The Next Economy
A Circular Economy Will Create Millions of Good Jobs; But Study Reveals Global North Bias

Circular-economic models and strategies are growing in popularity among businesses and policymakers as a means to increase efficiency, reduce waste and reach climate goals. By increasing the reuse and regeneration of products and materials, a projected 7-8 million new jobs can be created. But a new report by Circle Economy, the International Labour Organization (ILO) and the Solutions for Youth Employment (S4YE) Program at the World Bank‍ identifies knowledge gaps that may hinder the equitable creation of new employment opportunities.

Decent Work in the Circular Economy: An Overview of the Existing Evidence Base reveals that current research on circular-economic job opportunities displays a strong Global North bias. It fails to address the impact of circular interventions on people in the Global South — including atypical workers, women, migrants, youth and other vulnerable populations. Additionally, the study outlines what we currently know about jobs in a circular economy and pinpoints research gaps — calling for more consistent and internationally relevant evidence to create a stronger foundation for decision-making.

According to the report, 84 percent of current research focuses on the Global North. Sub-Saharan Africa, Eastern Europe, the Middle East and North Africa were the least represented regions — despite the fact that most circular-economic activities are now located in the Global South. Moreover, while 73 percent of workers in low-income countries are employed in the informal economy, most research concerns formal, regulated work.

Existing research also focuses disproportionately on job creation and disregards job quality — including working conditions and wages. The report finds that only a handful of studies have examined whether and how a circular economy can alleviate poverty and benefit vulnerable communities in low-income countries.

“The link between environmental sustainability goals and human development and jobs has often been overlooked, especially in the context of developing countries where most workers are clustered in the informal sector — which is characterized by low-quality, low-paying jobs,” says Namita Datta, Program Manager at S4YE. “The shift to more circular approaches calls for policies that ensure that the jobs created are not only good for the environment, but also good for workers.

“The focus would be on addressing the low-quality, low-paying jobs in the informal sector with hazardous working conditions and exposure to toxic materials that are associated with circular activities like waste management, recycling, repair and reuse,” Datta explained. “But this integration will require intentional and adequate policies, as well as further evidence to understand the impact of a circular economy on people's livelihoods. A truly just transition to a circular economy will require reskilling and upskilling opportunities for workers to access better job opportunities.”

Decent work in a circular economy: 5 themes

Five key themes underpin current research into decent work in a circular economy; these represent some of the crucial opportunities and challenges and should be considered for circular transition to lead to a more just and inclusive society:

1. Labor market and sectoral transformation — Employment and job creation are often described as the most important social and economic contributions of a circular economy. Based on a comprehensive 2018 ILO study, global employment growth was estimated to be driven by Latin America and the Caribbean (over 10 million jobs) and Europe (around 0.5 million jobs) due to new jobs in recycling and reprocessing. The region expected to have most employment gains is the EU, benefiting from the ‘first-mover advantage’ compared to the rest of the world.

2. Informality in a circular economy — The informal economy is estimated to employ 60 percent of the world’s population; yet most studies and policy approaches assume that the economy is part of a regulated, formal economy. This is especially significant in the Global South — where the reuse, repair, waste-collection and recycling sectors provide ample employment to low-income workers. Yet, the informal economy is not sufficiently included in the Global North’s circular economy agenda and existing research does not adequately consider the wide-ranging circular activities operating informally in the Global South.

3. Work reallocation and skills development — The successful reallocation of workers from linear to circular sectors is dependent on access to training and related policy measures. Gaining the ‘deep skills’ required for circular interventions relies on employers’ and educational institutions’ knowledge of circular business models. Lack of knowledge can result in a deep skills gap — especially in low-income countries, where access to STEM skills for remanufacturing and related sectors may be lacking.

4. Working conditions and social protections — Some academics and practitioners have proposed a circular economy as a solution to eradicate poverty (SDG 1). Still, research on poverty alleviation is lacking; most occupational health and safety concerns relating to circular activities are associated with the global waste trade and secondhand goods flowing from Global North to South, where workers are often exposed to toxic waste.

5. Gender discrimination and social equity — Projections show that the transition to a circular economy will increase female employment globally. Beyond gender equity, concerns relating to the social blind spots of circular-economic interventions among underrepresented circular actors (ex: migrant workers, youth) were only studied in-depth three times, revealing a significant knowledge gap.

Alette van Leur, Director of the ILO's Sectoral Policies Department, said, “There is no doubt that a circular economy can help us reach our climate goals. However, the links between circularity and the achievement of social and economic progress remain overlooked. The shift towards a more circular economy offers significant opportunities for the world of work, such as the creation of new jobs and sustainable enterprises. However, fully unlocking the potential of this new economy requires a just transition that addresses the current inequalities and suboptimal working conditions currently present in the circular economy. If not managed properly, these issues could continue to impede progress towards a more equitable and sustainable future.”

Ultimately, the new report calls for more in-depth and inclusive research on decent work and the circular economy — which puts the Global South, informal workers and global value chains in the spotlight. The authors also reveal the need for joint advocacy and data partnerships to close knowledge gaps and build links to other important themes — such as climate justice and women’s empowerment.

“Having better data and evidence to understand how the circular economy can create better-quality jobs in different industries around the world is crucial for a just transition,” says Hatty Cooper, Director of Governments and Institutions at Circle Economy. “Also, the circular economy is still seen as an environmental agenda; and its social and economic benefits are yet to be fully embraced, despite the importance of this topic. We need to work in partnership to create and put evidence of its socioeconomic impacts in the hands of practitioners and decision-makers.”

Decent Work in the Circular Economy is the first output under Circle Economy, the ILO and S4YE’s joint Jobs in the Circular Economy initiative — which aims to address gaps in the evidence base for circular jobs through collaboration with an international community of research institutions, industry representatives, social partners, governments and public agencies. The initiative was launched on May 9 at the Geneva Environment Network; findings from the report will also be presented later this month at this year’s World Circular Economy Forum.