Labour, budgeting and climate change (1) -By Eze Onyekpere

Filed under: Economic Issues |

Eze Onyekpere


Addressing the challenges of climate change is imperative to preserve jobs today and to secure the resilience of economies and societies for future jobs. Estimates based on the International Labour Organisation’s Global Economic Linkages suggest that unmitigated climate change and its associated impact on enterprises and workers will have negative effect on output in many industries, with drops of 2.4 per cent by 2030 and 7.2 per cent by 2050. On the other hand, greener economies could reverse the trend and yield productivity gains (ILO 2013). The implementation of Low Emission Development Strategies will cause shifts in the volume, composition and quality of employment across sectors and will affect the level and distribution of income. In particular, eight economic sectors employing around 1.5 billion workers, approximately half the global workforce, will undergo major changes. They are agriculture, forestry, fishing, energy, resource intensive manufacturing, recycling, buildings, and transport (ILO, 2013). In general, four categories of change can be expected: some jobs will be created; some will be lost; some will be substituted; while others will be transformed in the way work they are performed. Overall, positive labour market outcomes can be expected given that the job creation potential outweighs the risks of job losses.

It is therefore critical for Nigeria’s Nationally Determined Contributions and the resulting climate change policies to account for their potential implications for labour markets in terms of job creation and losses, change in existing occupation and skills needed for new and emerging occupations. These programmatic and pragmatic approaches cannot be achieved without the active and informed collaboration of the Federal Ministry of Labour and Employment. The deployment of the ministry’s recurrent and capital expenditure ought to be focused on the transition to low carbon emitting jobs and a resilient economy. However, labour and productivity is a cross-cutting issue that is not entirely dependent on the allocations and fiscal measures of the Labour and Employment ministry alone but on issues bordering on overall fiscal and monetary policies, macroeconomic management, trade, social security systems and environmental protection, etc.

Climate change will impact on the production, distribution and consumption systems and patterns in the short, medium to long terms. In a change environment, winners and losers will emerge. When climate change is mainstreamed in employment creation strategies, the risks inherent in the creation of losers will be minimised whilst the gains of producing winners will be increased. Fischer and Knutti have stated that the negative impacts on employment will be the result of extreme weather events such as droughts, cyclones and/or floods. They will also arise from slower processes such as sea level rise. The greater incidence of extreme weather events will affect urban employment because damage to transport, industrial infrastructures and settlements affects the ability of workers to commute and or to find alternatives when workplaces have to close. An illustration of this is the near destruction by flooding of Lokoja and some parts of Makurdi in 2012, which resulted in the loss of several jobs.

Climate change is also expected to reduce workers’ productivity by increasing mortality and morbidity because of the resurgence and proliferation of certain diseases. It will worsen the working conditions of workers who carry out their activity outdoors, such as construction workers. Rising temperatures, increases in respiratory and or water and food-related diseases and the risk of malnutrition will also negatively affect employment. The latter will also condition the future incorporation of young workers into the workforce due to irreparable childhood health damage (WHO, 2009). Increased migration and mortality will further aggravate problems such as worker turnover and the loss of qualified workers. The latter issue is of special concern as technical knowledge is essential in order to adapt to changing working conditions. Increased productivity will depend on the ability of any given society to respond to the climate threat with sufficient knowledge and innovation, sensitisation and mobilisation of its works force.

Mitigation strategies aim to limit or reduce the magnitude of long term climate change, primarily by reducing or preventing the emission of greenhouse gases (GHG). Mitigation strategies have significant potential to create new employment by: Stimulating investment and innovation in new green products and services that are more environmentally friendly and low-carbon. This also enables enterprises to access new markets and offers them a comparative advantage and for new enterprises to emerge. Also,this will entail improvements in energy and raw material efficiency at enterprise level. The greening of workplace practices can reduce the amount of resources needed for production; lower the amount of waste generated and thereby save energy costs.

According to the Gratham Institute, jobs will be created and lost in short, medium to long terms – a short-term effect, when jobs are lost in directly affected sectors and new ones are created in replacement industries. We can think of this as the direct employment effect. A medium-term effect, when the impact of climate change policy ripples through the economy. Jobs are created and lost along the value chains of affected industries. These are the higher-order, economy-wide effects of climate policy. A long-term effect, when innovation and the development of new technologies create opportunities for investment and growth. We can call this the dynamic effect of climate policy.

With these identified challenges of climate change on labour and socio economic activities, a central poser arises. How has the budget of the Federal Ministry of Labour and Productivity contributed to addressing the impacts of climate change in line with the National Policy on Environment, National Adaptation Strategy and Plan of Action on Climate Change for Nigeria and the Nationally Determined Contributions of Nigeria? A recent study by the Centre for Social Justice examined the trend of budget allocations to the Federal Ministry of Labour and Productivity for a period of four years (2013-2016), bringing out budget and policy recommendations and low hanging fruits that the Ministry can adopt in mitigating the adverse effect of climate change in the labour sector.

The trend shows that the ministry did not enjoy priority in allocations considering that in no year did its budget reach one per cent of the overall budget vote. The allocations to the Ministry of Labour and Productivity seem to be climate insensitive in terms of not recognising the obvious impact of climate change on job gains and losses and the productivity of Nigerians.