Thesis involving critical literature review
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Transitioning to a circular economy: the impact on labour
markets with a focus on the relationship between circular
employment and job polarisation.
Business and Management Dissertation, Part 2
Thesis involving critical literature review
BUS020X604S
Word count (excluding bibliography): 7,295
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Abstract
Governments, businesses and economies worldwide are currently under pressure to adopt more
environmentally sustainable practices. Simultaneously, structural changes in labour markets lead to
unemployment, stagnant wages and skills mismatch. Research has shown that the implementation of
circular business models (CBMs) has an influence on labour markets, and companies are more likely to
pursuit such activities if motivated by economic returns. This study aims to determine how a transition to a
circular economy can shape labour markets, with a concern on the link between circular employment and
job polarisation. Building on existing literature and theories, it asks: can circular economies help to offset
job polarisation? In this context, job polarisation is defined as the hollowing-out of middle-skilled
occupations compared to low- and high-skilled jobs. Based on existing sources and theories on circular
economies, green employment, and job polarisation, a critical literature review was conducted. The
representative literature was organised in themes, synthesised and compared against the main research
inquiry. Analysis of the findings demonstrated that circular activities were associated with a reduction in
job polarisation and an increase in business prosperity. In that framework, it is advised that organisations
and governments consider CBMs when designing and implementing strategic plans. However, further
research must be conducted to achieve more accurate results and provide more precise
recommendations.
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Table of contents
Abstract 2
Table of contents 3
1. Introduction 4
2. Literature review 4
2.1 Method/Introduction 4
2.2 Theoretical literature review 6
2.2.1 The concept of circular economy 6
2.2.2 Relationship between circular economies
and business and economic growth 7
2.2.3 The implications of circular jobs on employment 7
2.2.4 Job polarisation 9
2.3 Synthesis of the reviewed literature 10
2.4 Research positioning 12
2.4.1 Arguments 12
2.4.2 Justification 12
2.5 Discussion of arguments 13
3. Conclusions 15
4. Bibliography 16
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1. Introduction
Due to a growth in environmental awareness, green policies, and the need for social responsibility, the
concept of circular economy has developed over the past decades (Liakos et al., 2019). Together, the recent
awareness on the topic and the need to develop more sustainable practices (Meadows, Randers and
Meadows, 2004; Seiffert and Loch, 2005), have influenced countries and organisations all over the world.
Now, more than ever, institutions such as the European Union (EU), the World Economic Forum (WEF), and
major global consultancy business McKinsey & Company are among those researching and promoting the
circular economy (Weetman, 2017). At the same time, countries are experiencing many labour market
challenges, primarily related to high unemployment, increasing inequalities and mismatches (Banerjee and
Duflo, 2011). A major transformation in the anatomy of labour markets relates to the hollowing out of
middle-class jobs, and the simultaneous growth in low-skilled and high-skilled occupations (OECD, 2017).
Although there is a plethora of literature analysing either the impact of circular jobs on labour markets or
the extent of job polarisation, to the best of my knowledge, a literature review focused on the relationship
between the two topics is currently missing. Thus, as a result of the on-going interest in both circular
activities and employment in middling occupations (EMF, 2013; Abel and Deitz, 2012), the purpose of this
paper is to evaluate the implications of a transition towards a circular economy on labour markets, with a
focus on job polarisation. It is hoped that this research will provide a modern view on the matter and
contribute to the existing body of literature by highlighting the relationship between the concepts. The
main body of the study has been divided into five main parts: (1) a method/introduction – to explain how
the literature review was planned and executed; (2) a theoretical literature review – to examine the body
of knowledge that has accumulated in regard to this paper’s inquiry; (3) a synthesis of the reviewed
literature – to compare and synthesise the presented theories; (4) a research positioning – to explain how
the research argument is informed by and relates to the existing literature; and (5) a discussion of
arguments – to explain what emerged from the literature. The review will be first focused on the concept of
circular economy, then the relationship between circular economies and business and economic growth,
followed by the implications of circular jobs on employment and, finally, job polarisation. Despite the
existence of different approaches to circularity, the effects on economic growth and employment are very
similar and circular economies help to offset the phenomenon of job polarisation.
2. Literature review
2.1 Method/Introduction
As Colquitt (2013, cited in Saunders et al., 2016: 1211) argues ‘You need to connect your work with what
has already been said and acknowledge your “intellectual indebtedness”’, integrative literature reviews can
be powerful tools to generate new knowledge on a subject. Indeed, they identify synergies and
discrepancies within existing literature (Booth et al., 2012, cited in Callahan, 2014: 272) and can therefore
present a fresh perspective on a topic.
The method utilised to conduct this literature review is based on the six steps outlined in a research paper
by Templier and Paré (2015). These are: (1) formulating the problem, (2) searching the literature, (3)
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screening for inclusion, (4) assessing quality (5) extracting data, and (6) analysing and synthesising data
(Templier and Paré, 2015).
