The “right to repair” – possible implications for the labour market
Ines Thobe, Frauke Eckermann, Tobias Maier
In March 2023, the European Commission presented a proposal for a directive on a “right to repair”. The aim is for consumers to be able to use products for longer, thus leading to greater resource efficiency in the interests of a circular economy. This article uses a scenario analysis to investigate what implications different repair behaviour and longer duration of use will have for the labour market, the areas in which job shifts will occur between sectors and occupations, and what this will mean in terms of securing a supply of qualified skilled workers.
Efficient use of resources is becoming increasingly important
The benefits of handling raw materials and products in a responsible manner are currently becoming ever clearer, and more efficient use of resources is an increasingly urgent consideration. Resource efficiency is an important building block in consuming less energy and therefore also in emitting fewer greenhouse gases. The time framework for transition to a net-zero economy is stipulated in the Climate Protection Act. The schedule is tight, meaning that each and every contribution should be used as rapidly as possible.
In light of this, the present government has set out a “right to repair” in its Coalition Agreement (cf. SPD, BÜNDNIS 90/DIE GRÜNEN, FDP 2021, p. 112). Ideas to promote more sustainable use of resources are also being developed at other policy making levels. One example is the EU’s proposed directive for a “right to repair” of March 2023.1 The current focus is on electrical appliances such as washing machines and dish washers, although mobile telephones and tablets are also included. The intention is for relevant legislative acts covering further product categories to follow. An EU strategy for sustainable textiles was adopted by the European Parliament in June 2023.2
This article investigates what implications different repair behaviour and longer product lives will have for the labour market. It also examines the areas in which job shifts will occur between sectors and occupations, and what this will mean in terms of securing a supply of qualified skilled workers.
We deploy the scenario analysis method in order to respond to these questions. The BIBB-IAB qualifications and occupational projections (QuBe-Projekt.de), undertaken in conjunction with the Institute of Economic Structures Research (GWS), are used for this purpose. The 7th wave QuBe basic projection (cf. Maier et al. 2022) serves as a reference scenario, which we contrast with an alternative “right to repair” scenario. This alternative scenario originated within the scope of the “Work and training in the social-ecological transformation” project, which is being carried out by the QuBe Project Team together with the Institute for Innovation and Technology (iit) and on behalf of the German Environment Agency (UBA) and the Federal Ministry for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection (BMUV) (cf. Plassenberg et al. 2023).
What could be changed by a “right to repair”?
A “right to repair” has not yet entered into force. Nevertheless, to still be able to evaluate the possible impacts on the labour market of the introduction of such a right, it is necessary to have a notion of how a higher repair rate will affect types of production and behaviour, method of work and foreign trade. These four variables are key to the development of the economy and the labour market. Expert and specialist discussions were conducted with around 30 persons in mid-2022 in order to assess the changes for a scenario analysis. With regard to a “right to repair”, the results of the discussions may be summarised as follows.
The behaviour of private households exerts a decisive influence on duration of use and on the repair of products. The repair of electrical appliances could be significantly higher since the quality of products manufactured in the past 30 years generally permits repair. This statement only applies in a limited way to refrigerators. An inconsistent picture emerges in respect of smartphones. Whereas many inexpensive devices are replaced after a relatively short duration of use (two years) and are therefore unlikely to be repaired, significantly longer operating lives also occur, especially in the case of smartphones which hold their value. In the latter instance, repairs are thus more worthwhile and more frequent. By way of contrast, the respondents were of the view that the repair of garments represents a lost cultural asset. Durations of use have decreased significantly. Specific mention should be made of the importance of secondhand platforms, which help counter the reduction in product lives.
The production area mainly affected by the change in the type of production, i.e. the specific form in each area of combination of goods, performances, work deployment and capital goods for the creation of products and services, is “Repair works to data processing equipment and consumer goods”. Demand for repairs by private households is falling in this area. One key to repair is the availability and the price of replacement parts and standards for product components. Legal uncertainties, e.g. in respect of warranties, should be reduced.
