[Publication] Just Transition In The World Of Work

Introduction

The European Union’s commitment to climate neutrality by 2050, as set out in the European Green Deal (EGD), is underpinned by the Just Transition Mechanism (JTM), introduced by the European Commission in 2020 and structured around three financial pillars: the Just Transition Fund (JTF), a dedicated InvestEU programme, and the Public Sector Loan Facility.

In its resolution of 23 November 2023 on Job creation – the just transition and impact investments, the EP highlights its core aims and policy orientation. The resolution calls for adequate financing, better access to financing for SMEs, and policy adjustments to improve its effectiveness across vulnerable regions. It also prioritises high-quality, sustainable job creation in green and emerging sectors and proposes a proactive industrial policy.

Despite its transformative ambitions, emerging literature and evaluations suggest that the JTF has encountered significant challenges in achieving its objectives, particularly in ensuring equitable outcomes, effective stakeholder involvement, and access to the fund for SMEs.

Aim

This study aims to identify effective strategies and policy mechanisms that facilitate the creation of quality jobs, promote inclusive economic transformation, and ensure that all communities, particularly those most vulnerable, are supported.

Main findings

Current EU policy context for a just transition. The EU has embedded the just transition principle across climate, employment and cohesion policy, shifting from strategy to binding financing. The EGD anchors climate neutrality by 2050, while the JTM is the Union’s first legal and financial framework focused on the social and labour dimensions of decarbonisation, including reskilling, active labour market policies (ALMPs), and inclusion. This is complemented by a broader policy mix (Fit for 55; EU Skills Agenda/Pact for Skills; EPSR Action Plan;  REPowerEU, RRF and ESF+). The EU framework also aligns with  ILO guidelines and relevant  OECD  instruments.

Regional and sectoral perspective. EU labour markets remain territorially divided. In 2024, a north-west “blue corridor” (southern Sweden–Denmark–northern Germany–Austria–Netherlands) recorded higher employment rates than in other European regions. Coal regions report employment  rates below the EU average and very low female labour-force participation.  

Non-standard forms of employment contracts  and lower job quality are increasingly observed, especially among youth. The EU vacancy rate has generally fallen, but shortages persist in healthcare, construction, metalwork, transport, and ICT. Adult-learning participation remains below targets; aligning regional training with demand is critical.  Social vulnerabilities, such as population ageing, out-migration, and elevated NEET and poverty rates, compound transition risks, especially in coal-intensive regions.

Sectoral shifts  continue: industrial employment has fallen in many NUTS-2 regions since 2008, while pockets of Central Europe have gained via Foreign Direct Investment (FDI) (automotive, electronics). Construction has recovered where public investment and renovation have grown; knowledge-intensive services have expanded broadly; tourism has rebounded yet remains seasonal; and Electric Vehicle (EV) transition is reshaping automotive value chains. 

Convergence is uneven.  Many former coal- and heavy-industry areas in eastern European regions have narrowed GDP-per-capita gaps, whereas regions in Southern Europe have shown weak catch-up amid out-migration and narrow sectoral bases. 

Three contrasting territories taken as case studies—Lusatia (DE),  Asturias (ES)  and  Upper Nitra / Western Slovakia (SK)—illustrate how consensus-based multi-level coordination, strategic cluster-building, inclusion of social indicators in administrative procedures, and engagement of social partners can lead to more effective outcomes in just transition processes.

Key enablers. A successful just transition in the world of work depends on a set of mutually reinforcing enablers that help translate plans into quality employment and inclusive outcomes. They include: early and continuous participation of social partners; multi-level, place-based governance; strengthened regional and local capacity; a coherent legislation–institutions–assistance triad; an integrated policy mix; robust skills assessment and anticipation; accessible, well-targeted finance; and clear, harmonised rules with proportionate monitoring and evaluation.

Gaps. At the same time, several structural gaps may inhibit the just transition’s capacity to deliver equitable, high-quality employment. These gaps include: limited enforceability of agreements among social partners; monitoring that focuses more on the number of newly created jobs than on job quality; coarse NUTS-2 allocations that underfund vulnerable NUTS-3 labour markets; SME access barriers stemming from complex procedures and high co-financing requirements; insufficient local skills intelligence and weak inclusion processes; and the absence of poverty- and inclusion-sensitive indicators.

Policy recommendations for an effective Just Transition Directive focus on addressing existing gaps and reinforcing key enablers. In particular, they support:

• making participation by socio-economic partners and external stakeholders structured, resourced, and consistent across the entire JT cycle;
• securing multi-level governance with local knowledge;
• embedding social-vulnerability targets and indicators in just transition programming;
• considering secure, high-quality employment and fair participation as pertinent objectives of the Just Transition;
• strengthening skills intelligence and training pathways;
• calibrating programming and monitoring at the NUTS-3 level, not only at the NUTS-2 level;
• broadening SME access and tailoring support to the conditions in which they operate;

safeguarding enablers that are working.