Formulating the problem. During the first step, the review’s objective was identified and a justification for
the relevance of this paper was provided. An integrative literature review seemed to be a fitting form of
research due to the relative new nature of the topic. In fact, whilst the volume of literature on the matter
grows, the number of contradictions and diverging opinions also increase. Thus, this integrative literature
review aims to analyse the problem, compare viewpoints and hopefully present a new outlook on the
subject.
Searching the literature, Screening for inclusion, Assessing quality. It is worth addressing that Templier and
Paré’s (2015) proposed sequence of steps was not followed in a linear manner. Indeed, many stages were
attempted together and then refined during later phases (Kitchenham & Charters, 2007). This stage started
with a general search through a number of online databases, such as Business Source Premier, Emerald
Insight, JSTOR Journals and EBSCO. Roehampton University’s Library catalogue was also consulted to find
relevant books and online sources not available in other databases. At first, the search was based on broad
key words such as circular economy, circularity and green growth. Nonetheless, this initial approach
recognised a link between circularity and employment, which led to the inclusion of new search words such
as green employment and circular jobs. At this stage, the main journals reviewed were: Journal of Cleaner
Production, Sustainability, Environment, Development and Sustainability, Sustainable Development,
California Management Review, and MIT Management Review. Furthermore, the topic of job polarisation
also appeared to be connected to the circular economy. Thus, it was added to subsequent searches. These
primarily analysed articles from New York Fed- Current Issues in Economics and Finance, The Quarterly
Journal of Economics, Review of Economics and Statistics, American Economic Review and Journal for
Labour Market Research. Overall, a wide range of sources were reviewed throughout the study: books and
handbooks from fields such as economics, organisational studies, business management research and
environmental/ecological economics; official documents produced by intergovernmental organisations,
such as the International Labour Organisation, the European Environment Agency, the European
Commission, the OECD and the United Nations Environment Programme; finally, documents and reports
from think tanks, charities and research institutes, including the International Institute for Sustainable
Development, the World Economic Forum, the Ellen MacArthur Foundation, Circular Glasgow, the Institute
for Energy Research the Grantham Research Institute and McKinsey & Company.
Extracting data, Analysing and synthesising data. Together, the search revealed more than 40 journal
articles, 20 books and a considerable quantity of official documents from trusted organisations. After
assessing the abstracts, content tables and summaries, more than 70 sources were reviewed and
incorporated in this study. The above task was based on the relevance of the literature compared to the
research argument, and involved the use of tables and matrices to analyse, summarise and compare data
selected from the available literature.
After having evaluated and synthesised the evidence, the next stages were set to do the following: first, to
provide a discussion on the relationship between the literature and the research topic, and second, to
explain which new perspectives on the argument has the literature review assisted to emerge. Finally,
conclusions were drawn, including a summary of the main findings, their significance against the research
problem, and recommendations for future work.
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2.2 Theoretical literature review
This section contains a literature review based on data from journals, books, and documents from pertinent
organisations on the notions of circular economy, circular employment and job polarisation. First, the
concepts will be introduced, then the literature will be analysed and synthesised to find relationships
between the topics.
2.2.1 The concept of circular economy
It is appropriate to begin this theoretical review by trying to provide a definition of the concept of circular
economy. Nowadays, this comes as a challenging task because the idea of circularity itself can vary
between countries and organisations (IISD, 2018). The Ellen MacArthur Foundation (2017a) summarised
the overall assumptions behind the circular economy into three key principles: to design out waste and
pollution, to keep products and materials in use, and to regenerate natural systems. All the activities and
occupations set to achieve one of those propositions can help businesses and nations towards reaching
circularity (EMF, 2017b). Additional confusion can also arise because the term circular economy is often
used interchangeably with other sustainability related concepts such as green economy and bioeconomy.
To address this issue, a comparative study by D’Amato et al. (2017) based on the review of over two
thousand academic articles, identified the relationship among the terms. As the findings indicate, despite
their diverse philosophies, the concepts are joined by the common objective to reunite economic,
environmental and social goals (D’Amato et al., 2017). Specifically, it was found that the green economy –
inclusive of social and environmental issues – mainly acts as an ‘umbrella’ term for a range of sustainability
approaches, including the circular and bioeconomy, with the former more focused on finite products and
the latter on the resources used.
Much of the modern literature on the circular economy stems from the work of scientists, institutions and
academics that, in the 1970s, started to question the viability of the traditional linear ‘take, make, dispose’
approach (Weetman, 2017). The concept of a ‘closed economy’ with finite resources was first articulated by
economist Kenneth Boulding in his pioneering essay The Economics of the Coming Spaceship Earth (1966),
in which he outlined two kinds of reality: the ‘cowboy’ and the ‘spaceman’ economies. The first is
distinguished by the idea of limitless inputs, so that once resources are depleted, new ones can be found; in
this economy, success is determined by the amount of throughput of factors of production (Boulding,
1966). Nonetheless, Boulding argued for a ‘spaceman economy’ characterised by the idea of limited
resources, in which ‘man must find his place in a cyclical ecological system which is capable of continuous
reproduction of material form even though it cannot escape having inputs of energy’ (Boulding 1966). In
other words, humankind has the duty to minimise its impact on the Earth by revaluating its relationships
with production and consumption.