Method of work determines the occupations and work deployment in the production area. The wide dissemination of mobile telephones led to a wave of business start-ups in the field of mobile telephone repair. This is an example of how self-employment in the repair sector has created new work opportunities for many people.
Foreign trade is affected by the high import ratio of consumer goods (from audiovisual devices to clothing to washing machines) when goods are used for increasingly long periods by private households.
The conclusion of the expert discussions is that increased repair and longer use of consumer goods by private households are only possible if these households change their behaviour accordingly and show the objects a greater degree of esteem. A right to repair may provide incentives in this regard.
In order now to investigate the possible implications of a right to repair, we carry out a “right to repair” scenario analysis in the shape of an if-then analysis. The alternative scenario outlined here assumes changed repair behaviour and longer product lives. It also acts in the interests of a circular economy by implying the use of more recycled materials and further imputes higher product quality which is reflected in higher prices (cf. Information Box). In overall terms, therefore, this scenario observes a simple but alternative economic development which is compared with the “conventional” economic development (reference scenario: QuBe basic projection) (cf. Maier et al. 2022).
Assumptions of the alternative scenario “right to repair”
- We assume that behavioural adjustments will require a longer period of time. For this reason, we make a proportional increase of ten percent in expenditure on repairs by private households until the year 2050. The budget proportions for new acquisitions are reduced accordingly. The result of this is that the “Repair works to data processing equipment and consumer goods” sector receives more orders, whilst sales are withdrawn from the sectors which manufacture new products.
- The scenario further assumes that duration of use increases by about 20 percent and that consumption of new products falls by the same factor. This applies to audiovisual devices, clothing and household appliances. The money saved can be spent elsewhere by the households.
- Finally, the scenario assumes that things will be held in greater esteem. For audiovisual devices, this means that they will be recycled and that around 30 percent more recycled raw materials will be used in domestic production by 2050. These will replace imported raw materials.
- One more assumption is that private households will use the money saved as a result of the new behaviour in a way which corresponds to their previous consumer profile (savings rate remains at the original level)
(cf. Plassenberg et al. 2023).
Possible labour market effects
The results of the scenario analysis show that, in macroeconomic terms, altered repair behaviour and longer use of products lead to a change in occupational structure. Gains in repair services, for example, may compensate for job losses in the sectors such as retail (cf. Figure 1).
The effect is reinforced between 2030 and 2040, i.e. the overall change increases. Although the turnover of disappearing and newly emerging jobs rises from 2040 onwards, the change in the labour demand remains virtually the same.
Trend reversal in the repair sector?
The higher turnover of jobs at the macroeconomic level is being driven by the changed labour demand in the sectors and occupations affected. As Figure 2 shows, implementation of the assumptions would lead to a trend reversal in the “Repair works to data processing equipment and consumer goods” sector. Since the year 2005, when approximately 73,000 persons were working in the sector, labour demand fell by almost a quarter to 56,000 in 2021. Of these, 66 percent were exercising a skilled task. 19 percent were performing a specialist task which, for example, requires upgrading training or a bachelor’s degree. Nine percent were employed in highly complex tasks and only six percent in unskilled or semi-skilled tasks. In the QuBe basic projection, which serves as a reference scenario (cf. Maier et al. 2022), the expectation is that a further fall in the labour demand will take place to 52,000 in 2040 and to 51,000 in 2050. In the alternative scenario “right to repair”, on the other hand, labour demand rises to 63,000 (2040) and to 64,000 (2050).
Which occupations are affected?
Figure 3 shows the top ten of a total of 37 main occupational groups for which particularly high employment effects are expected in the year 2040 through the alternative scenario “right to repair”. A distinction is drawn between the repair and the consumption effect. The repair effect is the effect which originates through the assumed longer product life and higher expenditure on repairs by the households. The consumption effect is the effect which occurs when households spend the money saved by longer product life on new products and services.
Longer product lives must therefore be successfully realised before the consumption effect can be unleashed. Firstly, this means that replacement parts must be available. Secondly, the skills to carry out relevant repairs must be present on the labour market.
