The Green Deal’s Unemployment

23 March, 2021

green deal unemployment

The Green Deal claims to be a solution to unemployment. This is not true. The figures say the opposite: it is a solution for capital, the big energy and automobile companies, large landowners and even for small farmers. From the very first moment, however, it leaves a trail of layoffs, unemployment and loss of wage purchasing power.

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Green Deal: more unemployment, higher profits

Tesla Gigafactory in Berlin. Despite the new facilities, the transformation of the sector towards the electric car will mean the loss of 400,000 jobs in Germany alone. The green deal does not look like good news for unemployment.
Tesla’s Gigafactory in Berlin. Despite the new facilities, the transformation of the sector towards electric cars will result in the loss of 400,000 jobs in Germany alone. The green deal does not look like good news for unemployment.

John Kerry, Biden’s climate change czar, wanders around every European government event proclaiming that the Green Deal is the greatest marketplace mankind has ever known. Such enthusiasm is reflected in all the new financial companies emerging around the renewables bubble. And of course in the energy companies: such as Iberdrola or Endesa, which delivered impressive results in 2020 with great fanfare

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But under the general disaster of the crisis goes unnoticed the industrial reconversion underlying those results and the massive layoffs in the green champions. For example, IBEX energy companies are obvious beneficiaries of the Green Deal, but together they laid off 7,500 workers last year. Endesa alone is slated to lay off 1,200 more workers, 10% of its workforce, over the next four years. It does not look like the electric companies will contribute to reducing unemployment over the next few years.

If we put the focus on the automotive sector, we will find something similar. Not a week goes by without new layoff announcements at one of the big companies. The strategic plans of the two largest European companies, PSA and Volkswagen, follow a clear strategy: reduce the range of engines and car bodies, increase margins and keep laying off workers until at least 2030, when only electric cars will be sold on the continent.

In fact, the closer we get to 2030, the greater the impact on unemployment. The leap to the electric motor means a simplification of motor production lines: they become simpler, with fewer parts, and more similar to each other. The industry itself, which two years ago estimated that thanks to electrification it could shed 111,000 jobs in Germany alone, is now raising the figure to 400,000. Clearly, this is going to be felt in the unemployment figures in Germany… and across Europe.

This is the Green Deal in its purest expression: a legally mandated technological change which generates an investment boom and increases profits of the big capital applications (energy, automotive, engineering, banking…) at the cost of orchestrating a transfer of rents from the workers. Because the key to all this is for workers to produce more value with fewer jobs while paying more for the same electricity and the same cars.

Lots of solar panels, lots of windmills and few jobs

Cartoon about the loss of energy production productivity with the green deal.

However, they keep trying to persuade us that it will be a Fair Transition and that the emergence of many new quality (non-precarized) jobs is imminent and will reduce unemployment. In theory, any widespread technical improvement is an increase in hourly exploitation which should allow for increased production and employment and over time a rise in real wages. But that would occur only provided two things:

  1. That the technical improvement is real, i.e., that physical productivity increases, an increase in the output produced by applying an average hour of labor to the same quantity of raw materials.
  2. That there exists a market with the effective capacity to buy a larger quantity produced.

None of these two conditions is met.

1 Although in some very specific production – such as car engines – there is an increase in the physical productivity of labor, in the economy as a whole there is a drop in overall productivity. Among other things because it takes more raw materials to produce the same thing.

This is clear in industry. Those that are not easily electrifiable -aluminum, steel, etc.- easily become unviable and keep sending workers to unemployment (Alcoa for instance). Experiments with biofuels and hydrogen are proving highly unsatisfactory. For its part, long-distance transport is increasing its costs and is expected to do so even more if, as announced last week, the aim is to accelerate the decarbonization of seaborne transport.

In electricity production, the same thing: 53.8% of the Spanish generation pool is already renewable, mostly thanks to wind power. But the same wind does not blow every day of the year or at all hours. So backup plants are being kept, from nuclear to coal, in order to stabilize the grid. The loss of productivity is obvious.

