Jobs Potentially Destroyed Due to Access to Modern Energy Services

Overview

There are countless studies talking about electrification and its benefits. According to this latest report from IRENA, the renewable energy sector has created more than 500,000 new jobs globally in 2017 and more than 10 million people are employed by the sector. This is the net effect of renewables on the job market. But what happens in the short run? What are the social and economic impacts on the society once it has gained access to the renewable energy sources? How does the dynamics of job market change once people have access to the modern services and tools? Are there any negative impacts on jobs related to modern energy access? This article looks into the jobs that are destroyed when a village is electrified or has access to modern/renewable services

Impacts of electrification on employment

Access to modern energy sources include: access to clean cooking energy, electricity for households as well as social institutions such as hospitals, schools etc. and energy for productive use. It impacts labor productivity through different channels such as: electrical appliances makes household activities easy and faster to perform, access to electricity at night means longer working hours and appliances can be used for productive activities as well as more leisure activities.

The following summary table lists different studies that look into the impact of electrification on employment. Most studies do not find a negative impact of electrification on employment. Out of the 11 studies, only 2 identify decreasing impacts (however, small and only a shift towards non-agricultural activities).

Table: Causal impact of access to electricity on employment and labour market.

Study	Source of electricity	Results	Method	Sample size	Period	Risk of bias
Barron and Torero (2015), El Salvador	On-grid	Increase in non-farm employment and in home business, particularly for women	RCT	500 (HHs)	2007-2012 (4)	low
Squires (2015), Honduras	On-grid	Increase in children employment rate; increase in female employment	FE-IV	19,000 (HH)		Medium
Dinkelman (2011), South Africa	On-grid	Increase in employement for women and no significant effect for men	D-D-IV	1816 (community)	1996-2001 (2)	Medium
Burlig and Preonas (2016), India	On-grid	Small decrease in share of men working in agriculture and small increase in non-agriculture activities  No effect on female employemnt	RDD	30,000 (villages)	2001-2011 (2)	Low
Libscomb et al (2013); Brazil	On-grid	Strong effect on activity rate and employment in the formal sector, both in rural and urban areas.	FE-IV	2184 (country)	1960-2000 (5)	Low-medium
Grogan and Sadanand (2013); Nicaragua	On-grid	Significant increase in the propensity to work outside teh home for women. No effect for men	FE-IV	6882 (HH)	1971-2005 (3)	Medium
Bernard adn Torero (2015), Ethiopia	On-grid	No short-run effect of rural electrification on time spent on income generating activities	RCT	563 (HH)	(2)	Low-Medium
Dinkleman (2011), South Africa	On-grid	Increase in labour supply for both women and men (only OLS)	pooled OLS & FE	1816 (community)	1996-2001 (2)	Medium
van De Walle et al (2015); India	On-grid	Significant substitution of days of work from causal wage works to regular wage and agriculture self-employment for men. Small significant reduction of female causal wage work.  Increase in male working hours, no effect on women. Decrease in the likelihood of having more than one job among males	Panel data &IV	3000 (HH)	1981-1999 (2)	Medium
Dasso and Fernandez (2015); Peru	On-grid	Women: higher employment, lower probability of working in agriculture sector	FE	3989 (individuals)	2006-2012 (6)	Medium
Alcazar et al. (2007), Peru	On-grid/better supply	Significant reduction in hours worked in agriculture and increase in non-farm activities	PSM	6690 (HH)	2005	Medium

However, other studies have suggested that electrification could have negative impact at least in the transition phase on employment and those are explained below:

Productive use of energy substitutes manual labour

Access to modern energy services facilitates new productive activities (income generating activities) which were initially not feasible or unprofitable without electricity. The income generation activities could be poultry farming, carpentry, hotels, restaurants etc. People also have access to electronic appliances such as TV, fan etc. which changes their social life . This also changes the way people do their work. For example, access to electric mills means you will no longer need labors to manually mill the products. Also use of electric appliances in tailoring, carpentary and other industry also reduces the need for labor. This changes the labor market and the types of employment in the long term. However, in the short term, there is not much change in the labor market as it takes time to implement productive activities. 

Shift from agriculture towards more payed work

Electrification provides diversification of income (mostly from agriculture) in developing countries. This study about the impact of rural electrification in Peru found out that in the areas included in a electrification program, households with electricity worked more hours in non-farm activities than families without electricity. This can either suggest increased productivity in the agriculture or loss of labor hours in the agricultural sector. A study from IEA also suggests that access to electricity in agriculture may initially decreases job opportunities especially for women. Access to electricity increases the efficiency and productivity, and thus, less labor hours are required as compared to the previous situation.

Loss of jobs in the kerosene/charcoal market

According to the World Bank, 15 million people are employed across Sub-Saharan Africa in both formal and informal wood fuel-sector. Access to clean cooking solutions and renewables such as solar lights reduces the dependence on firewood and fossil fuels such as kerosene and charcoal for cooking and lighting purposes. This could result in less demand for these products and also in less jobs along the kerosene/charcoal value chain. Since it is an informal sector, it is not exactly clear how and to what extent the kerosene/charcoal job market changes. For example, according to this study, interviews were conducted among kerosene vendors in informal markets in Malawi and Kenya to assess how the sales have decreased due to solar LED-lights. The study found that the decreasing demand for kerosene was not disruptive as most of the vendors sold kerosene along with other products and thus have adopted to the changing pattern. This is however, one point along the value chain and for an overall impact, the whole value chain has to be analyzed. The other people in the value chain such as people collecting the firewood, bringing it to the market etc. might be differently impacted.

Conclusion

Most studies concerning job impacts focus on the gain in employment. Only very few studies focus on the loss or change in employment patterns. For a holistic view, it is important to conduct more studies that focuses on the transition in jobs, during both short and long term to identify the net effect on jobs due to access to modern energy. Some of the question that needs to explored are:

• Who are the actors along the value chain (both in formal and informal markets)?
• How has the access to modern services impacted these actors in the short and the long term?
• What is the net impact on employment in the short term as well as long term?

Finally, the following table summarizes the impacts of employment into categories. Please feel free to edit and add your points to this table.

Jobs extinct	Transition phase	New jobs created
Manual labor is substituted in electric mills carpentry tailoring ice making bottling water	Workers are laid off as the electrical appliances increases the labor productivity and less labor is required.	New appliances offer income generating activities new business such as carpentry, poultry etc TV = movie theater in a restaurant Hotel for tourists due to hot showers (solar heating) Lighting at nights so that business run longer
Traditional resource jobs are going extinct in charcoal Kerosene markets Firewood collection	Less demand for these products means there is less work for the vendors and other people along the value chain.	Sales force of new appliances solar products seller cookstoves producers
Agricultural tasks are more efficient solar water irrigation oil pressing drying and cooling		Non-farm work increases (potentially higher income)[1]  animal husbandry in the free time shops or other entrepreneurship
		New possibilities create more demand for more energy charging of mobile phones internet cafes Shops can sell cold drinks (solar cooling)

Also, there are social factors to consider. In many closely-knit communities, the people might have access to modern services, but still allow your neighbor to work on your farm to maintain social relationships. There has not been much literature exploring the social facets and hence it is important to also look at the social aspect while looking at the net effect on employment.

Reference

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