Just over a decade later, Boulding’s concept was expanded by Stahel and Reday in Jobs for Tomorrow, the
Potential for Substituting Manpower for Energy (1981), in which they conceptualised a loop economy and
presented strategies for job creation, resource allocation and waste management. Stahel is also credited
with having coined the term ‘Cradle to Cradle’, which was adopted twenty years later by Braungart and
McDonough (2002). In their publication Cradle to Cradle: Remaking the Way We Make Things, they
developed a theoretical framework aimed at changing the designing process of all materials used in
industrial and commercial activities. Their philosophy is based on three key principles: ‘waste equals food’ –
to design components that can be reutilised through biological and technical metabolisms; ‘use current
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solar income’ – to take advantage of renewable energy; and ‘celebrate diversity’ – to promote biodiversity
and sociocultural differences (Braungart and McDonough, 2002).
A recent paper from Velenturf and Purnell (2017) evaluated the impact of science and technological
advancements on circular economies. For instance, new compound and composite materials – e.g. rare
earth metals, lithium and cobalt (Nansai et al., 2014) – used in many technology-enabled products are not
usually eco-friendly and, at the end-of-life-stage, are likely to enter the biosphere. However, this threat can
be overcome and seen as an opportunity for future product design focused on durability, reusability, and
recyclability (Velenturf and Purnell, 2017). A study from Garmulewicz et al. (2018) recognised the
opportunity to exploit disruptive technologies in order to pursuit circularity. In particular, the author
identified 3D printing as tool with the potential to ‘upcycle’ discarded plastics into new printed products as
well as the potential to minimise transport emissions and packaging by taking advantage of local
production (Garmulewicz et al., 2018)
2.2.2 Relationship between circular economies and business and economic growth
Let us now consider the body of literature accumulated in recent years on the impact that a movement
towards a circular economy has on business and economic growth. On a broad scale, Ghisellini et al. (2016)
argued that the application of circular economies globally is still in the early stages, primarily targeting
recycle rather than reuse. Indeed, to motivate business to pursuit circularity, there must be the prospect
for economic returns on the investment. When it comes to supply chains, a study conducted by
Geissdoerfer et al. (2018) proposed a framework to align circular business models (CBMs) and supply chain
management in a way that encourages sustainable development. As stated by the authors, businesses can
benefit from the implementation of CBMs in many ways: for example, by lowering the costs linked with
obtaining certain raw materials, and by promoting their eco-friendly processes to consumers, which are
more likely to engage with the brand (Geissdoerfer et al., 2018). Similarly, a review paper from Camilleri
(2018) claimed that circular economies generate value both to business and the environment through loop
activities. In fact, by reusing, repairing and recycling resources, supply chains gain operational efficiencies
whilst protecting the environment (Camilleri, 2018). Drawing on data from the Czech Statistical Office,
Ungerman and Dědková (2019) quantified the effects of businesses’ participation in circular activities. As
the results showed, although companies profit in the long term through their involvement in the circular
economy, they can experience high costs for the initial investment in the latest technologies . Altogether,
Ungerman and Dědková (2019) argued that while a circular economy is undoubtedly favourable to the
environment, it is also important to understand its consequences on the broader economy.
2.2.3 The implications of circular jobs on employment
There is a wide variety of literature that analyses the impact of green growth and the circular economy on
employment (Bowen and Kuralbayeva, 2015). From those sources, the most significant ones tackling job
creation, sectorial composition and skills demand have been identified.
Renner et al. (2008: 304) defined green jobs as ‘employment that contributes to protecting the
environment and reducing humanity’s carbon footprint’. According to the International Labour
Organization (ILO) (2016), green occupations can benefit the environment either through the production of
green outputs, for instance clean transportation, or through eco-friendly processes based on circular
economy principles, such as recycling and waste management. An article from Figueres and Ryder (2014)
for the World Economic Forum reported some data on green employment across the world in 2014: in the
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USA, occupations in the solar industry increased by 115% since the previous year; in China, more than 1.7
million people were employed in the renewable energy industry; in South Africa, a programme focused on
wetland and forest rehabilitation and fire management was projected to create 4.5 million jobs over its first
five-year stage; in Brazil, a project offering incentives to carry out conservation work in local nature
reserves rewarded monthly grants of $35 to more than 16,600 struggling families in its first year (Figueres
and Ryder, 2014).
A study from Circular Glasgow (2019a) developed its own methodology to calculate the scale of the current
green employment in the city. This was based on the 7 key elements characteristics of the circular economy
identified by Circle Economy (no date): prioritise regenerative resources, design for the future, incorporate
digital technology, collaborate to create value, use waste as a resource, preserve and extend what it is
already made and, finally, rethink the business model. The paper analysed 600 sectors and by linking each
element to an occupation, for example ‘prioritise regenerative resources’ to solar panel installer, the
meaning of employment in Glasgow was identified and subsequently measured in its magnitude and nature
(Circular Glasgow, 2019a).
