Bela Galgóczi: A Fight for Every Job – De-Carbonising Europe’s Cars

Bela Galgóczi is senior researcher at the European Trade Union Institute

Cross-posted from the Green European Journal

A timeline for the phase-out of petrol-powered cars produced in Europe has now been set. The transition to electric vehicles is part of the European Union’s Fit for 55 package, which aims to reduce the region’s net greenhouse gas emissions by at least 55 per cent by 2030 compared to 1990 levels and 100 per cent by 2035 (though with a loophole for synthetic fuels). Decarbonising road transport – a huge contributor to overall greenhouse gas emissions – is key to achieving climate neutrality in the EU by 2050, a commitment that lies at the heart of the European Green Deal. With deadlines looming, Europe’s automobile industries are charting the electrification course rapidly. This, of course, is good news. The way the transition is taking place, however, is far from ideal. As one of Europe’s largest industries – and biggest sources of employment – shifts into gear for major change, new fault lines are emerging. Its ability to grapple with the inevitable conflicts and successfully weather the transformation will have major implications for millions of Europeans.

What’s at stake?

The automotive industry is currently facing a range of challenges. Besides undergoing an internal shift to digitalisation, automation, and total value chain reorganisation, it now needs to fast-track a move towards electric vehicles.

Every fewer new cars are sold each year, and stability in sales revenues is only due to them getting larger and more expensive.

This transformation is upsetting the long-standing dominance of industry heavy hitters such as Volkswagen and BMW, and allowing newcomers like Tesla to enter the market in a previously unimaginable way. To Germany’s shock, the Tesla Model Y outsold the Volkswagen Golf in September 2022. Chinese companies like BYD and SAIC Motor are also gaining new ground, making up 6 per cent of EU electric car sales in 2022. This is likely to reach 20 per cent by 2030. It is increasingly clear that past success offers no guarantee of future competitiveness. The EU’s potential diminishing dominance in this global industry is set into sharp relief in this new era of deglobalisation, with pandemic-induced supply chain disruptions and the end of the rules-based post-World War II international order – accelerated by Russia’s invasion of Ukraine – raising the geopolitical stakes even higher.

In the European Union, the automotive sector is directly responsible for 2.6 million jobs. With 13.8 million direct and indirect jobs as a whole, it accounts for more than 6 per cent of total European employment. Forecasts on how electrification will affect these jobs depend on their scope and assumptions, but most predict major job losses in the manufacturing segment – between 275,000 and 410,000 by 2040 according to a 2021 study by the European Association of Automotive Suppliers. This may be partly compensated by increasing value added from electronics, autonomous drive systems, and electric charging infrastructure. According to a study published in 2021 by the Boston Consulting Group, up to three million industry jobs will also be fundamentally transformed in terms of the skills required, place of work, contract type, and working conditions.

These forecasts assume that new car sales will remain stable – but this cannot be taken for granted. Ever fewer new cars are sold each year, and stability in sales revenues is only due to them getting larger and more expensive. This assumption also reveals how many industry players see automotive electrification: not as part of a wider decarbonisation of transport that includes fewer cars and better mass transit, but simply as the replacement of the combustion engine with an electric one.

Media concern has focused on possible employment loss due to electrification. The greatest risk, however, is missing the train. Slowing down the mobility transition at this stage would undermine European competitiveness and result in greater job losses in the long term. At this point, focusing on aggregate job gains or losses is therefore less important than helping European companies, regions, and workers navigate the transition.

