How decarbonisation is affecting coal power workers

Over the past decade, approximately one-third of Australia’s coal-fired power stations closed, with more expected in coming years.

Drawing on individual wage micro-data of workers in the coal-fired power sector, the non-partisan economic research institute e61 investigated how these workers, and by extension their families, are being impacted by power station closures. It found that former coal-fired power station workers experience a greater drop in wages than other industries following redundancy, earning 69% less compared to 43% less for those in other sectors.

E61 analyst and paper co-author Elyse Dwyer said that while it was common to see wages decrease when a worker is made redundant, the dip seen among ex-coal energy workers is substantially larger than that observed in other industries.

“After four years, coal-fired power plant workers earned around 50% less than their pre-redundancy earnings, compared to 29% for all other workers, with lower-skilled workers seeing the greatest relative decrease.

“There’s a variety of factors that may cause this, such as many coal-industry workers being located in regional areas without abundant alternatives for high-wage jobs, but other crucial factors are the age of the workers being made redundant and the potential non-transferability of skills,” Dwyer said.

According to Dan Andrews, e61’s Head of Research and Policy Engagement, managing this earnings impact will be an important factor in the success of Australia’s efforts to move away from fossil fuels. “Public support for progress on our climate and net zero goals will require careful management to mitigate some of the impacts faced by these communities,” Andrews said.

CEO of the e61 Institute Michael Brennan added that the paper’s findings are an important first step in designing policy to support workers and communities affected by the energy transition.

“Understanding the distinct experience of these workers — and getting at the underlying drivers of their larger earnings decline — will help inform policymakers to design and target the right interventions. There could be a need for specifically designed support.

“This work highlights the value of large-scale microdata in informing our understanding and potential responses to this once-in-a-generation economic transition,” Brennan said.

E61’s paper, ‘At the Coalface: What Happens to Workers Displaced by Decarbonisation’, can be downloaded here.

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