What is equitable labour and how do you pay attention to it as an entrepreneur?
As an entrepreneur, it is crucial to ensure justice in labour practices within the circular economy. According to the International Labour Organization (ILO 2023), labour is just when it provides a fair income, guarantees safe and secure employment, ensures equal opportunity and treatment, provides social protection for workers and their families, promotes personal development and social inclusion, and workers are free to express themselves and organize. Employers and governments must ensure these aspects, especially during the transition to a circular economy to protect workers’ interests.
Decentralized service economy
As we transition to a circular economy, more and more companies are emerging that operate through a decentralized service base rather than traditional centralized labor. This decentralization reduces dependence on external resources and increases resilience in regions, facilitating the circular transition. Yet the use of decentralized chains and business models also brings pitfalls. (Circle Economy 2020)
An example of a model that illustrates the pros and cons of decentralized models is Uber, which competes with the traditional taxi industry. Uber aligns with the idea of the circular economy with drivers using personal vehicles to provide services, ensuring that these vehicles are used optimally and not left unused outside of working hours. However, there are social costs associated with Uber. The technology-driven model may disrupt traditional industries, potentially affecting several workers. In addition, services like Uber are criticized for unfair competition with traditional taxi drivers, safety issues, potential privacy violations and possible discrimination in feedback systems, where passengers can give negative ratings to minority drivers. A decentralized system like Uber’s example ensures that workers are less protected. For example, workers cannot organize into unions and the organization above can adjust their financial arrangements without difficulty without workers being able to challenge them (Rogers 2017: The Social Costs of Uber).
Understanding and addressing the social costs of decentralized forms of labour is essential for entrepreneurs in the circular economy, with a focus on pursuing inclusive solutions to labor standards, discrimination and industry transformation to promote a fair and resilient economy (ILO 2023: Decent Work in the Circular Economy).
Shifts in sectors
The transition to a circular economy is changing the labour market structure, which not only shows the impact on labour but also highlights the importance of equity (Sitra 2021). Analysis, conducted by Borms et al, of growing or shrinking jobs in different sectors provides insight into transition impacts and identifies growth opportunities with fair access for all.
Certain sectors, such as “administrative and support services,” “wholesale and retail trade in motor vehicle and motorcycle repair,” and “manufacturing,” show a growing focus on repair, reuse, and recycling. This may be due to policies that encourage circular practices, changing consumer preferences for sustainable products and services, or innovations in circular business models.It is critical that new opportunities are distributed equitably so that all communities and individuals have equal access to the benefits of the circular economy. At the same time, job declines in certain sectors, such as “administrative and support services” and “manufacturing,” may be affected by external factors such as economic fluctuations, changes in consumer behaviour, or unforeseen events such as the COVID-19 pandemic (Borms et al 2024). If you are an entrepreneur working within the transition to the circular economy, consider how the most vulnerable workers from the economy being replaced can be taken with you and retrained. Thus, as an entrepreneur, you can help protect vulnerable groups during times of change.
Entrepreneurs offering circular labour must ensure that workers from linear industries can develop the necessary knowledge and retrain to sectors that are in greater demand due to the circular transition. This should include addressing gender inequality as many new jobs are not a good match for women’s skills and abilities (ILO 2023). Women are in the minority in technology sectors and sectors such as construction and repair, which are experiencing an increased focus due to the circular economy (AfDB 2021). Closely monitoring these shifts is important to understanding the broader impact of circular economy initiatives on the economy and employment, particularly the equity effects. Based on this, policymakers and businesses can take targeted action to further promote the circular economy and support sustainable growth and jobs, while striving for a fair and inclusive economy.
(PBL 2022: Addressing international impacts of the Dutch circular economy transition)
The drift curve can be applied to the issue of shifting between labour sectors due to the transition to a circular economy by identifying the changes in demand for certain skills and jobs in different sectors. While some sectors grow as a result of the transition to a circular economy, others may shrink. These shifts reflect the movement of workers from traditional linear sectors to emerging circular sectors.
Informal sector
The circular transition impacts both formal and informal sectors. The informal economy, which provides an estimated 60% of employment worldwide, plays a crucial role in the labour market. Within approaches to the circular transition, this group of people is often overlooked. Informal labour within the Netherlands includes occupations such as maintenance, repair, domestic work and personal services (NOS). These are important in the transition, for instance in recycling processes such as deposit bottles collected and returned by people and within the repair sector. These are two professions that play an important role in the transition and it is important to include them in considerations around the circular economy. (Borms et al 2024).
In the Global South, informal labour also plays an important role within the transition. Informal entrepreneurs, a majority of whom are women, are often involved in activities such as collecting and sorting recyclable materials, repairing used goods and producing recycled products (Sitra 2021). Thus, many circular interventions take place within this sector. These activities not only help reduce waste and conserve natural resources, but also provide a source of income for people in vulnerable communities. An increase in recycling needs due to the circular transition will therefore also coincide with an increase in this sector. (ILO 2023)
In contrast, informal workers often experience poor working conditions, health problems and exclusion. The lack of recognition of this sector may hinder opportunities for inclusive growth and sustainable development. Policymakers and entrepreneurs should recognise and support the informal sector with favourable regulations, financing and skills development. In this way, the circular transition can contribute to inclusive and sustainable economic growth (ILO 2023).