It is also important to understand that, even if overall automotive employment in Europe remains relatively constant, European manufacturers and regions – from the generalist volume producers in France and Italy to Germany’s premium manufacturers and the central and eastern European supply chain – will experience the transition in vastly different ways. While all major regions saw a decrease in the number of new cars sold between 2000 and 2019, Germany only saw a 9 per cent reduction, whereas Italian sales dropped by 51 per cent. In the same period, employment in the sector rose by 3 per cent in Germany but plummeted by 43 per cent in France. The car industry in central and eastern Europe – boosted in past decades by foreign direct investment – is a special case. Its cheap and flexible workforce offers a competitive advantage, but the industry’s future here remains uncertain. The region has the oldest, most polluting, and fastest-growing car fleets in Europe and a population largely unable to afford electric vehicles. More problematically, its unions are weaker and often not internationally affiliated. These workers and plants have less bargaining power and are particularly vulnerable to decisions made elsewhere. Also a problem is the industry’s continuing “upmarket drift” – the production of heavier, faster, and more expensive battery electric vehicles and plug-in hybrids that, among other issues, need larger batteries – which is putting a strain on critical material use.

The trade union perspective

The primary focus of Europe’s automotive trade unions is clearly to secure jobs and workers’ rights as the industry navigates the green transition, but individual unions play different roles depending on their scope. Workplace unions within specific plants or companies tend to prioritise the short-term goals of their members. By contrast, higher-level trade unions with a more national or international outlook and at one level removed from the immediate concerns of workers – such as the European Trade Union Confederation (ETUC) – are more likely to situate the interests of their members within long-term societal goals such as the need for environmental policies and political participation.

In the industrial relations literature, trade union responses to the green transformation can be grouped into three categories: opposition, hedging, and support. In contrast to an uncompromising opposition to climate change mitigation, hedging strategies accept the need for emissions reduction policies but seek to minimise environmental regulation. Support strategies are in favour of climate mitigation and take a proactive stance on decarbonisation.

Over the last decades, trade unions have developed their ability to challenge profit-driven changes imposed by capital. The changes proposed under the green transition are of a different ilk: they are policy driven and serve the public interest. Instead of questioning or impeding the necessary restructuring, trade unions must become drivers of this change while working to manage its consequences. This is a huge challenge, and one exacerbated by the capital-labour conflict. Even if unions agree with the long-term objective of the restructuring process, proposed changes such as reducing jobs and lowering conditions can resemble the profit-maximising efforts that unions usually resist on their members’ behalf.

On top of that, precarious jobs with less security make up a large and growing share of posts. Such jobs have historically borne the costs and risks associated with change, making it both harder to protect them and to get these workers on board with restructuring. This asymmetry of power, alongside a growing recognition of the importance of climate and environmental objectives, has led to trade unions becoming the drivers behind the “just transition” concept. In 2018, global manufacturing union IndustriALL and others called for balanced emissions reductions that take employment and social aspects into account and for a just transition fund for industry.

Industry stakeholders can exert considerable power at policy-making level. Employer associations – the owners’ and managers’ versions of trade unions – have been playing a controversial role in lobbying for lighter regulation on car emission standards. The 2015 Dieselgate scandal – which uncovered that manufacturers such as Volkswagen had installed defeat devices allowing cars to cheat pollution controls – shows how the industry has tried to evade regulation after failing to prevent it.

In the run-up to the European Council’s 2018 adoption of a 35 per cent reduction in car CO2 emissions by 2030, both unions and employers’ associations supported the German government’s push for a lighter 30 per cent target. With the Fit for 55 package, the cut increased to 55 per cent for cars and 50 per cent for vans by 2030, rising to 100 per cent by 2035. In 2021, German automotive association VDA opposed the phasing out of the combustion engine, and IndustriALL has also expressed concerns about fast-track electrification.

But things are changing. Germany’s largest trade union, metalworkers’ union IG Metall, has revised its previously cautious approach and embarked on a fast-track transition. And in 2022, European-level trade unions launched an urgent appeal calling on policy-makers to support the automotive sector in implementing a just transition. The sector as a whole is not currently included in the EU’s Just Transition Mechanism – set up to “ensure that the transition towards a climate-neutral economy happens in a fair way” – as the latter is limited to carbon-intensive regions, while the prospective Social Climate Fund will primarily aim to balance the regressive effects of the Emissions Trading System (ETS2).

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