Environmental Goods and Services Sector: employment and value added

Setting the scene 

The 7th EAP (EU, 2013) calls for strengthening the market share of green technologies in the European Union and enhancing the competitiveness of European eco-industries. This will not only reduce the environmental pressures arising from economic activities but could also have important socio-economic benefits in terms of value added and employment. This briefing presents trends in value added and employment in the EGSS. The 7th EAP reflects the objectives of the Europe 2020 growth strategy towards a sustainable economy (EC, 2010), including growing employment in the green economy (EC, 2012). In the context of globalisation and technological change, the green economy offers potential for growth. Europe as a global leader in the development of environmental goods and services has significant potential for exporting this expertise (EC, 2015a).

Policy targets and progress

The increased awareness of the need to combat environmental pollution and preserve natural resources as well as obligations to comply with the environmental acquis has led to an increase in the supply and demand of environmental goods and services, i.e. products to prevent, measure, control, limit, minimise or correct environmental damage and resource depletion.

The Europe 2020 strategy does not include quantitative targets for increasing employment or for output from the EGSS. Nevertheless, the EGSS’s environmental–economic accounts enable trends in headline macroeconomic indicators for the EGSS, such as value added and employment to be reported, providing information on progress towards a green economy. The EGSS encompasses environmental protection activities — related to preventing, reducing and eliminating pollution and any other degradation of the environment — and resource management activities — which include management of energy resources (renewable energy production and equipment and installations for heat and energy saving).

Figure 1. Employment and value added in the EU environmental goods and services sector (EGSS) compared with the whole economy

Note: The GDP and EGSS value added was deflated to 2010 values using the GDP deflator. 

Figure 1 shows that, on average, since 2003, the EGSS has seen faster growth in employment and value added than the total EU economy. The sector’s contribution to gross domestic product (GDP) grew from 1.5 % in 2003 to 2.1 % in 2014, while employment in the EGSS grew from 3.0 million full-time equivalents to 4.2 million over the same period. 

Growth in both environmental protection and resource management activities has been strong but has been particularly high in the resource management area, whose value added grew from EUR 50.7 billion in 2003 to EUR 117.3 billion in 2014 (at 2010 prices), an increase of 133 %. The renewable energy sector was the key driver in the growth of the resource management area — the value added of the renewable energy sector increased by 179 % over the period — while an increase in products for energy and heat savings also played a key role. The increase in value added of the environmental protection activities over the same period was rather moderate - 25% between 2003 and 2014. Although the environmental protection activities still represent the major element of the EGSS (EUR 156.7 billion in 2014 at 2010 prices), the relative contribution of these activities in the EGSS growth has considerably decreased over time.

EU employment in environmental protection and resource management activities was estimated at 4.2 million full time equivalent employees in 2014 (Figure 2). Employment trends were mainly driven by the growing importance of activities that manage energy resources, in particular the production of energy from renewable sources, the production of wind and solar power stations, and equipment and installations for heat and energy saving (Eurostat, 2017).

Outlook beyond 2020 

An expanding EGSS is a key factor in achieving low-carbon growth decoupled from resource use, as envisaged in the 7th EAP. Policies on energy efficiency and renewable energy (EC, 2015b) and waste recycling (EC, 2015c) cover a period beyond 2020, suggesting that there could be long-term growth in the EGSS. Further expansion of the EGSS could be assisted through ambitious renewable energy and green growth policies at the EU and national levels but also via more direct assistance such as investment support schemes that provide investors with a high degree of investment certainty.

About the indicator 

This briefing uses data from the EGSS account, which is a module of the European environmental–economic accounts. Environmental accounts analyse the interaction between the economy and the environment by organising environmental information in a way that is consistent with national accounts. The EGSS is defined as that part of a country’s economy that is engaged in producing goods and services that are used in environmental protection activities and resource management either domestically or abroad. The income created by the EGSS is expressed in terms of gross value added (at 2010 prices), which is the difference between output and intermediate consumption. Employment in the EGSS is expressed in terms of full-time equivalent jobs.

The data are broken down by industry (e.g. services, construction, etc.); environmental protection class (e.g. wastewater management, waste management, protection of biodiversity and landscapes); and resource management class (e.g. water management, energy resource management). Being still at an initial stage of its development at the EU level, the EGSS does not cover a number of resource management economic activities, e.g. the management of forest resources, the management of wild flora and fauna and research and development on resource management, as well as economic activities that focus on the use of natural resources, e.g. the use and extraction of minerals and hunting.

European environmental accounts are established by Regulation (EU) No 691/2011 on European environmental economic accounts. From 2017, reporting of data on the EGSS will be mandatory and standardised. Current data are a combination of Eurostat estimates with some Member State data reported through voluntary surveys. There are some comparability issues at country level in terms of coverage, time series availability and the use of different classifications. For more information please see Eurostat, 2016a, 2016b, 2016c and 2017.