1. Introduction

Ever since the first report to the Club of Rome (1972), with its alarming title, The Limits to Growth, there has been a concern over the implications for the economy - and for the level of employment it supports - of stringent environmental policies. If the environment would pose limits to the expansion of economic activities, then this might be feared to 'freeze' the level of these activities and with given technologies this would lead to a stabilisation of the demand for human labour; with stable working hours this would entail a fixed amount of employment. Technological progress in the form of enhanced labour productivity would even worsen prospects, in that it would push out labour.

Others, from the very beginning of modern environmental concerns in the 1970s, have argued that taking into account environmental considerations in decisions about production and technology would induce a process of substitution of human labour for energy, materials and even capital, so that environment and employment were and would be compatible. Both extreme positions were academic ones, and tended to convince only those who adhered to them to begin with.

In the middle of the next decade, OECD published its report on the economic impacts of the first "wave" of environmental policy in industrialised market economies (OECD 1985). This report showed that the first 15 years of environmental policies in countries such as Japan, the US and the Netherlands had had statistically insignificant macro economic impact (with, if anything, a slightly positive impact on overall employment). Even the second wave of environmental policies (i.e. the more anticipatory, prevention oriented policies of the late 1980s and early 1990s) may be expected to have only marginal economic repercussions at the macro level and slightly positive ones on employment -- for example, as witnessed by calculations in relation to the allegedly "progressive" National Environmental Policy Plan of the Netherlands (1989).

The first Visser t Hooft Memorial Consultation on Sustainable Growth (1993) has generated a report stating that the fundamental tendencies of economic growth and of the associated destruction of the earth's carrying capacity for economic activity, now must "...limit the previous vision that societies can solve basic economic problems, such as poverty and unemployment, by means of economic growth and expansion" (Béguin-Austin, ed.. 1993:20; see also Arrow et al. 1995) The most recent report to the Club of Rome: "Accounting for Nature" (1995) is based on work suggesting that for the last 20 years the link between production growth and the creation of welfare has become progressively weaker and now seems to get lost: production growth now is associated with declining welfare, in many developed countries. Such conclusions would fuel concerns over the relationships between environmental management and employment.

We shall first investigate some traditional approaches to the inter-relationships between economy, environment and employment Then we shall see what can be offered from an ecological economic perspective. Some recent studies will be reviewed that try to empirically explore these links, and some strategies to change current practices and structures in such a way that sustainable employment will be realised, will be presented and assessed.

2. Growth, Employment and the Environment: the Traditional Point of View

Traditionally, economics has been interested in economic growth (in terms of increased production and consumption) as a means to enhanced social welfare. The notion of welfare should be distinguished from that of the level of production or consumption: welfare has to do with the degree of satisfaction derived by individuals from their endowments with material and immaterial goods, their participation in the economic system or their leisure time, etc. given their individual preferences. Welfare and growth were typically assumed to be positively correlated (since Pigou, 1920), and it has become standard practice to monitor economic activity levels -by measuring "national income" or "national product" (as the total of values added in the activities for which there are market

values). Growing production is expected to lead to more employment and more income, and thus welfare will increase.

Growth in production is possible as long as: (i) these products continue to be absorbed by consumers, and (ii) there are additional means of production i.e. labour, capital, material inputs). On the consumption side, it is assumed that individuals will never be satisfied: they are taken to always prefer more goods and services over less. And more can indeed be produced, according to mainstream economics. The availability of the means of production is not a static quantity, but depends on dynamic processes such as population growth, capital formation (investment) and, last but absolutely not least: scientific and technological progress (S&T): S&T can make more materials from nature economically available; it can also, together with investment make labour more productive .The latter point is recognised to be one of the crucial driving forces in growth oriented economies.

Growth thus appears as a mechanism that will accelerate the possibilities of meeting human material needs and expand the range of options for human participation. It thus at first sight seems to generate welfare. However, there are some serious flaws in this position. One has to do with the inherent dynamics of the growth-innovation impulse '(this section). The other is related to the implied claims on the physical environment (see next section).