With regard to employment creation, a research report from Morgan and Mitchell (2015) for Green
Alliance suggested the creation of 200,000 jobs derived from circular activities in the UK and the chance to
offset 7% of occupational mismatches. In other words, circular jobs would help to align employment
opportunities with either where the unemployed live, or with the skills available from their previous
occupation (Morgan and Mitchell, 2015). This is supported by Mitchell and Jones (2015) who extend such
findings to a European context and highlight the possibility of newer job opportunities across regions and
countries. Furthermore, both sources agree that employment openings would be created for skilled labour
at all levels (Morgan and Mitchell, 2015; Mitchell and Jones, 2015). This is corroborated by a short
publication from the European Environment Agency (2011) researching the role of recycling in a green
economy. It indicated that although most job opportunities in the recycling industry include low-skilled
work, there are also many openings for medium- and high-skilled labour, varying from collection, handling
and processing to remanufacturing.
A sector-based research from the European Commission (2018) provides further insight into the allocation
of green jobs in the European labour market. Through the use of a E3ME model, this research analysed the
implications of circular economy policies across Europe, with a particular focus on job losses and creation
among different sectors. The findings suggest that sectors dealing with raw materials are set to decline in
size, while the recycling, repairing, and waste management industries should experience growth. The
results show other ‘winning’ sectors: agriculture -due to increased demand for organic products; services –
as a consequence of the additional income to spend, and electricity – due to the electrification of the
transport sector (European Commission, 2018). Oppositely, ‘losing’ sectors producing durable goods like
cars, machinery, and electronics will decline in size due to the longer lifetime of products.
A different perspective is outlined by Alvarez et al. (2009), whose work examined Spain’s ‘green jobs’
agenda to establish whether the implemented policies were economically beneficial. The findings suggest
that an average loss of at least 2.2 jobs, or about 9 jobs lost for every 4 created, should be expected.
Therefore, although the Spanish agenda is regarded a prime example to be followed by circular economy
advocates and politicians, research shows that such policies can also lead to undesirable employment
consequences (Alvarez et al., 2009). This is also supported by Morriss et al. (2009), whose research paper
aimed at exposing certain myths surrounding green jobs. These included: having a standard definition of
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green employment, job creation, economies exclusively relying on local products and services and, finally,
that forcing technological progress by regulations is beneficial (Morriss et al. 2009)
2.2.4 Job polarisation
Over the past three decades, labour markets across OECD countries have experienced profound changes in
their sectorial and occupational structures (OECD, 2017). One of the most notable transformations is the
decline of middle-skilled occupations relative to the number of low-skilled and high-skilled jobs: this
phenomenon has been defined as job polarisation (Abel and Deitz, 2012; OECD, 2017).
Until mid-late 2000s, most literature identified ‘skill-biased technological change’ (SBTC), the idea that
technology acts in favour of highly skilled workers and against less skilled workers, as the main reason for
an increase in wage inequalities (Hacker and Pierson, 2011). Building on that, research from Autor, Levy
and Murnane (ALM) (2003) argued that technology substitutes for human labour in performing manual
(some manufacturing jobs) and cognitive (clerical occupations) routine tasks; and complements human
labour in performing some high-skilled (professional and managerial jobs) and low-skilled (such as cleaning
jobs) non-routine tasks. In other words, they suggested that technological advancements could replace
workers in routine chores, but cannot yet replace them in non-routine occupations (Autor, Levy and
Murnane, 2003).
By drawing on the ideas of ALM, pioneers Goos and Manning (2007) have been able to demonstrate the
extent of job polarisation in the UK between 1979-1999. Specifically, they argued that the UK labour market
was polarising into ‘lovely’ high-skilled jobs and ‘lousy’ low-skilled jobs, accompanied by a hollowing-out in
the middle. To prove their hypothesis, data from the New Earnings Survey (NES) and the Labour Force
Survey (LFS) was used; the results were then restricted to either using 3-digit occupation codes or their
interaction with 1-industry classification. To assess job quality, Goos and Manning (2007) combined median
occupational wages at the beginning of 1979 with data on employment growth between 1979 and 1999.
Overall, the results found no striking evidence of any positive relationship between initial wages and
employment growth as SBTC would suggest. By contrast, regressions used in the study identified a Ushaped
employment growth at the two ends of distribution, supporting the ALM hypothesis of job
polarisation. In essence, the Goos and Manning (2007) study indicates a rapid growth in lovely jobs, some
growth in lousy jobs, and decline in numbers of middling jobs.
