Workers in the automotive industry are facing mass redundancies, replaced by experts

The study evaluated three scenarios for the development of the automotive industry, which should lead to the achievement of the Green Deal goals. Among them is the European Commission’s current approach based solely on electric vehicles proposed in the Fit for 55 package, a scenario of a radical increase in the number of electric cars and a mixed approach that includes both electric battery and internal combustion engine technology.

The document concludes that a mixed strategy of continuing to produce cars with internal combustion engines would have a similar impact on reducing the carbon footprint, but with higher employment rates and higher added value in the supply chain.

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Overall calculations show that, under the current scenario, around half a million jobs will be lost in the production of powertrains over the decades, especially in the component supply sector. Electromobility can create new jobs, but it will replace only less than half of the current ones.

In addition, the vast majority of jobs, estimated at 70 percent, will end in a relatively short period between 2030 and 2035. This could have drastic effects on the socio-economic situation in Europe, the study points out.

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According to the authors, the reason for the sharp decline is the low flexibility of the current supply chain. “While carmakers have more capacity to divest or transform in-house activities to compensate for losses in powertrains, suppliers are unable to respond as flexibly because they are bound by long-term contracts with carmakers,” the study said.

Uncertain Czech future

According to the study, the domestic automotive industry has a decent outlook at first sight. Engine production employs about a third of the employees of the Czech automotive industry. The increase in jobs in the production of electric drives, combined with the remaining production for the market for spare parts for internal combustion cars, could mean that even in the current scenario, the overall employment rate in the production of power units in 2040 will remain roughly the same.

The study estimates that even in twenty years, 41,000 Czechs will be involved in the production of power units. However, a closer analysis shows that the future of employees in the Czech automotive industry is not so certain.

The first alarming report concerns highly concentrated redundancies over the next ten years. According to the study, twelve thousand original jobs in production will be eliminated by 2030, but this should replace the newly created jobs in the electromobility sector.

In 20 years, it is estimated that less than 24,000 people could work in electric drive factories, while about 17,000 would continue to work in the production of spare parts for cars with internal combustion engines. However, the devil is in the details. In this case, it is a composition of disappearing and newly emerging jobs.

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Although the Czechia has a great chance of attracting electric car manufacturers, studies admit, their production requires a significantly less qualified workforce and a significantly different type of professional positions than in classic cars. “The electric motor consists of significantly fewer components than the internal combustion engine, electric cars do not have a gearbox or an exhaust system, so we expect up to a third of the jobs to be reduced,” says Jaroslav Souček, chairman of the KOVO trade union.

CLEPA’s previous research has shown that battery production provides more jobs for university-educated employees and less for mechanical workers who produce parts related to internal combustion engines. “Most jobs in the electromobility sector are in the battery supply chain, which requires mainly chemists, data analysts and other qualified professionals,” the report concludes.

Therefore, a big question mark arises as to whether workers who leave their original job will be willing to undergo demanding retraining, which would place them among the more qualified professionals. “Mass retraining will certainly be offered, but it will certainly not affect all job losses,” says Souček.

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Miroslav Lopour, the manager of strategic projects in the energy team of the Deloitte consulting services department, is also concerned. “Without modernization, carmakers can move to battery factories and countries with modern know-how. The battery factory will then bring tens of thousands of places. There are also tens of thousands in energy, “he warns.

The Automotive Industry Association, on the other hand, is not concerned about the decline in the employment of unskilled workers. “The main reason is the still tense labor market. Rather, it can be expected that even in the case of redundancies, there are a number of companies ready to supplement their status, ”explains Zdeněk Petzl, the association’s executive director.

He is more concerned about the lack of experts. “Rather than just a Green Deal, this need is driven by the advent of new technologies and the pressure to increase production efficiency, digitize and automate the production process,” he notes.

The future is being decided now

Contrary to forecasts, analysts’ mood is optimistic. “Our latest estimate from the summer shows that about a fifth of supply capacity could be significantly affected, but only less than five percent could be an existential threat,” says the leading partner for the automotive sector in Central, Eastern and South-Eastern Europe and Central Asia. EY Petr Knap. According to him, rising staff costs, energy and advancing automation will be a comparable or even greater “killer” of jobs in the automotive industry.

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The remaining regulations contained in the climate package will also play an important role. “The Green Deal also includes a so-called carbon duty, the impact of which should be to increase employment in connection with the relocation of some production activities back to Europe,” notes Kamil Blažek, chairman of the Association for Foreign Investment – AFI.

The current strategy of companies and the state will decide whether job losses will actually occur, experts agree. “Due to the fact that the production of cars with internal combustion engines will decrease, their subcontractors will reduce production. However, this change will be gradual, will take several years and it is possible to prepare for it within the entire production chain, ”says Blažek.

According to him, the task of the state is to ensure the fastest possible changes in education. “In the next ten years and then, we will always need a workforce that is significantly more flexible than today,” he said.

Knap agrees. “Our employment structure needs to change in the long run and relatively quickly towards higher qualifications and expertise. Only in this way can we achieve higher added value, so that we can afford higher wages and withstand the costs associated with an aging population and many other risks, ”he states.

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