Environmental Goods and Services Sector: employment and value added

Setting the scene 

In the context of globalisation and technological change, the green economy offers potential for growth. 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). 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 Environmental Goods and Services Sector (EGSS).

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 (EC, 2010) 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 mainly 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 2015, while the sector’s contribution to employment grew from 1.3 % in 2003 to 1.7 % in 2015. 

The value added in the EGSS increased by 63 % in the 2003-2015 period and reached EUR 286 billion (at 2010 prices) in 2015. Growth in the value added of environmental protection and of resource management activities has been strong. It has been particularly high in resource management, whose value added grew from EUR 50 billion in 2003 to EUR 126.7 billion in 2015 (at 2010 prices), an increase of 153 %. The growth in the value added of resource management was mainly because of growth in the renewable energy sector as well as in investments in energy efficiency (energy efficiency and energy saving activities and products). The value added of environmental protection activities still represent the major element of the value added of EGSS (EUR 159.4 billion in 2015 at 2010 prices). The relative contribution of these activities in EGSS growth, however, decreased considerably over the 2003-2015 period. The value added of the environmental protection activities increased by 28 % between 2003 and 2015.

Employment in the EGSS increased by 38 % in the 2003-2015 period and reached  4.1 million full time equivalent employees in 2015 (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, 2018a).

Outlook beyond 2020 

An expanding EGSS is a key factor in the transition to a low-carbon economy that is decoupled from resource use, as envisaged in the 7th EAP. Policies on energy efficiency and renewable energy (EC, 2015a; AIRS_PO2.7, and AIRS_PO2.6, 2018), and waste recycling (EC, 2015b; AIRS_PO2.3, 2018) 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 activity (e.g. wastewater management, waste management, protection of biodiversity and landscapes); and resource management activity (e.g. water management, energy resource management). Eurostat's estimates of the EGSS value added and employment at the EU level comprise all environmental protection activities and the key resource management activities, i.e. production of energy from renewable energy, energy efficiency and water management. Further efforts are being made to extend the scope of the EGSS sector towards a more complete and accurate accounting of EGSS activities (Eurostat, 2018b).

Regulation (EU) No 691/2011 sets out the european environmental economic accounts. From 2017, reporting of data on the EGSS is mandatory with regard to market output; the reporting of non-market output, output for own-final use and ancillary output is still voluntary. 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, for example some environmental activities and/or products may not be fully covered and time series may not be available prior to 2014 which is why only EU-28 data are presented in this briefing. For more information please see Eurostat, 2016a, 2016b, 2018a and 2018b.