And the so-called electro-intensive industries if they are able to keep up is because they are receiving a favored treatment by the states. In Spain this privileged tariff was in 2020 of 59.78 €/MWh. A bargain, and even so, more than double the French price, which is 28.56 €/MWh, and 24.17 €/MWh more expensive than the German price, which is 35.61 €/MWh. In other words, the switch to clean energies by large industry is paid for with subsidized tariffs on account, in reality, of the domestic electricity bill. A new indirect transfer of wages to capital. And it is not minor.

2 Since there is no real improvement in productivity, moreover since there is a need to save what is in reality a drop in physical productivity in order to convert it by legal imposition into an increase in the productivity of capital, the price of consumer products will tend to rise. Electric cars are more expensive. Imports will be more expensive because they will pay emissions tariffs when they arrive at the border and also when moving by land they will have to pay higher prices for transportation. And electricity in general, even if they make a thousand bill manipulations, will also be more expensive for at least 10 more years. Etc., etc.

Also, where will new markets appear in which to place the electricity or cars produced? The domestic market, at higher prices and with record unemployment, is not growing and the Green Deal industry, as we have seen only sends more people to unemployment. And if there were solvent foreign markets in which to place the production increases… the various national capitals would be growing based on exports right now, instead of being in a brutal crisis.

Smaller capitals also win, but workers always lose

Francisco Pizarro solar park in Extremadura. Gigantic surface and investment. And the same old unemployment.
Francisco Pizarro solar park in Extremadura. Gigantic surface area and investment. And the same old unemployment.

Today the business media report that the photovoltaic and wind boom is blanketing acres and acres of entire regions… but creating very few jobs, and poorly paid jobs at that. For instance, over half of the new photovoltaic power installed in Spain in 2020 (2,633.20 MW) is in Extremadura, only in photovoltaics 800 million euros were invested in the region last year. It is already the Spanish region with the highest installed photovoltaic capacity… and yet, with all the fury, only 1,690 jobs were created. The impact on regional unemployment figures was negligible.

In the same region, the announcements of gigantic plants supported by long-term electricity contracts with large industries continue… and the speculative game with the necessary land to place so many panels is fueled. The result: agricultural income is growing as it has not done in the last century. Evidently we are not talking about the income of day laborers, but of large landowners and small landowners. That is to say, of agrarian capital.

In Spain, land prices started at levels of 1,200 € per hectare, to reach 1,700 €, without value added tax. Livestock farmers are also asking for compensation for Common Agricultural Policy subsidies and agricultural producers for compensation for crop loss at the start of work, for the costs associated with that season, including readjustments of water pipes, easements, and other charges, according to industry sources in Spain.

And it’s not just in Spain. In Germany, land prices already range between €2,000 and €3,000 per hectare and the same government says it is concerned about the displacement of rents and the use for wind farms and photovoltaic parks of land hitherto dedicated to agricultural production.

Speculators – who then sell the rights to build wind farms to electricity companies – enter into long-term leases with the owners of the land, usually for 20 years. The return to the landowner from one of these contracts is four times that of dry-land cereals… without risk or the need to hire any workers. What’s more, not infrequently, putting the ones formerly employed out of work.

That is to say: from the multinational electric company and the land-owning nobility with dehesas in Extremadura to the small agricultural landowner in East Germany, all are increasing the profitability of their investments like crazy. And all are expecting the profits to be disbursed automatically through the market by the salaries paid by each national capital. The same plummeting wages will have to pay more for the most basic things: from energy to food to industrial products.

The goal of the Green Deal is not to end climate change, nor to improve people’s quality of life. It is not a necessary sacrifice in order to save the climate and Nature. It is the sacrifice of our living conditions to once again save investments and revive the accumulation of capital in the midst of the worst crisis in a century. That is why it attacks workers’ wages and consumption capacity, that is why it creates unemployment and precariousness. All well-painted with doomsday scenarios and blaming so that we accept the mess without complaint.

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