A large and growing body of literature has subsequently contributed to the debate surrounding job
polarisation. Goos, Manning and Salomons (2009; 2014) replicated and extended the original Goos and
Manning analysis in two successive studies. In 2009, they reported similar results for the employment
structure of other 16 European countries; in 2014, while the findings were also similar, the impact of
offshoring was also taken into consideration. More recently, a paper from Salvatori (2018) analysed the
impact of a range of skill groups to the polarisation of the UK labour market. The findings are very specific:
on one hand, the increasing number of graduates is found to contribute to the shift from middling positions
to lovely jobs; on the other hand, the growth in the number of immigrants is found not to have any
particular effects on job polarisation (Salvatori, 2018).
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2.3 Synthesis of the reviewed literature
There is a growing body of literature that recognises the relevance and importance of the circular economy.
Both pioneering papers (Boulding, 1966; Stahel and Reday, 1981) and recent works (Ghisellini et al., 2016;
Velenturf and Purnell, 2017; Ungerman and Dědková, 2019) emphasise the need for humankind to
revaluate its relationships with nature and its resources. On the other hand, there is disagreement among
scholars, countries and organisations in providing a common definition for the circular economy. For
instance, Geissdoerfer et al. (2018) affirm that it is ‘an economic system that minimises resource input…
[and] is hoped to mitigate negative impacts without jeopardising growth and prosperity’, while Camilleri
(2018) believes that ‘the CE is characterised by its closed-loop flow of material and energy, taking account
of natural and human resources, science and technology’. Nonetheless, a number of key words repeatedly
emerged in the reviewed articles: waste management, reuse, recycling, preservation and regeneration of
nature (EMF, 2017a; Circle Economy, no date; Stahel and Reday, 1981; Velenturf and Purnell, 2017).
However, it must be noted that there are several ‘outlooks’ linked to the circular economy that share a
common argument and purpose yet vary in their outcomes and implementation (EMF, 2017a). (a) Some
authors (Ungerman and Dědková, 2019; Geissdoerfer et al., 2018; Camilleri, 2018) believe that a shift
towards circularity is a modern endeavour focused on combining environmental preservation with
economic growth. Specifically, Geissdoerfer et al. (2018) claim that circular activities can benefit businesses
by reducing the costs associated with certain raw materials, and by providing them with ‘a free marketing
tool’ that shows their efforts towards corporate social responsibility; in the same vein, Camilleri (2018)
argues that circularity can generate a new stream of operational efficiencies and therefore create value. A
similar perspective has been adopted by Ghisellini et al. (2016) who believe that environmental efforts are
a responsibility shared by all the levels of a company (including their supply chains and consumers). (b) A
second group of authors (Velenturf and Purnell, 2017; Braungart and McDonough, 2002) argue that the
focus should be on new approaches and technologies that can design materials and processes suitable for
reuse and/or recycling. This idea also supports two complementary theories: biogeochemical processes
can be exploited to recover resources from disposed materials, and ‘waste is food’ that can be extracted by
the microbes naturally inhabiting the soil (Velenturf and Purnell, 2017; Braungart and McDonough, 2002).
(c) A third direction, e.g. Garmulewicz et al. (2018) believes that the technologies currently transforming
business and the economy (Manyika et al., 2013) can offer opportunities to enhance circularity. This view is
supported by Unruh (2015) who identifies the circular economy as a ‘killer app’ for 3D printing; in fact, this
manufacturing method could use a single plastic polymer to create infinite product, it has the potential to
work on renewable energy and, finally, it could recycle waste plastics and reuse the material for the next
print (Unruh, 2015; Garmulewicz et al., 2018).
A considerable amount of literature has been recently published on the effects that the circular economy
has on employment. However, there is disagreement on whether green growth produces or reduces job
opportunities. Bowen and Kuralbayeva (2015) claim that such dissent is due to the difficulties in
establishing the meaning of green employment. In fact, some definitions (Renner et al., 2007) concentrate
on jobs and skills with a clear environmental objective, whilst others (ILO, 2016; OECD, 1999) put an
emphasis on employment in sectors that produce green outputs or environmentally friendly processes. A
unique approach adopted by Circular Glasgow (2019a) linked each feature of circularity to a profession –
for instance, ‘use waste as a resource’ to ‘recycling operative’ – in order to provide a baseline of the circular
employment in the city. Nonetheless, the debate still persists and offers different viewpoints on the
repercussions of circular activities on job creation. (a) A first direction, supported by intergovernmental
organisations (UNEP, 2011; OECD, 2011) and authors alike (Figueres and Ryder, 2014; Morgan and Mitchell,
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2015; Mitchell and Jones, 2015), agrees that circular activities foster employment. In particular, leaders of
the United Nations believe that sustainable economies lead to the creation of good jobs – occupations that
provide good wages, safe working conditions and development opportunities (UNEP, 2011); similarly,
members of the International Labour Organisation (ILO) claim that climate change and unemployment can
be tackled simultaneously (Figueres and Ryder, 2014). This perspective is complemented by Morgan and
Mitchell (2015) and Mitchell and Jones (2015), whose studies primarily focus on establishing what type of
employment is fostered by green growth. In specific, the former ones suggest the creation of over 200,000
jobs across the UK for workers with different skill sets (Morgan and Mitchell, 2015), and the latter ones
report similar results across Europe (Mitchell and Jones, 2015). (b) On the other hand, the European
Commission (2018) argues that not all sectors will benefit from a movement towards circular economies: as
a matter of fact, industries handling raw materials and manufacturing durable goods (e.g. cars) are set to
decline in size, while sectors dealing with resource and waste management as well as the electricity
industry should experience significant growth. (c) A final group of authors (Michaels and Murphy, 2009;
Alvarez et al., 2009; Morriss et al., 2009) are unsure about any positive consequences originating from
circularity. Instead, they argue that policies aimed at boosting circular employment are economically
counterproductive (Alvarez et al., 2009), question whether such employment provides net economic
benefits (Michales and Murphy, 2009) and even complain about the vague nature of the theories and
studies on green employment (Morriss et al., 2009).
