Just Transition Insights, Issue #14, 04/24/2023
Leading Off: Deeper Dive On New Zealand
Last month, we looked at the question of whether so-called “free trade” offered a high wage path for New Zealand and, thus, would be a component of a “high bar” Just Transition. The Just Transition discussions in New Zealand—or Aotearoa, the Māori-language name for New Zealand—are a bit more wide-ranging than just “free trade”, and we posed a number of questions to official government sources, whose answers we now have and can pass on to our readers (the answers come from the Economic Development and Transitions Branch of the Ministry of Business Innovation & Employment).
Short context: as we wrote last month, the government’s focus right now is on two areas—
We are currently providing targeted support in two regions to undertake a just transition:
Taranaki, to adapt to the ban on new permits to drill for oil or gas offshore; and
Southland, to adapt to the planned closure of the New Zealand Aluminium Smelter at Tiwai Point.’
So, our questions zeroed on those regional efforts, as emblematic of the larger Just Transition picture for the future. Our original questions are in bold and italics below with the answer provided in block quotes; we add any clarifying or analysis in red.
We noted this passage at this link https://southlandjusttransition.nz/2022/09/07/skills-hub-proposed-to-help-workers-impacted-if-tiwai-smelter-closes/ “The hub would employ a team to help those impacted by the Tiwai Point smelter’s potential closure choose their next career steps and possibly retrain, while making sure they have the social and wellbeing support they may need to do make the shift without putting their families on the back foot.” Is the smelter in fact closing?
The future of the New Zealand Aluminium Smelter is ultimately a commercial decision for Rio Tinto. They have publicly indicated a desire to continue operating the smelter beyond 2024, pending the outcome of negotiations with the smelter’s electricity suppliers. Rio Tinto has committed to a full remediation of the Tiwai point site, regardless of decisions over the smelter’s operations.
Whether the smelter closes in 2024 or beyond, its regional dominance will continue to cause uncertainty for Southlanders. A key focus of the Southland Just Transition process is planning for and managing the social, economic, and environmental impacts of economic change at the regional and community level.
We asked the above question because a stated key element of many Just Transition promises are retraining programs to move workers into new jobs.
Has there been any additional progress regarding this hub?
While there are not any updates on the proposed Skills Hub you mentioned, there are other initiatives in the region that aim to provide resources for retraining and education, such as the Grace Street Project by the Invercargill Community Connections Charitable Trust. The Just Transitions Partnerships team will continue to look for opportunities to support workers and communities impacted by changes.
Translation: nothing is truly ready for workers who might be out of a job by next year.
In terms of retraining—what’s the baseline being used regarding retraining in terms of past successes or failures?
Jobs and skills hubs aim to provide a better understanding of each job-seeker’s current skill set, their potential development and training pathways, and their attractiveness to prospective employers. The goal is to enable workers to transition into alternative high-wage, low-emissions jobs. While past successes and failures in retraining may inform the process, our focus is on creating new opportunities and pathways through the Southland just transition process.
We asked the above question because, generally speaking, retraining programs created to respond to job losses have been failures across the globe because of a lack of money for the programs and the reality that retraining rarely shifts the economic landscape in which most transitions plunk workers into lower-paying jobs with fewer benefits, especially if a worker is moving from a unionized workplace to a non-union workplace.
What is the criteria being used to make sure social and wellbeing support is robust enough? Is there specifically what we call a “high bar” approach=no one loses any income if there is a shift?
The intention is that the workforce will shift into high wage, low emissions jobs. The New Zealand Treasury’s Living Standards Framework and He Ara Waiora provide a framework for understanding and assessing wellbeing indicators.
The Living Standards Framework includes three levels:
- Our Individual and Collective Wellbeing: This level captures the resources and aspects of our lives that have been identified by research or public engagement as important for our wellbeing as individuals, families, whānau and communities.
- Our Institutions and Governance: This level captures the role our institutions and organisations play in facilitating the wellbeing of individuals and collectives, as well as safeguarding and building our national wealth.
