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Employment Impacts of EESoP

The Employment Impacts of the Energy Efficiency Standards of Performance

(funded by the Energy Saving Trust and UNISON.)

ACE was involved in a study investigating the employment impacts of the Energy Efficiency Standards of Performance (EESoP) for Public Electricity Suppliers. The study estimated the direct employment involved in installing a range of measures implemented under SoP and the work needed to administer the programme itself. The short-term indirect employment impacts, resulting from reduced fuels bills, reduced demand for electricity and the increased spending of any newly employed people, were also investigated.

Summary of findings

The Standards of Performance for Energy Efficiency have involved direct annual employment of 210 people in management, marketing, development, monitoring and administration; and 184 people in the installation of insulation measures.

In addition to these 394 person years per year of direct employment, the local multiplier effects resulting from the programme led to the generation of a further 67 person years of work in the local economies affected by the schemes. This figure for additional employment in local economies is a conservative one, based on the latest government estimates of local multipliers.

Some Standards of Performance schemes generate more employment than others; for example, providing reduced cost and free CFLs requires far less labour effort than the provision of loft or cavity wall insulation. Thus, if the potential of the programme to assist in employment generation activities in the building industry is to be considered, these ‘employment generating’ schemes only should be included in the assessment of the costs.

Overall investment levels, per person year of direct employment created, were £25,700 in labour costs, plus £19,300 invested in energy efficiency materials.
For the construction industry jobs, labour costs were £27,500 per person year, of which £8,300 came from third parties, with associated materials costs of £41,300.
The project management and administration employment involved a range of skill levels and therefore labour costs. Averaged over all schemes, the labour costs in these tasks are estimated as £24,100 per person year. When indirect employment is also included in the calculations, the average labour-related programme cost falls to £22, 000 per person year. Including material costs, this figure becomes £39,000. These results compare well with current estimates of labour costs (for example, the Building Research Establishment suggest a figure of £30,000 per person year), which suggests that the estimates of the total work effort involved in the scheme are reasonable.

The CHPA also use an estimate of £30,000 required investment per person year of labour resulting from new CHP schemes. This assumption appears reasonable in comparison with the results of the present study; the development of CHP is likely to require, on average, a higher skill level in the newly employed than the implementation of an insulation programme, and therefore the related employment costs are likely to be somewhat higher. Thus, the demonstrated average cost per job created in the Standards of Performance programme seems to confirm the suggestion that this type of scheme is a good method of generating employment in sectors requiring a relatively low level of skills, and therefore suitable for many of the long-term unemployed.

If future schemes can be designed to incorporate employment opportunities for such people, the employment generated by the schemes is far more likely to have a permanent effect on employment levels; supply-side adjustments in the labour market which might act to offset initial employment gains are far less likely if the new jobs are taken by the long-term unemployed.

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