To date, several studies have investigated the reasons for a reduction of middle-skilled jobs compared to
high-skilled and low-skilled occupations. Modern literature reveals general agreement (Autor, Levy and
Murnane, 2003; Goos and Manning, 2007; Goos, Manning and Salomons, 2009;2014; Salvatori, 2018) that
technological advancements can substitute labour in routine chores, but cannot replace it in non-routine
tasks. This phenomenon, first hypothesised by authors Autor, Levy and Murnane (ALM) (2003), is now
known as job polarisation. However, until mid-2000s, it was mainly believed that technology was biased
against low-skilled workers in favour of high-skilled workers (Hacker and Pierson, 2011). To argue that,
Goos and Manning (2007) revealed the extent of polarisation in the UK labour market: indeed, their study
showed a U-shaped employment growth at the two ends of distribution, thus indicating an increase in both
‘lovely’ high-skilled jobs and ‘lousy’ low-skilled jobs, followed by a decrease in the middle. In follow-up
studies, the authors reported similar employment curves across sixteen European labour markets (Goos,
Manning and Salomons, 2009), as well as if offshoring was taken into account (Goos, Manning and
Salomons, 2014). Research undertaken by Salvatori (2018) was more concerned with the impact that
graduates and immigrants have on such phenomenon: whilst the former ones were found to contribute to
the movement from ‘middling’ to ‘lovely’ jobs, the latter ones were believed not to have any particular
effect on job polarisation (Salvatori, 2018).
To conclude the synthesis of the literature regarding the circular economy, green employment, and job
polarisation, it is worth summarising a few common themes. Firstly, it is generally believed that a
movement towards circular activities has a positive impact on the environment (e.g. Boulding, 1966; EMF,
2017a). However, some authors (e.g. Velenturf and Purnell, 2017; Geissdoerfer et al., 2018) provide
different views regarding the ‘right’ implementation of such activities. Source of debate is also the nature
of green employment: whilst one group of authors (e.g. UNEP, 2011; Morgan and Mitchell, 2015) claims
that circular economies create jobs, the other (e.g. Alvarez et al., 2009) argues the opposite. Nonetheless,
one direction (Morgan and Mitchell, 2015; Mitchell and Jones, 2015; EEA, 2011) highlights the opportunity
to partially counterbalance job polarisation: as stated, shifting towards a circular economy would create
many openings for low-, medium- and high-skilled workers.
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2.4 Research positioning
As discussed in the theoretical background, there is plenty of research, especially recent, concerning the
notion of circular economy and its implications on business and economic growth. Similarly, there is a
multitude of literature examining the nature and effects of green employment all over the world. What this
paper aims to offer is fresh insight on the topic, and a critical analysis of the relationship between a
movement towards a circular economy and job polarisation. The paper intends to do this by inquiring the
following:
1) Do circular economies lead to a growth in employment?
The results will provide a baseline from which further discussion can be undertaken.
2) Are jobs created for skilled labour at all levels?
Determining the relationship between the circular employment and job polarisation can provide
new insight to existing literature.
2.4.1 Arguments
The following arguments have been identified based on the reviewed literature:
A1: There is a positive relationship between circular economies and employment growth.
A2: The phenomenon of job polarisation can be partly offset by circular jobs.
2.4.2 Justification
Human activities are endangering the planet life-support systems and could generate catastrophic
consequences for a great part of our biophysical environment (Rockström et al., 2009; Jackson, 2009). To
address these issues, targets for reducing waste and protecting the environment have been outlined in the
European Circular Economy package (European Commission, 2015). It sees a movement towards circularity
to be a fundamental step towards a low-carbon, sustainable, resource-efficient economy (Weetman, 2017).
As a result of the EU plan, many forward-thinking multinational organisations have started to implement
circular economy principles into their strategies (EMF, 2013).
The circular economy is a model aimed to replace the traditional linear economy of ‘make, use, dispose’
(EMF, 2013). It is an economic development that strives to maintain resources in use for a long time,
extracting their highest potential while in use, then re-entered into a system through the reutilisation of
materials (Webster, 2015; Geissdoerfer, et al., 2017). As such, the circular economy can be an essential
driver not only towards the preservation of the environment, but towards the creation of attractive socioeconomic
advantages (Mont, 2007). These include the creation of jobs, opportunities for social integration,
and help to mitigate the effects of climate change on earth (Weetman, 2017).