- The Wealth of Aotearoa New Zealand: This captures how wealthy we are overall, including aspects of wealth not fully captured in the system of national accounts such as human capability and the natural environment.
The Living Standards Framework Dashboard is a measurement tool that complements the framework by providing a range of indicators for wellbeing outcomes that are used to inform our reporting and policy advice.
Likewise He Ara Waiora is a framework that helps public servants to understand waiora, often translated as a Māori perspective on wellbeing.
A small question: does retraining come with childcare support to allow a worker to attend retraining without concern about childcare?
Decisions about the specific supports for workers in the event of a downsizing or closure are still being worked through. E tū, a trade union and member of the Southland Just Transition’s Enduring Oversight Group, are currently conducting a decent work survey to better understand the needs of workers at the New Zealand Aluminium Smelter and in the Southland region.
We raised childcare as an element of financing because, as we proposed in our March 13th issue, retraining packages that include child care would allow workers to actually attend retraining when the classes are not taking place during working hours.
Is there a specific definition with numbers what a “high wage” economy looks like as described, for example, here: https://www.mbie.govt.nz/assets/economic-plan.pdf ? Our understanding is that the minimum wage will rise on April 1st to NZ 22.70/hour. Is that the baseline for a “high wage” economy?
No, there is no specific definition in terms of numbers. We can’t know in advance what an adequate income will be in the future. The key thing is whether “New Zealanders, regardless of where they live, have the capability and opportunities they need to live the lives they value.” In other words, there is subjective element to this.
This is illuminating. If a government cannot project what an adequate income will be in the future, how can a government offer up a plausible argument for a Just Transition plan that is fair and embraces a “high wage” economy?
In the same report in #2, it mentions: “We have concluded Free Trade Agreements (FTAs) with the UK and the EU”. Can you describe how the FTAs generally are part of that “high wage” strategy?
As a general rule, FTAs increase market access for New Zealand products e.g. through reducing barriers such a tariffs. This means that the opportunity to export more goods ate better prices is increased, therefore benefiting businesses and their workers. Benefits of the two FTAs are summarized here:
We will just point out that this is a fundamental question for debate—this project has maintained from the outset (including a lengthy discussion here) that the shape of so-called “free trade” agreements—which are basically rules seeking out lowest wage options—do not support a “high bar” Just Transition.
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Spotlight: The Clean Energy PR Machine Is Awesome To Behold…
…but what that means for actual wages is a mystery.
Here’s a snippet that could have been written by the best public relations consultants in the business (we aren’t going to link to this bogus report). It’s dishing out information on the Inflation Reduction Act:
In the months since the landmark climate and clean energy investments became law, clean energy companies have announced or moved forward with projects accounting for more than 142,000 new clean energy jobs for electricians, mechanics, construction workers, technicians, support staff, and many others.
And let the flags wave boldly, the patriotic hearts swell:
As the largest U.S. investment in clean energy and climate in history, this national clean energy plan will continue to reshape and recharge our economy for many decades to come. The Made in America clean energy boom is just getting started.
The missing piece: not one word about unions. Not one word about what the jobs will actually pay.
With the notable exception of one company—Sparkz, which as we discussed here in our Q and A with the CEO, has an actual agreement with the United Mine Workers of America—it’s a breathless recounting of project after project by companies with workplace records ranging from unknown to really quite bad, including Tesla, a company which was just found by a U.S. federal court to have, in fact, fired a worker involved in union organizing and threatening to rescind stock options if employees unionized.
The kicker here: the advisory broad behind this PR mumbo-jumbo includes people who would no doubt consider themselves “progressives”.
An important reminder to those folks: to paraphrase the Rev. Jesse Jackson, even slaves had jobs. Simply regurgitating jobs created does not advance the notion of a “high bar” Just Transition—or even a “lite” transition version.
