A socio-ecological contract for a Europe in transition

Last month, the European Commission proposed that by 2040 greenhouse-gas emissions in the European Union should be reduced to 90 per cent below 1990 levels. To reach such a target, we would need to step up the pace of decarbonisation: in the three decades to 2020 the EU achieved a 30 per cent reduction but for the two decades between 2020 and 2040 it would have to deliver a further 60 per cent—twice as much in two-thirds of the time.

Yet resistance to climate policies is building and, in fear of a strengthening climate-sceptic populist right, there is backtracking at policy level. We are witnessing a climate backlash. But then the climate crisis confronts us with a unique and unprecedented constellation of inequalities.

Unlike previous crises, cause and effect are distant, in time and space, and the link between collective risk and individual action is not clear. While climate change will have dramatic effects on future generations, and on vulnerable regions and people, it is not perceived as an imminent danger by those most responsible for the emissions: there is no direct link between, say, a coal mine in Australia and floods in Europe. And whereas local air or water pollution can be stopped at source with immediate effect, with climate change only co-ordinated and coercive action can bring results and only over decades.

The effects of climate policies on jobs, however, are felt here and now. The much greater threat to peoples’ livelihoods and to equity—climate change itself—seems distant and therefore less important than the more immediate impact of climate policies. At the same time pre-existing inequalities make the entire process of decarbonisation much harder (think about the gilets jaunes in France or the current farmers’ protests across Europe) and need to be addressed. The way ahead is not less climate action but more ‘just transition’.

Social-policy tools

Stepping up climate ambition will intensify the social effects of this transformation, at least in the short term: the differential distributional effects of climate policies, labour-market changes and challenges vis-à-vis the accessibility and affordability of low-carbon technologies. And these different dimensions of vulnerability are often cumulative and compounding.

In the past five years, European policy-makers have demonstrated more openness and sensitivity to the social dimension—abandoning flawed crisis-management practices in the aftermath of the eurozone crisis and agreeing the European Pillar of Social Rights. Yet specific policies to address the social impacts of climate change and the green transition were developed only following the European Green Deal in 2019: the Just Transition Mechanism was established in 2020 and a Social Climate Fund (which will only come into effect in 2026) was initiated in 2021. The energy-price and cost-of-living crisis has also prompted EU policy-makers to repurpose the Recovery and Resilience Facility (set up in 2020 to deal with the effects of the pandemic) for the green transition.

These policy tools tend to show a pattern: they start by addressing specific issues, often with a narrow focus and limited resources; as new challenges emerge, their scope is extended ad hoc—but without additional resources. Most recently, the minimum-wages directive and the Council of the EU recommendation for a fair and inclusive green transition emerged as important instruments to strengthen the social partners and collective bargaining, but more action is needed to ensure that these also have an effect at national level.

An ‘eco-social’ model

For all the positive rhetoric and good intentions, this patchwork of policies is far from the holistic, comprehensive approach to just transition required—as by the International Labour Organization in its guidelines. What is more, the EU does not yet have any policy tools that would provide collective risk coverage for climate and extreme weather-related risks.

Europe thus needs not only to strengthen its social model but to reshape it as an ‘eco-social’ model. For that, it needs a new social contract—a socio-ecological contract.

Dealing with the new complexity of intertwined inequalities while pursuing a transformative green restructuring of the entire economy requires a prominent role for the state. Tackling the climate and biodiversity crises in line with social objectives can accelerate low-carbon transitions in an inclusive and equitable manner, strengthening an egalitarian and ecological public sphere that protects workers’ rights and nature.

Just transition needs a renewed welfare state as guarantor and enabler, with an active role for trade unions, civil society and employers. It should set a benchmark for policy co-ordination, build buffers to provide social protection and manage and facilitate labour-market transitions through social investment—all the while ensuring social dialogue and stakeholder involvement.

Essential elements

Several organisations (the United Nations, the ILO, the International Monetary Fund and the World Economic Forum), as well as unions, civil society and employers, have expressed the need for a new social contract, with different accents but a common basis. Based on their demands, the essential elements of a socio-ecological contract can be framed.

The eco-social model is based on sustainable growth that respects planetary boundaries and works for all. Social risks, including those arising from the green transition, are diffused away from workers while all share fairly in social progress. Affordable and effective social protection reduces inequality, poverty and social exclusion.

Without proper social and labour-market policies all pre-existing inequalities are amplified during the transition. So a range of existing inequalities must be urgently addressed: income polarisation and wage stagnation, work fragility with informal work and precarious work contracts, the challenge of affordable housing, access to affordable healthcare and education, persistent gender and ethnicity gaps, growing regional disparities, vulnerability to climate change and environmental hazards. And for the transition to a zero-carbon economy, differential labour-market effects (job transitions, skills development), the distributional effects of climate policies (energy and transport poverty) and the accessibility and affordability of low-carbon technologies must all be tackled.

Pivotal role

In specific policy terms, this requires:

• creation of climate-friendly, quality jobs;
• a policy framework (including regional and industrial policies) facilitating labour-market transitions and green skills development, correcting regressive distributional effects of climate policies for vulnerable groups and making low-carbon technologies affordable for, and accessible to, all;
• equal rights for all workers, regardless of their employment arrangements;
• universal social protection, with the perspective of universal basic services;
• elimination of all discrimination, including by ethnicity, age or gender, and
• fair taxation for individuals and corporations at national and international levels.

At European level, the main actors are the EU institutions, the member states, employers, trade unions and civil society. The ‘eco-social’ state has a pivotal role in a comprehensive, holistic policy framework where climate, macroeconomic, industrial, labour-market and social policies form a coherent system.

A social contract based on mutual commitment must be underpinned by binding criteria and implementation. The current practices of just transition—such as due diligence and codes of conduct—are useful but are mostly based on soft law, while climate and economic policies are backed by hard law. Policy instruments need a proper balance between the two, combining regulation, market mechanisms, taxation and standard-setting.

Global level

The establishment, monitoring and implementing of such a contract needs proper social dialogue and civil-society involvement. All participating actors need to develop new capacities and be open to co-operation and alliances.

Businesses need to accept that beyond the profit motive they must serve the whole of society: environmental, social and governance (ESG) values should be more than public relations. Trade unions should become agents of change, actively promoting just-transition policies and managing plant-level restructuring across the value chain.

Unions also need new strategies to set foot and organise in emerging sectors and activities, such as the green and digital economy. They should look too beyond their members, in the spirit of social-movement unionism, for alliances with civil-society organisations.

A socio-ecological contract must also reach the global level. Given the specific role of the ILO, its constituents, in particular workers’ organisations, are best placed to engage in the design and establishment of a new socio-ecological contract within the multilateral system. The Global Coalition for Social Justice initiated at the 2023 International Labour Conference is a good starting point.

**The article by Bela Galgoczi is published in Greek in collaboration with Social Europe.