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Circular economy could create 40,000 jobs in London

Expansion of London’s circular economy could create more than 40,000 jobs in the city by 2030 and simultaneously drive resource efficiency, according to a report published by the Waste and Resources Action Programme (WRAP).

Employment and the circular economy: Job creation through research efficiency in London’, produced by WRAP for the London Sustainable Development Commission (LSDC), the London Waste and Recycling Board (LWARB) and the Greater London Authority (GLA), also suggests a circular economy could result in a long term reduction of unemployment, specifically in low and mid-skilled occupations.

The Circular Economy Package, which was launched by the European Commission last week, seeks to address resource efficiency through the promotion of waste reduction, remanufacturing and eco-friendly design.

The report analyses the potential effect of a transformative transition towards a circular economy on unemployment in London and follows on from WRAP reports published earlier this year, which focussed on the employment ramifications of a circular economy in Northern Ireland, the UK and Europe as a whole.

Report findings

The report says a circular economy is good news for job creation because the types of businesses involved in re-using, repair, remanufacturing and rental require more labour to create economic value, notably amongst low to mid-skilled occupations, where future job losses in London are expected.

It focuses on the concept of job ‘mismatch’ and analyses the effect of expanding the circular economy within London on addressing this issue.

Circular economy could create 40,000 jobs in London
The front page of the 'Employment and the circular economy: Job creation through research efficiency in London’ report
Job mismatch can occur because of occupational reasons, when skills in a particular region don’t match the available jobs, or due to geographical reasons, where the unemployed don’t reside in the areas of job opportunity. 

Another type of mismatch highlighted is the labour market mismatch where the number of mid-level jobs, in terms of occupation, skills and pay, are in general decline with more job opportunities being available in low and high level jobs.

Since 2004, London has shown a decrease of 4.6 percentage points in mid range jobs, the equivalent of 22,000 jobs, whereas low skilled and highly skilled jobs have shown increases of 1.3 and 3.2 percentages respectively.

This trend is expected to continue with service, managerial and professional sectors showing expansion with a decline in clerical, secretarial posts in addition to job opportunities in storage, wholesale, transportation and public administration.

The report projected that by 2030 highly skilled jobs will have increased 4.7 percentage and low skilled jobs will only have increased 0.7 percentage points.  Mid level jobs are predicted to continue to decline by 5.5 percentage points in the next 15 years.

Benefits

The report suggests that the predicted decline in mid-level jobs can potentially be offset by the expansion of the circular economy within London, which could lower the labour market mismatch.

There are currently around 46,700 people employed in jobs related to the circular economy in London, 28.9 per cent of which are in the waste and recycling sector. This is due to an increase in household recycling from 9 per cent to around 34 per cent of total households.

These jobs are currently spread fairly evenly across all boroughs in London, which indicates that expansion of circular economy jobs could benefit all areas of the city, according to the report.

Areas such as Greenwich, Southwark and Ealing boroughs, with high levels of unemployment, show a higher concentration of circular economy jobs.  A similar pattern can be seen in Brent, Ealing and Bexley boroughs, which have been highlighted as Opportunity Areas, allowing the possibility that circular economy expansion could be encompassed within plans for these Opportunity Areas.

Scenario analysis

A previous report written by WRAP and Green Alliance outlined three different potential scenarios for the improvement of the circular economy within Britain by 2030. 

Data obtained from ‘Employment and the circular economy: job creation in a more resource efficient Britain’ was used to predict the job creation potential specifically for London.

The first scenario assumed that no new initiatives would be put in place, however, allows for some progression in circular economy activities.  It is predicted this scenario could create approximately 3,000 jobs resulting in decrease in unemployment by around 1,100 circular economy jobs.

The second scenario involves maintaining the current levels of circular economy development with larger improvements in recycling, repair and reuse than those outlined in scenario one.  This would also include moderate progress in remanufacturing and servitisation sectors and has the potential 16,000 jobs (gross) resulting in a net increase of 5,500 jobs in London.

The third scenario involves more significant transformation of the circular economy activities within London and could create 40,000 circular economy jobs in the city.  This scenario involves extensive development of recycling, remanufacturing, reuse and servitisation activities and could potentially reduce unemployment by 12,000, a total of 12.5 per cent of London’s excess unemployment.

In general the report predicts that expanding the circular economy can improve the levels of low and mid level skilled jobs available, in particular areas such as skilled trades, customer services and sales, while also increasing jobs for highly skilled workers.

Circular economy could have ‘great benefits for the city’

Writing in the report’s foreword, Mayor of London Boris Johnson said: ‘The principles of the so-called ‘circular economy’ have become better defined, and have captured the imagination of policy makers, businesses and entrepreneurs alike. It’s now apparent that accelerating it could drive great benefits for the capital– increased profitability and competitiveness for business, cost savings on the city’s significant waste management bills, reduced environmental impacts, and better self-sufficiency at a time of uncertain commodity markets.

‘I am grateful to all those involved for their tremendous work on this exciting topic. I urge central government, local authorities, businesses, developers and entrepreneurs alike to join me and to commit to making the change a reality.’

At the request of the Mayor, LWARB will also spell out in more detail how these jobs will be created and the types of investment required to bring about this transformation by 2036, in a route map document – Towards a Circular Economy.

Initial focus for the route map will be on the built environment, electricals, textiles, food and plastics. These areas have been chosen because of their high environmental impact, their retained financial value and potential for re-use.

Wake-up call

Lord Barker of Battle, Chair of the LSDC, said the time had come for the circular economy to be taken seriously. He said: “This report is a wake-up call to set a course to a smarter future, one that is better for the environment, the people of London and the wider economy. If we act now, London can be a global leader in the technologies and systems required to be at the forefront of this revolution – a revolution that will unite business interests with the city’s wider development needs and ensure we remain globally competitive.”

The report’s author Peter Mitchell, Head of Economics at WRAP said: “Through creating thousands of jobs with the right mix of skills and in the right locations [the circular economy] will deliver lasting reductions in unemployment and offer opportunities in segments of the capital’s jobs market that are expected to decline.” 

Wayne Hubbard, Chief Operating Officer, said: “We estimate that, in addition to creating thousands of new jobs for Londoners, a circular economy in London could be worth at least £7 billion every year by 2036 in the built environment, food, textiles, electricals and plastics sectors alone. In early 2016 LWARB will be approaching businesses and organisations working in these ‘focus areas’ to identify how we can collaborate to accelerate London’s transition to a more circular economy, and realise these huge benefits.”

Read WRAP’s ‘Employment and the circular economy: Job creation through research efficiency in London’ report.

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