Are we ready? Introducing CPP's new research programme on navigating industrial transitions in an age of uncertainty

1 May 2024

By Ross Mudie

6 minute read

Throughout history, industrial transitions have tended to share three common characteristics:

  • They incur major disruption to both economy and society – fundamentally altering how we work, where we work, and the outputs that our labour contributes towards
  • They incur ‘winners’ and ‘losers’ – disruptive industries create new jobs as they grow, replacing industries and jobs that are unable to keep pace with change
  • They are the product of the practical application of new technologies to enhance productivity, efficiency, and industrial capacity

This is just as true of the first industrial revolution of the nineteenth century as it is of the later technological revolution of the early twentieth century, and as it is of the dawn of the information age in the late twentieth century. Each of these transitions pushed our industrial capabilities beyond our previous imagination, catalysing widespread economic and societal change. This ‘creative destruction’ of industries and jobs has, in recent centuries, transformed completely the shape, nature, and purpose of economic production, as well as how live, work, and interact with the world around us.

Today, our economy is in the midst of two further, major industrial transitions.

  • The green transition - which seeks to shift economic production away from its overdependence on fossil fuels, and towards greater consumption of clean, renewable energy.
  • The digital transition – that we define as the continual integration of digital technologies across organisational processes, and occupational tasks.

Both of these transitions offer potential to move us beyond our current macroeconomic context of stagnant productivity growth and falling living standards. Hence why pursuing the development of green and digital industries has become an active ambition of both main political parties. They are two of the five key growth industries outlined by the Chancellor, Jeremy Hunt, in a speech given in January 2023 on his long-term vision for economic growth, and two of the seven priority sectors for the opposition Labour Party’s industrial strategy. The pursuit of the green transition in particular is a major priority for Labour’s industrial plans, with the party committed to a highly ambitious pledge to deliver a zero-carbon electricity system by 2030.

But while the wheels of both transitions have been set in motion for some time, the road ahead is likely to be a rocky one. PricewaterhouseCoopers (PwC) estimate the size of the ‘green skills gap’ in the energy sector to be around 200,000 workers, and failing to fill this gap will constrain our capacity to generate renewable energy. Upskilling existing workers to carry out domestic retrofit remains a significant hurdle to raising the quality of our housing stock. We cannot say, with much certainty, whether the workforce implications of artificial intelligence will predominantly be about labour-augmentation, or job displacement. And we are yet to truly reckon with how we balance the desire for greater remote working from white collar workers, while maintaining the agglomeration effects of industrial clustering.

These challenges are profound. But they are, perhaps, still less profound than the question of who might stand to benefit from these industrial transitions. Our post-1970s economic history has demonstrated how challenging it can be to manage economic change, as we have routinely struggled to support areas experiencing decline to capitalise on the emergence of new industries. In our more recent history, since the global financial crisis, we have struggled to develop the incentive structures to support the reallocation of labour across sectors and into jobs that we see as having are well paid, secure, and serve a broader economic and social purpose. Applying the principle of creative disruption to these forthcoming transitions is integral to maximising their economic potential. But it is inevitable, and it will become a conscious decision for policymakers, to determine how we best enable the transition of workers from ‘old’, carbon-intensive and lower-productivity industries, into new, high-productivity, emerging industries.

These forthcoming transitions, like those that have preceded it, offer an opportunity to support the development of our regional economies. How much we are able to harness them as a means of developing our regional economies is a matter of whether policy can support a wide distribution of work and opportunity across places. And how far we are able to maximise the economic potential of both transitions in supporting regional development rests on our ability to develop the productive capacity of our workforce to contribute, so that they can enjoy the benefits.

Over the next few months, the Centre for Progressive Policy (CPP) will publish three papers as part of this programme of work. The first two will put the green and digital transitions, separately, under the spotlight, exploring their potential implications on, and for, the workforces of different local economies. Our final paper will consider how we navigate multiple industrial transitions, concluding with our full, final set of policy recommendations, from this programme of work.

We are excited to see where this work takes us, and we look forward to speaking to many of you along the way. If you’re interested in getting involved with this programme of work and would like to discuss any of the ideas outlined here in greater depth, then do get in touch: rmudie@progressive-policy.net