Positive employment effects as a result of increased repair are revealed in the main occupational groups found in the “Repair works to data processing equipment and consumer goods” sector. These include “occupations in textile and leather making and processing”, “mechatronics, energy and electrical occupations”, “technical occupations in engineering and the automotive industry” and “computer science and other ICT occupations” as well as “occupations in business management and organisation” and “occupations in metal making and metal working and in metal construction”. These main occupational groups benefit from the direct impetus triggered by the assumption.
On the other hand, occupations in business management in the retail sector are lost. This means that the direct positive impact on this main occupational group emerging from the repair sector is weakened by indirect negative effects in other sectors. In overall terms, the repair effect exerts a relatively neutral impact on labour market development. Longer product lives and more repair behaviour mean that a total of 2,000 more jobs would exist in the year 2040 than if these behavioural changes had not occurred.
New areas of financial leeway arise if households succeed in having repairs performed cost effectively. If these opportunities are used, then further jobs can be created via expanded induced effects. Prices rise in the wake of higher esteem and better quality. This is already leading to a slight change in the alignment of the consumption pool of private households. Such a factor is particularly conspicuous in the case of sales occupations in the retail trade (cf. Figure 3). Because of the fact that less is bought (longer product lives), there is also less of a need for the services of the wholesale and retail sector. For this reason, the impact on sales occupations in the retail trade is negative. The negative employment effect on sales occupations in the retail trade is compensated if the money saved is reinvested in new products (shown in Fig 3. as consumption effect). The overall effect is therefore even positive. Occupations in business management and organisation can also make discernible gains by dint of the consumption effect.
Conclusions and outlook
Although a “right to repair” has not yet entered into force at national or European level, its introduction is foreseeable. If products are repaired more frequently and if – as assumed – product lives are extended, then this will have significant implications for the labour market. Around 69,000 jobs, which would not have originated if previous types of behaviour remained in place, would be created by the year 2040. However, approximately 10,000 jobs, mainly in the retail sector, would also disappear. Availability of relevant replacement parts and a sufficient supply of skilled workers are both key to actual implementation of a higher repair rate. Two thirds of tasks exercised in the repair sector are skilled tasks for which qualification takes place via training in the dual system. It would in theory be possible to cover additional skills requirements in occupations specifically affected by repair, such as ICT, textiles, engineering and the automotive industry, and mechatronics and energy and electrical occupations, since a sufficient supply of trained skilled workers is available. Nevertheless, these are currently tied into other sectors and will reduce in numbers over the long term as the baby boomer generation departs from the labour market.
If a right to repair is introduced, newly created occupations will need to be communicated so that people can be informed of the employment prospects. Employment in the repair sector has been in decline for around 18 years. The sector integrates occupations which are often to be found in the manufacturing industry, although the presumption would be that processes are less automated and need to be adjusted more individually to (local) repair needs. For this reason, greater flexibility is expected on the part of employees. This may require continuing training measures. The sector should also invest more in its own training in order to secure a supply of skilled workers.
Although there are more and more repair cafés, no genuine trend reversal towards more repair and longer durations of use is occurring. The requirements in this regard are a shift in values on the part of consumers and specific stipulations for long-life and repairable products and reasonably priced replacement parts.
The scenario analysis has weaknesses, most of which relate to the assumptions. There is an absence of evidence in respect of the extent to which money saved by dint of longer product lives is actually consumed and in respect of which repairs are performed by skilled workers rather than by the households themselves. Nevertheless, the scenario aspect illustrates that if products are used for longer and if sufficient skilled workers are available to carry out the relevant repairs, this will create additional areas of financial leeway for private households and domestic value creation will increase.
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(All links: status 22/11/2023)
Institute of Economic Structural Research (GWS GmbH), Osnabrück
DR. FRAUKE ECKERMANN
Academic researcher at the Federal Environmental Office, Dessau-Roßlau
DR. TOBIAS MAIER
Divisional Head at BIBB
Translation from the German original (published in BWP 4/2023): Martin Kelsey, GlobalSprachTeam, Berlin