The circular economy will have a positive impact on employment

It turns out that circular policies should have a positive impact on employment in the future. But the devil hides in detail, and there is not much data. It turns out that the most effective tool is to reduce labour taxation while taxing environmentally negative activities. But we have more data in the construction sector. In fact, the European Commission has published examples of best practice and the guiding principles that should be applied in the construction and use of buildings.

Do not miss other topics we cover in our EnviLaw newsletter #2:

The circular economy will have a positive impact on employment

In the transition to a circular economy, the fundamental impact on the way resources are used and the associated need to change the functioning of companies is almost always emphasised. However, if the planned circular economy policies are implemented, the labour market will also feel the impact. From latest OECD study changes in demand patterns and production regimes can be expected when implementing circular policies. The greatest impacts will be felt in materially demanding sectors, such as heavy industry, where jobs will be extinguished. However, new jobs will be created in the services sector, as well as in the areas of waste management, recycling and repair.

As we are currently at the beginning of the transition to a circular economy, there is not much data. However, most of the available models suggest that circular policies may increase employment by 2% while reducing material consumption by tens of percent. Models built to reduce the tax burden on labour and increase the tax burden on environmentally undesirable activities show better results than models that only account for regulatory measures and new business models. However, there are not many of the latter. In practice, it will depend on the courage of states to implement policies that will not only protect the environment, but also increase employment at the cost of a decline in employment in materially demanding sectors.

One man’s trash is another man’s treasure

The circular economy is not just Buzzword, but also has practical use in present. At the end of each production process waste is generated in addition to the resulting product. However, this waste may be under certain conditions categorised as a by-product. This means that the producer does not have to pay for the disposal of waste, but can sell or donate a by-product for further use.

The main advantages of by-products are:

  • Opportunity to significantly save waste management costs
  • Minimising environmental impact of the company

By categorising waste as a by-product business processes can be streamlined and costs saved,while improving the environmental impact of the company, finding new synergies and business partners.

How to build circularly?

One of the key areas for applying circular principles is construction, as it is an area with great material consumption. And more than anywhere else, it is precisely in the construction industry that the circular principles need to be applied throughout the whole life cycle of buildings. After the incorrect design of the building, it is fundamentally difficult to apply the circularity when using or demolishing it. That is why the European Commission has published Principles of circular economy for building design, which should serve as the best practice for applying these principles in all life cycles of the building.

Of course, for each group of stakeholders, the principles apply in a different way. The building is approached differently by an architect, builder, producer of materials, demolition team, investor or regulator. For all these groups, the European Commission therefore recommends steps to allow for greater circularity of buildings. Of course, these are only recommendations, but they foreshadow what the circular economy in the construction sector will look like and what direction regulation will take.

EnviLaw newsletter

Upcoming events

Seminars, webcasts, business breakfasts and other events organized by Deloitte.

    Show morearrow-right