Arguably, the circular economy is already shaping labour markets and day-to-day activities . As previously
mentioned, research conducted by Morgan and Mitchell (2015) for WRAP and Green Alliance indicates that
an expansion towards circularity could create over 200,000 jobs across the country and offset 7% of labour
circular activities. Moreover, cities like London and Glasgow already show numerous signs of circular
activity. Exemplary, the Mayor of London and the London Waste and Recycling Board have already
Thesis involving critical literature review
13
sponsored many circular projects: from water fountains installed across the city to reduce the use of plastic
bottles, to the FoodSave initiative aimed to put surplus food to good use (Greater London Authority, 2020).
In Glasgow, under the soon-to-be implemented Deposit Returning Scheme, shoppers will pay a 20p deposit
when buying drinks purchased in single-use bottles and cans. As people return their empty containers for
reuse and recycling, they will get their money back (Circular Glasgow, 2019b).
The Morgan and Mitchell (2015) report also outlines the many labour market challenges currently faced by
Britain, such as high unemployment in certain regions, scarcity of natural resources, increasing inequalities
and declining employment in mid-level jobs. The findings in the research indicate that these issues are
linked, as focusing on our resource efficiency can make a valuable impact to partly offsetting some labour
market challenges (Morgan and Mitchell, 2015). This suggests that a research on circular employment,
more specifically on the relationship between circularity and job polarisation, is timely and can help
policymakers to better understand trends and businesses to formulate investments. In fact, the findings of
this review should be of interest to organisations; the implications of a growth in circular economy should
be relevant to companies interested in adopting a green strategy. Moreover, policymakers should also find
the findings of this research informative as they can assist with decision making. Overall, this paper will
contribute to the existing body of literature by providing fresh and specific insight on the connection
between circular economy activities and job polarisation.
2.5 Discussion of arguments
In this section of the thesis, the findings stemmed from the literature review will be discussed in relation to
this paper’s inquiry. A number of key arguments and sub points will be considered in order to support the
main argument. Before proceeding with the discussion, it is important to briefly restate the purpose of this
study and the thesis statement, which are, respectively: to evaluate the implications of a transition towards
a circular economy on labour markets, with a focus on job polarisation; and, despite the existence of
different approaches to circularity, the effects on economic growth and employment are very similar and
circular economies help to offset the phenomenon of job polarisation.
Argument #1 There is a positive relationship between circular economies and employment growth.
As established in the literature review, a number of authors (Michaels and Murphy, 2009; Alvarez et al.,
2009; Morriss et al., 2009) claim that a movement towards a circular economy is not likely to lead to
economic benefits or job creation. To counter-argue this theory, this section of the study will provide a
logical discussion on the matter, supported by literary evidence. As a starting point, for this study’s research
statement to be valid, new ‘green jobs’ must be created when implementing circular business models
(CBMs). For this to occur, certain conditions must be met: firstly, (1) circular economies create value for
business; secondly, (2) increased business profitability generates economic growth; and, finally, (3)
economic growth leads to a higher employment rate.
As previously stated, companies will adopt CBMs if presented with the prospect of economic benefits
(Ghisellini et al., 2016). These returns can vary, and include: a reduction in supplier costs, improved brand
image, and a series of new efficiencies spread throughout the supply chain (Geissdoerfer et al., 2018). On
the other hand, it has been claimed that CBMs often require a high capital investment for obtaining
circular-enabling technologies (Ungerman and Dědková, 2019). Arguably, this cost cannot be met by certain
Thesis involving critical literature review
14
organisations and, as a result, it prevents companies from easily including circular economy practices into
their business models. Nonetheless, as most research (e.g. Geissdoerfer et al., 2018; Camilleri, 2018) has
demonstrated, businesses gain profitability in the long term through their participation in circular activities.
Therefore, it can be argued that CBMs still stimulate business growth. On the question of whether
increased business profitability/revenues results in economic growth, it is widely believed that enhanced
productivity allows enterprises to produce greater output for the same amount of input, generate higher
revenues, and, consequently, higher GDP (DCED, no date). For instance, KickStart (2016), a charity that sells
irrigation pumps to farmers in developing countries, reported that the additional revenues earned by the
operators of the pumps in Kenya accounted to 0.6% of the country’s GDP in 2011. Based on the evidence,
one could argue that the criteria of increased business profitability generates economic growth is met. With
regard to the last condition, it is generally believed that economic growth and job creation tend to be
directly correlated (e.g. Khan, 2007; Kapsos, 2005). However, the extent to which employment responds to
GDP growth has been reported to vary (IMF, 2016): in particular, the agriculture, services and textile
sectors are believed to be very responsive (Melamed, Hartwig and Grant, 2011; Basnett and Sen, 2013). It is
encouraging to compare this information with that found in previously reviewed literature (European
Commission, 2018), which believed that the services and agriculture industries would experience a
significant growth in employment following the adoption of CBMs. These findings, while preliminary,
suggest that circular economies indeed lead to a growth in employment.
