Thinking climate and social policies as one

by Susanne Wixforth and Reiner Hoffmann on 17th September 2019
A European approach to the politics of climate change must integrate social justice, as climate neutrality will be costly but growth without end is unsustainable.
On June 20th 2019, the European Council presented a New Strategic Agenda, 2019-2024. Among its priorities, climate change is placed in the context of social sustainability.From a trade-union perspective, the link between social and climate policies is crucial: it ensures that workers and EU citizens accept the measures taken to fulfill the 2015 Paris agreement. Yet the planet cannot wait—we need a planned economic turnaround.
Since the financial and economic crisis, the European Union has been in a mode best described as ‘driving by sight’. Real wages are stagnating or even declining, while states are losing their ability to shape bold policies. Rising unemployment and diverging wage trends divide the member states’ societies even further. A thin stratum of billionaires confronts plenty of precariously employed workers, who cannot themselves bear the high costs climate neutrality, energy transition and energy efficiency will entail .
According to surveys, 30 per cent of the German population feel left behind or not represented by traditional parties and, consequently, do not participate in elections. In France, the ‘yellow vests’ movement has presented a new challenge to parties and trade unions alike. In Italy, left-wing and increasingly right-wing populist parties have received unprecedented popularity among voters protesting against EU-driven austerity. Yet due to the EU’s crisis mode, climate and social policy have been allocated little room on the political agenda of the union.
Planetary limits
The scientific facts are clear: the current economic model will reach its planetary limits in the near future. The political problem posed by climate change, however, is its complex cause-effect relationship: climate protection does not directly improve the situation, and omitted protection does not have directly identifiable consequences either. In both cases, the outcomes only appear years after the (in)action.
This turns policy-making into a highly difficult task, and, above all, has harmful effects on future generations. The student movement ‘Fridays for Future’ can become a trigger for radical change: during the global climate strike in March 2019, 1.2 million young people went out on to the streets, 300,000 in Germany alone. Their demand is simple—the right to a future.
The EU’s strategic agenda for 2019 to 2024 can provide an answer to the call from the youth: the conception of the EU as an internal market based on the rule of law and competitiveness will be completed by a new priority—’realising a climate-neutral, green, fair and social Europe’. The agenda highlights the transition to a climate-friendly economy and a major mobilisation of private and public investment, with an accelerated shift to renewable energies and increasing energy efficiency. To achieve these, supporting communities and individuals along the way will be key.
Implementation of the European Pillar of Social Rights is needed to ensure adequate social protection and inclusive labour markets and to promote cohesion, as well as good access to health care. The fight against inequalities that affect young people in particular is also a priority.
Radical change
One may criticise the fact that climate change and social policy are dealt with in the strategic agenda as if they were one single issue. From a trade-union perspective, however, this connection is indispensable, because ambitious climate policy implies a radical change in traditional key industries, especially in sectors such as energy or automobiles. Business models are going to change; there will be new market participants while old ones will leave the market.
This structural change can only be successful if it is shaped by a state capable of bold action, and if workers and citizens are engaged and ascribed an active role in the political process. The so-called German ‘coal compromise’ is an example of how long this can take, how great are the efforts required and how costly the transition of entire sectors can be.
Without a reorientation of the economy, we are most likely to face global warming of 3 to 5 degrees Celsius. One of the reasons is that if annual economic growth exceeds 1.9 per cent we will be unable to counter the disastrous effects of greenhouse gases. Global gross domestic product is currently growing by 3 per cent per year, however. Limiting global warming to below 2C is therefore incompatible with an economy that relies exclusively on growth.
‘Capitalism is in a dead end,’ said the French minister of finance, Bruno Le Maire, summarily. The state of capitalism and the ability of the market to satisfy collective needs are at the core of the debate. Our way of doing business and our understanding of prosperity and growth must change fundamentally. A planned economic turnaround is needed, curbing annual production and limiting consumption.
Bold policies
Does that mean we have to opt for economic austerity and voluntary poverty instead of GDP growth? A US central banker accurately summed up the dilemma: ‘Growth is a substitute for justice.’ Politically, it is much more challenging to distribute what we have more fairly than to simply deny climate change and exploit the environment. Therefore, the question goes the other way around: can justice be a substitute for growth? An economic turnaround requires bold policies, namely redistribution of the wealth of the rich, an end to growing income inequality and good rather than precarious work.
This cannot be achieved by setting non-binding objectives alone but requires concrete European legislation with ambitious measures for all sectors. It is obvious that even the European Commission’s existing vision for 2050—a 40 per cent reduction in greenhouse-gas emissions—will not suffice to meet the Paris climate targets. The European Trade Union Confederation (ETUC) proposes a 55 per cent reduction in GHG emissions by 2030, while the German Trade Union Federation (DGB) is calling for a 40 per cent increase in energy efficiency throughout the EU by 2030.
Such ambitious goals must however be accompanied by a ‘just transition’. The two pillars of climate protection and social compatibility must be put on an equal footing and conceived as one. Security of supply and affordable energy prices, allied to sustainable industrial policy based on innovation and investment instead of European deindustrialisation, are preconditions of both.
Massive investment
To this end, the public sector must be equipped with sufficient financial resources. In its document A Clean Planet for All , the commission states that 2.8 per cent of EU GDP (€520-575 billion) must be invested annually to reach a climate-neutral economy. The European Court of Auditors goes even further and estimates that, between 2020 and 2030, some €1,115 billion will be needed every year. Such investments cannot be delivered with a ‘business as usual’ agenda. Therefore, the ETUC has called on the European Council to set up a climate-financing pact to enable massive investment in energy-efficient building refurbishment, the rail network and alternative energies.
This can only be achieved if we strengthen the revenue side and make the wealthy participate in financing the transition, through a financial transactions tax and tackling loopholes to improve the tax liability of multinational companies, while combating inequalities. A digital tax and a minimum corporation tax are innovative approaches as well, eventually providing for a just taxation of the platform economy.
All these measures require an ambitious European strategy, based on binding targets to be achieved in the near future. National solo efforts to accomplish a fair and climate-neutral economic transformation will lead to nothing at all. And denying climate change, in the manner of the Brazilian president, Jair Bolsonaro, and his counterpart in Washington, Donald Trump—who cancelled US involvement in the Paris agreement—is equivalent to deliberate destruction of the future.
(Susanne Wixforth is head of unit in the Europe and International Department of the German Trade Union Confederation (DGB). Reiner Hoffmann is chair of the DGB.) – Social Europe