How will electrification of vehicles impact auto workers?

Threats to traditional auto manufacturers are outlined in “The top trends killing the auto industry” in Corporate Knights (Feb. 3), including the climate crisis, the fall of fossil fuels, electrification and autonomous EV fleets, unfunded pension liabilities (US$14.4 billion for G.M., US$10.2 billion for Ford), as well as  shifting government policies, and dampened demand in general. All the more reason to celebrate the good news about investment in EV production in Canada by GM, Ford and Fiat-Chrysler , as well as GM’s January 2021 announcement that it will  sell only zero emissions vehicles by 2035. In February, Ford announced its target to sell EV’s only in Europe.  But the good news is complicated, as described in  “Auto industry peers into an electric future and sees bumps ahead” (Washington Post, Feb. 6)  , and by  “Canada and the U.S. auto sector’s abrupt pivot to electric vehicles” (National Observer, Feb. 15) . For Canada, the challenges include competition for the development of battery technology and the policy challenge of the new “Made in America” Executive Order by President Biden on January 25.  Despite the brief and optimistic overview presented in  “Jerry on the Job: How the president of Canada’s largest union, Jerry Dias, is driving the country’s electric vehicle push” (Corporate Knights, Feb. 4), our highly integrated North American auto industry has a complicated path forward. 

One of the most important issues ahead is how the conversion to electric vehicles will impact the jobs of current auto workers. In late 2020, Germany’s Fraunhofer Institute for Industrial Engineering conducted a detailed study of this issue on behalf of the Sustainability Council of the Volkswagen Group.  Employment 2030 Effects Of Electric Mobility And Digitalisation on the Quality and Quantity of Employment at Volkswagen (Nov. 2020) is an English-language summary of the full, detailed study, which modelled the impacts of digitization and electrification in the industry. Although the study is specific to  VW production in Germany, its findings are instructive, and include that job losses will be less than anticipated, ( a decrease of 12 percent in this decade, mainly due to planned output volumes and higher productivity).  Digitization will result in a need for new skills, “will necessitate a profound change in corporate culture”, and will include higher employee expectations for job flexibility. A summary appearing in Clean Energy Wire   states: “ …. there is no uniform employment trend in the ‘transformation corridor’ over the coming decade. Instead, there will be a complex, interconnected mixture of job creation, job upgrading and job cuts. It argues that it will be vital to ensure that small and medium-sized enterprises (SMEs) do not fall victim to this reorganisation, and warns that Germany’s automotive sector must establish new forms of cooperation so as not to “recklessly surrender the field of mobility to new market players.”  The study is also summarized in a press release by  VW (with links to the full study in German).

Employment and Job loss experience of Canada’s oil and gas, coal workers

In September 2020, Canada’s oil and gas industry employed approximately 160,100 workers –a 0.9% increase from August 2020, but a 14% drop from September 2019.  In that same one-year period, employment in the services sub-sector decreased by 29%;  the pipelines sub-sector decreased by  30% and the exploration and production sub-sector increased by 3%.  These statistics are based on Statistics Canada’s Labour Force Survey (LFS) data,  made available on the  Employment and Labour Force Data Dashboard provided by PetroLMI, a labour market agency specializing in the oil and gas industry, jointly funded by government-industry.  Their September 2020 blog is here, summarizing the current trends ; an archive of PetroLMI reports re the trends and forecasts is here – most recently, The LNG Opportunity in Canada: Employment Prospects and Requirements (June 2020).

In addition to providing regular labour force data by industry, on September 22 Statistics Canada released two studies in its Economic Insights series:  How Do Workers Displaced from Energy producing Sectors Fare after Job Loss? Evidence from the Oil and Gas”  Industry    and How Do Workers Displaced from Energy producing Sectors Fare after Job Loss? Evidence from coal mining. Both studies use data, (including age),  from Statistics Canada’s Longitudinal Worker File, covering the period 1995 to 2016, for  workers permanently laid off from those industries..  

Job loss experience for oil and gas workers

How Do Workers Displaced from Energy producing Sectors Fare after Job Loss? Evidence from the Oil and Gas” Industry reports that “job loss leads to substantial and persistent earnings declines”, although “three years or five years after being displaced, a significant fraction of workers displaced from this sector earn more than they did in the year prior to job loss.”  Data show that re-employment has become progressively more difficult, and for workers laid-off in 2015 or 2016, less than two-thirds found paid employment in the following year, with most moving outside the oil and gas industry – construction being the most common sector for re-employment. CBC produced a summary of the Statistics Canada report in an article here , augmenting it with personal stories and commentary from economists.

Coal workers’ job loss experience

Similar analysis (the reports are authored by the same Statistics Canada economists) appears in  How Do Workers Displaced from Energy producing Sectors Fare after Job Loss? Evidence from coal mining . Contrary to the trend for oil and gas workers, finding employment within a year of lay-off became easier for coal workers more recently: 67% for workers laid-off in 1995 compared to 89% for those laid-off in 2005 . However, regarding earnings loss, the report compares coal data with all industries, and states: “These numbers imply that about half of workers laid-off from coal mining and from other industries during the 2004-to-2011 period saw their annual wages and salaries drop by at least 30% in the short term. Since coal miners are paid higher-than-average wages …. the median declines in annual wages and salaries of coal miners displaced from 2004 to 2011 amounted to roughly $14,800 (in 2016 dollars) in the short term, more than twice the median declines (of about $6,100) experienced by other laid-off workers.” Conclusions are similar to those in the report on oil and gas workers: a  transition to “green jobs” has not materialized, and “ for many coal miners and other workers, job loss leads to substantial and persistent earnings declines”, but, “the financial consequences of job loss are not uniform for all displaced workers. …. Three years after job loss or five years after job loss, a significant fraction of displaced workers earn more than they did in the year prior to job loss.”