Argument #2 The phenomenon of job polarisation can be partly offset by circular jobs
Having established the validity of argument #1, the section below will discuss and compare reviewed
literature against the following hypothesis: the phenomenon of job polarisation can be partly offset by
circular jobs. Again, for this proposition to be true, two main criteria must be met: firstly, (1) the extent of
circular employment can be calculated; and secondly, (2) circular jobs are created for workers with different
skill sets.
Much of the debate surrounding green jobs (e.g. Morriss et al., 2009) originates from the complexity of
calculating the scale and scope of circular employment. In fact, as observed by Bowen and Kuralbayeva
(2015) research papers and authors often avoid using the term at all and experience difficulties in trying to
provide a baseline for such employment, often presenting contrasting results. For this paper’s inquiry to
hold credibility, it is essential that the extent of circular jobs can be calculated. Researchers from Circular
Glasgow (2019a) developed an original method to quantify the number of core and enabling circular jobs in
the city. The study was based on the seven key aspect of circularity identified by Circle Economy (no date)
and involved the cross-analysis of over 600 sectors with the jobs previously linked to one of those
distinctive aspects. Drawing upon this project, it can be argued that the extent of circular employment can
be calculated and thus, the hypothesis is acceptable. Finally, to address the condition of circular jobs are
created for workers with different skill sets, evidence will be presented and compared against this paper’s
inquiry. Exhaustive research from Morgan and Mitchell (2015) aimed at analysing how a growth in circular
economy interacts with Britain’s labour market, suggested the creation of over 200,000 jobs by 2030 and
the chance to reduce 7% of labour market mismatches, including the hollowing-out of middle-skilled
occupations. Other authors and organisations (Mitchell and Jones, 2015; EEA, 2011) supported this theory:
Mitchell and Jones (2015) reported similar results across Europe; and a publication from the European
Environment Agency (2011) claimed that despite most job openings in the recycling sector require lowskilled
work, there are also considerable opportunities for middle- and high-skilled labour, including
collection, handling and processing and remanufacturing. As there is a relatively small body of literature
that is concerned with the relationship between job polarisation and circular employment, no studies
Thesis involving critical literature review
15
counter arguing the above statement have been found. Thus, solely informed by the reviewed literature, it
can be assumed that argument #2 the phenomenon of job polarisation can be partly offset by circular jobs is
valid.
To summarise, the reviewed literature seems to support the thesis statement – despite the existence of
different approaches to circularity, the effects on economic growth and employment are very similar and
circular economies help to offset the phenomenon of job polarisation. However, these findings must be
interpreted with caution as while undertaking the critical literature review, certain limits became apparent.
A summary of the main findings, together with the paper’s limits and recommendation, will be provided in
the next chapter.
3. Conclusions
The role of the circular economy has been in the middle of various debates for authors, organisations and
governments when it comes to its impact on the broader economy (Weetman, 2017). In this paper, a wide
range of literary sources have been consulted and synthetized for the purpose of analysing how a
movement towards circularity can impact labour markets, especially in terms of job creation. There are a
number of factors that the study took into consideration. First, we focused on the notion of circular
economy and discovered contradictory approaches and implementations of such concept. Despite these
dissimilarities, it was found that circular economies across the world still share the same universal cause
and objective – to reduce humankind’s impact on Earth whilst achieving economic prosperity. On this
matter, we then looked at the existing literature regarding the effects of circular economies on business
and economic growth. While some research (Ungerman and Dědková, 2019) argued that CBMs are not
valuable to business due to the high cost in purchasing and maintaining technologies, most authors (e.g.
Garmulewicz et al., 2018) agree that business will prosper in the long term. This led us to conclude that
indeed, CBMs boost economic growth. By comparing this finding against the literature, we then discovered
that the adoption of CBMs leads to the creation of jobs, whose scale and scope can be calculated. This
allowed us to estimate the nature of new employment: what skilled labour is needed and in which sectors.
Supported by the analysed literature, it was found that green jobs create opportunities for middle-skilled
workers as well as low- and high-skilled workers. Taken together, these findings suggest the existence of a
role for circular economies in creating employment and offsetting job polarisation. Overall, this thesis has
provided fresh insight into the relationship between circular activities and labour markets and has
confirmed the findings of previous research (Morgan and Mitchell, 2015; Mitchell and Jones, 2015; EEA,
2011) which indicated a positive correlation between green growth and employment. However, as the
body of literature on the matter is limited, it was not possible to provide sufficient counter arguments
against the thesis statement in order to offer a more complete picture. Moreover, it would be interesting to
provide a new perspective on the topic through the adoption of a different research design: for instance, a
functionalist-positivist research including a secondary quantitative data analysis could help to establish a
greater degree of accuracy on this matter.
Thesis involving critical literature review
16
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