Energy sector employment by region, 2019

The energy sector is a capital-intensive industry, geared to meet, as efficiently as possible, the world’s expanding energy needs. Given this, a large portion of its workforce is focused on new and expanding projects—building energy efficient power plants, expanding and upgrading grids, and tapping into additional deposits of fossil fuels. Accordingly, developing an estimate of global energy employment needs depends heavily on planned energy investments in the coming years, as well as current and new capacity and production. Our employment estimates are developed using the IEA’s comprehensive data on global investments, energy production and demand. Our assessments are also calibrated to data from national labour statistics, corporate filings, company interviews, international organisations’ databases and academic literature.

Numbers in this report are shown for 2019, the latest year of comprehensive historic data, to establish a pre-pandemic baseline, accompanied by high-level estimates for 2021 and 2022. In this report’s accounting, energy employment encompasses all jobs directly related to the operation of energy facilities and their construction, as well as indirect jobs in manufacturing of direct inputs specific to the energy industry. Indirect jobs associated with production of general goods such as cement are not counted, nor are induced jobs. Jobs are normalised to full-time equivalent (FTE) employment for consistent accounting. Numbers include informal workers in order to better reflect the impacts of energy policy on the labour force. The Annex shows further detail on the methodology.

The regional distribution of energy jobs depends on multiple factors. First, jobs are concentrated where energy facilities are being built more than where they currently exist. Given the labour intensity of building new facilities, fast-growing markets tend to dominate the workforce. Second, today’s global supply chains for some upstream components are concentrated in certain countries. Notably, manufacturing of solar PV is centred in China. The production of fossil fuels spans the globe among resource-rich economies, but know-how on areas such as exploration, development, production and services are concentrated in regions like Houston, Texas in the United States, with companies based there providing expertise for projects worldwide. Third, worker compensation differs widely across countries, by a factor of up to 20. Differences in labour costs beyond earnings, such as benefits and pensions, add a secondary layer of country variations. Where compensation is low, like in India, the construction of the same project may employ many-fold the workers as they do in advanced economies. Finally, the prevalence of part-time, temporary, and informal work creates wide disparities in how many people work in a sector, even when normalising to FTEs, as we do in this report. Short-term projects, such as the installation of rooftop solar PV, often rely on part-time workers. In emerging markets and developing economies (EMDEs), informal work is common. Deployment or decommissioning of a project can create jobs only for a few weeks but wages earned can represent an important share of workers’ annual income, even if they work in farming or other jobs for most of the year.

The energy sector demands more high-skilled workers than other industries, with 45% of the workforce requiring some degree of tertiary education, from university degrees to vocational certifications. Less than 10% of energy employment is in low-skilled labour, and is concentrated in EMDEs, although may be missing many informal workers in those regions.

Variations are larger between geographies than across sectors, with EMDEs employing more low-skilled or informal workers in manual tasks, whereas in advanced economies, many labour-intensive parts of the energy business have been mechanised or automated.

This high degree of skilling fetches higher wages on average. Energy sector wages typically see a premium over economy-wide average wages, though this premium ranges substantially from 10% to 50% across advanced economies alone. These premiums remain true across all regions, but the differences between wages in advanced economies and EMDEs remain pronounced, with the range of wages between geographies being larger than the range of jobs within the energy sector within the same region.

Established industries such as nuclear, oil and gas typically offer the highest wages. Industries with a high share of workers in construction, such as installing solar panels or carrying out energy efficiency retrofits, typically have lower wage premiums. Newer energy sector sectors, such as solar, also have less union representation than established fossil fuel industries, especially in EMDEs. Labour representation has led to higher wages in parts of the energy sector. For example, coal jobs in India receive compensation around three to four times the national average.

In all IEA scenarios, energy employment is set to grow, creating a growing demand for workers with energy-sector specific skill sets. Meeting a growing need for skills is a concern raised in interviews we conducted with companies,1well as in dialogues held in IEA’s Clean Energy Labour Council between governments and labour leaders.

Many of the skills needed exist in adjacent industries. For instance, project managers in residential construction have some of the same skills needed to manage the construction of solar farms. Companies also indicate an intention to transition existing employees from carbon-intensive activities to other parts of their portfolio, instead of exclusively pursuing new hires or dismissing any workers. This is particularly true in the electricity and other clean energy sectors, where all firms interviewed saw either rising employment or were reallocating their workforce internally rather than dismissing any workers. To support this, companies have created internal upskilling and reskilling programmes in partnership with universities.

Many firms interviewed said they faced a very competitive environment for hiring candidates with the requisite skill sets. This was particularly true for positions in fields for science, technology, engineering, and mathematics (STEM), followed by project managers and other technical roles. Companies also expressed concern about the high turnover of workers with the most in-demand competences, which has increased throughout the Covid-19 pandemic.

Strong links between employers and universities or vocational training programmes can fill talent pipelines, as can research grants for PhDs, internships and apprenticeships. New graduate rotation programmes were cited as ways to cultivate, attract and retain key talent. Companies highlighted a growing need to revamp teaching curricula of degrees with the highest demand, namely engineering, followed by economics and information technology. Surveyed companies also welcome opportunities to work with universities to shape new curricula.

The IEA intends to deepen our analysis on growing skilling needs in energy, as well as the transferability of skills from energy sectors in decline and from adjacent industries.

Women are strongly under-represented in the energy sector. Despite making up 39% of global employment, women account for only 16% of traditional energy sectors captured in dedicated labour classifications. As in economy-wide employment, women make up a very small share of senior management in energy, just under 14% on average. However, there is substantial variation among energy sectors, with the percentage shares in nuclear and coal the lowest at 8% and 9%, respectively, whereas electric utilities are among the highest with nearly 20%. This compares with 16% of women in senior management economy-wide. While ratios are better in regions with policy frameworks and strong private sector efforts to improve gender balance, all geographies show the energy sector lags behind the economy-wide average when it comes women’s participation in senior management roles in the sector.

There are no major differences in the share of female employment between fossil fuels and clean energy globally. However, clean energy start-ups show signs of change, with a greater share of women founders and inventors in clean energy, even if still far short of parity. This marks an opportunity for these growing segments to help increase female representation. However, further steps must be taken in all energy sectors if women’s roles in energy companies is to improve. In the IEA’s NZE Scenario, as many as 14 million new jobs in clean energy are created by 2030. Introducing new public sector policy frameworks supporting diverse hiring practices, as well as private sector initiatives, could make the energy employment growth this decade an opportunity to achieve a better gender balance, with special focus needed particularly in management. Numerous studies show that improved diversity enhances firm performance, long-term competitiveness and greater innovation, all of which contribute to the energy sector advances needed to meet global change goals.

The IEA’s Gender Diversity Initiative has been developing further indicators on the topic of gender and energy, including energy employment, recently published in a dedicated data explorer.