good practices. This means that it would not be the circular economy dictating the necessary paradigm shift, but it should rather take on the responsibility of the productivity increase introduced by new technologies, with the reduction of labour costs and the expulsion of workers. This would have paradoxical effects, such as increasing environment protection, perhaps with drastic reductions of CO2 content per product unit. Let us examine a currently labour-intensive sector such as separate waste collection and recycling. In a highly automated scenario, there will be a rise in productivity, final yield and value increase with robots able to automatically recognise materials used in packaging – see the plastic sector – thus lowering the final cost of raw/secondary materials with ensuing market growth, whilst protecting capital and the environment; but not income and workers.

And even R&D could hardly alter this equation. For instance, Stora Enso, a Swedish-Finnish group with a €9.8 billion turnover in 2016 and 25,000 employees in 35 countries, decided to change its production by adding lignin, which until recently was burnt to produce energy, to pulp. A drastic change. While 10 years ago, 65% of the company’s activity was based on paper, this percentage has now dropped to 30%, and innovative biomaterials are up to 14%. Stora Enso carries out the new lignin treatment in its plant in Sunila (Finland) where it has produced 50,000 tonnes of lignin per year since 2015 using the kraft process normally used to convert wood into pulp. Stora Enso is now the largest lignin producer in the world; this has enabled it to launch a new product on the market, called Lineo, that replaces fossil-fuel derived phenols. The company invested €32 million in the new lignin separation process without significantly increasing jobs in the plant, which, as with others of this kind, is low-labour intensive. The plant employs 150 people who, besides lignin, produce 370,000 tonnes of pulp. The entire transformation process is led by 70 researchers in the new research centre in Stockholm devoted to biomaterials – about 50% of employees working in Stora Enso’s R&D department worldwide. In practice, new products are developed, with new markets and relatively low investments compared to turnover in existing industries, thus producing added value for capital and the environment, but not for society.

Moving from one sector to another, it is interesting to see what is happening in the multinational fashion corporation H&M. Two years ago, the company launched a series of sustainability and circular economy targets including: products made with 100% sustainable materials by 2030, commitment to zero discharge of hazardous chemicals by 2020, efficient water use by 2020, total elimination of climate changing emissions by 2030, improving efficiency in all outlets worldwide – around 4,800 for all the different brands of the group – by 25% by 2030, and using 100% renewable energy by the same year. At the beginning of 2018, though, it also announced the launch of a new multi-brand e-commerce system that will have discount prices and thus also announcing that in the coming years they would close a series of walk in shops and open less outlets than previously planned. Basically, fewer sales assistants. All this despite the fact that in 2017 the group’s turnover increased by 4% to €22.2 billion. It makes little difference that H&M included in its sustainability report a whole chapter devoted to working conditions along its entire value chain.

Most probably, there is an underlying problem. Today, for companies loss or creation of jobs is an invisible externality in their bookkeeping, even for those that are more environmentally conscious. 


Circular Crossroads

The circular economy is at a crossroads. It can follow the technological innovation path of the capitalist industrial cycle, ignoring the employment issue and waiting for the creation of employment compensation mechanisms such as those that occurred in the other two industrial revolutions; or it can go down a different path. “The first question is: now that we are facing a new technological wave, what could a new compensation mechanism be? There is no simple answer,” declares Andrea Fumagalli, Professor of Political Economy at Pavia University. “We do not know what this new transformation will be like. Who will play the main role: biotechnologies, nanotechnologies, artificial intelligence or automation? A technological progress concerning the management of the human body and brain and the increasing quantity of data.” However, this is just one aspect of the problem. According to Fumagalli, innovation will have a strong correlation to human life. Life technology, healthcare, genome, prevention, stem cells, spare time and security management, these are the new scenarios of innovation that will also affect the circular economy.

“We do not know what role the circular economy will play in these sectors. This is uncharted territory,” continues Fumagalli. “The circular economy works in waste management and other sectors of the green economy, but the core question is whether all this is enough to start new sectors linked to eco-sustainable compatibility that is able to compensate the haemorrhage of jobs. I think that the circular economy can have a role in the service sector, such as personal care, social promotion and welfare, all sectors concerning the management of people’s time.” In these sectors, resources have no physical limits and there are two huge areas for development and thus for the creation of new jobs: knowledge services and virtual space. “Knowledge is a non-rival good, the more it is exchanged the more it spreads, and is not affected by scarcity limits while virtual space is limitless,” states Fumagalli. “Today, wealth is created through intangible rather than tangible elements. The idea that only productive investments in tangible goods can create value no longer works.” According to Fumagalli, the circular economy could be at the heart of an economic model where human beings work for human beings and the use value replaces the exchange value.

The potential of this model lies in the fact that value is not determined from outside and is not characterised by accumulation. People decide the value on the basis of their relations. These characteristics are capable of triggering the transition – because the creation of value outside capital is the straw that breaks the camel’s back of this unsustainable system based on the fossil-fuel economy – both from an environmental and social point of view. 

Re-claiming our time and relations in a use-value perspective could be one of the strategies to get out of the circular economy-traditional economy parallelism, and embrace a truly sustainable paradigm shift. 



McKinsey, Jobs lost, Jobs gained, 2017; tinyurl.com/y7wkamyf

M.Z. Jacobson et al., 100% Clean and Renewable Wind, Water, and Sunlight All-Sector Energy Roadmaps for 139 Countries of the Worldwww.cell.com/joule/pdf/S2542-4351(17)30012-0.pdf?code=cell-site

Impacts of circular economy policies on the labour market, 2018; circulareconomy.europa.eu/platform/sites/default/files/ec_2018_-_impacts_of_circular_economy_policies_on_the_labour_market.pdf

EPSU, Waste Management in Europe. Good Jobs in the Circular Economy?tinyurl.com/ybk5bczu