We would hope that a different standard is embraced in the debate over future climate-friendly jobs: define what kind of jobs are being created, explain where wages and benefits are stout or not and what projects include a voice for unions.
Ideas: Global Just Transition For All Fund—An Update
In our very first issue in October, we proposed a global international Just Transition fund, which we called Global Just Transition For All fund (GJTFA). The concept is both fairly straightforward and revolutionary: setting up a global mechanism devoted to funding a “high bar” for workers’ transition. We’ve been developing the idea further.
First, the initial concept viewed this working on three levels, basing it on cross-border financial models that exist already (for example, the Nordic Investment Bank, for example, that is governed by representatives of its eight-member countries: Denmark, Finland, Iceland, Norway, Sweden, Estonia, Latvia and Lithuania):
- First, fund regional projects to extend support for affected workers and communities where energy-intensive sectors are hemorrhaging jobs.
- Second, on a national systemic level, funds will be invested to combat energy poverty and underwrite long-term campaigns to ignite energy system transformation.
- Third, raise living standards by promulgating living wages and collective bargaining rights.
Now, we also think it’s worth exploring this—as we are—by industry. We will unveil the framework in 2023.
It will still have our basic guidelines, extending global authority for its operations and enforce, via industries, living wage commitments and full, enforceable union organizing and collective bargaining rights.
Stay tuned!
Opinion: Consumers Will Be OK Paying Costs For Workers Just Transition
by Jonathan Tasini
About 15 years ago, as part of a nascent broader effort to organize unions at Wal-Mart, I organized a set of focus groups around the United States to test what people thought about the company. The people in the focus groups were drawn from different regions to give a comprehensive mix of data.
A quick caveat: I take the results from focus groups with a hefty helping of skepticism. That is, any time people get into a room together, the dynamics often move people, individually, towards a “I don’t want to be the odd person out or be the troublemaker” posture so it’s quite common, I think, that whoever emerges first as the most bold voice in a circle of people who don’t know each other can often, then, will influence the shape of the group’s general opinion. It’s the lemming mentality.
With that caveat in mind, the people in all of the focus groups were asked to consider the following scenario: if you knew that Wal-Mart—whose entire brand is anchored on the idea of giving customers the lowest price possible, and, in fact, whose profits are based on appealing largely to poor and lower-income shoppers—had to raise prices a bit in order to pay for higher wages and/or health care for its workers, would you be OK with that and would you still shop at Wal-Mart?
Almost without exception, every person said, “Yes.” Importantly, the emphasis was on prices going up slightly, not breaking the wallet of people who themselves had, at best, modest incomes.
We think this is likely a phenomena that can be translated to the question of Just Transition for workers. In the second issue of this newsletter last year, we proposed that while the lion’s share of non-government funding for “high bar” Just Transition should come from corporate coffers, society, as a whole, should contribute to upgrading our society and a regular “wires charge” would be a good option.
To remind our readers, a “wires charge” is a tiny, relatively insignificant, amount that would be part of a monthly (or quarterly, depending on the billing cycle) bill. “Tiny” is certainly a relative concept but, in general, such charges are so small that, on a regular billing basis, consumers are unaware of the charges.
Done right, there is a dual dynamic at play here: most people want to feel like they are doing the right thing and supporting workers who might lose their jobs—workers who might be your neighbors—in the process of making the planet more livable is likely to be embrace…as long as the cost is not so heavy that the paying individual ends up feeling a heavy weight when it comes to the end-of-the-month bills piled up on the kitchen table.
We just need to find the right balance. Whether this means a “wires charge” or some other mechanism is yet to be settled on. We are working on such schemes!
Tasini is the founder and executive director of Just Transition For All
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Table of Contents
Leading Off
Deeper Dive On New Zealand
Spotlight
The Clean Energy PR Machine Is Awesome To Behold...
Ideas
Global Just Transition For All Fund—An Update
Opinion
Consumers Will Be OK Paying Costs For Workers Just Transition
Links
This Week's Links
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