In Europe, companies subject to the carbon tax for their CO₂ emissions are resorting more frequently to layoffs, especially of low-skilled workers in Belgium, as reported by L’Echo on Wednesday, citing recent studies conducted by Belgian business economists.
Researchers from KU Leuven and HEC Management School of ULiège analysed the period before 2017 compared to subsequent years. In 2017, the emission trading system (ETS) became significantly more expensive for the industrial sectors, including energy, chemicals, steel, and cement. They compared companies subject to the ETS with similar firms not required to pay emission allowances.
In companies subject to the ETS, the likelihood of mass layoffs increased by 5.7%. In the largest company category, up to 980 more people were laid off during collective redundancies than if these companies were not subject to the ETS.
The researchers also conducted a more detailed study of the Belgian situation. Companies in Belgium facing the sudden increase in ETS costs since 2017 have reduced their workforce by 2%. “It is more often male workers and part-time contracts that disappear,” explained Kristof Struyfs, a professor at Open Universiteit near Maastricht and affiliated with KU Leuven. “Production-related jobs occupied by less-skilled workers are disappearing.”