Increased labour productivity is an ambiguous form of development On the one hand, it allows us to make more goods and services with less effort, so social welfare increases. On the other, with given levels of production, it will tend to push labour (i.e. labourers) out of production. Or, in other words, if society displays increasing labour productivity and wishes its people to participate in the productive process, then it will have to increase production and consequently- consumption. This process is reinforced by one feature that is deeply entrenched in modern economic institutions (i.e. the market mechanism): that of decentralised decision making and competition, which induces a tendency to reduce prices by reducing costs, which can be done most effectively by furthering labour saving technological innovation and the subsequent expulsion of labour. In the long run in industrial societies, labour productivity increases annually by some 2%.

The ambiguity comes in when one considers that economic growth itself may be conducive to S&T, thereby inducing more innovation, thereby undermining the capability to absorb labour, Given this process of increasing labour productivity (that is,' given the underlying processes of innovation and associated capital formation), growth and employment can be positively linked only as long as the rate of growth exceeds that of change in labour productivity'.

In fact the economic process under the conditions described, has embarked on the track of a permanent rat race: it has to grow in order to ensure full employment and growth reduces employment. Moreover, the market mechanism will ensure that this reductionary tendency will be reinforced to maximum strength. These tendencies now are recognised as a threat: economists and policy makers are concerned over what is referred to as: "jobless growth". In some industrialised countries, unemployment (if measured in the same way as in the 1930s) is of the same order of magnitude as in the years of the Great Depression.

Such observations may even affect predominant views of (hu)man(s). It is quite common in the economic literature to speak of 'homo economicus' as a sovereign consumer, whose wishes dictate what and how much is produced, given the constraints on the availability of factors of production. But this view seems to become out-dated. In a recent study on the scope for growth of a modern economy (i.e., the Dutch- economy) the conclusion was drawn that: "...As soon as medium term full employment is required, a consumption growth of at least 3% is mandatory" (WRR 1987:9). Even apart from other repercussions (such as environmental ones, to which I will turn presently) and even allowing for the fact that for many people increased consumption is a blessing, there is a nasty ring to this conclusion; we apparently are condemned to consume, whether we like it or not.

2.b Sectoral Asymmetries

In many developed economies, wage levels tend to follow productivity changes in the most rapidly advancing sectors. This pushes up wage and cost levels especially in the care oriented sectors. Hence relative prices are changing at the expense of those sectors; they will dwindle, unless their services have a low price elasticity. This is referred to as "Baumol's Law" (Baumol, 1967), leading to pressures to economise there, especially if they are financed through social security institutions and funds. Hence the paradoxical situation of rising per capita incomes and less social services in rich, growing economies.

It may well be that often sectors with little change in labour productivity have high relative labour intensity. if that is the case, Baumol's law indicates a structural and increasingly significant pressure on the economy to expel labour.

2.c Buffering Unemplovment

Of course there are ways of dealing with this relationship between innovation and employment other than boosting consumption and growth m general. One is, to make labour less expensive so as to make it more attractive as a factor of production. The other is to accept that there is a reducing demand for labour power in absolute terms. This can be met in two ways: (i) accepting a reduction in the number of labourers (given the average amount of time input per employee), and (ii) accepting a reduction in the length of the labour day or the number of labour days per week/month.

First, an economy or a sector could consider lower average wage levels, thereby enabling more labour intensive production processes without loss of competitiveness. This would imply that wage levels develop differently in different branches of economic activity and/or in different countries. This may be regarded as unacceptable by many on political grounds (e.g. because it is regarded as an unfair wage policy). Also economic arguments (although not based on any 'iron law' in economic theory) may speak against this approach: labour will tend to move to sectors and countries where wages are higher, thus giving rise to more or less unavoidable equalising tendencies.

Nevertheless, Goudzwaard and De Lange have proposed a mechanism to bypass Baumol's Law along the lines discussed here. They disentangle two kind of activities: the normal 'productive' ones leading to a supply of goods and services via the market, and 'transductive' activities, i.e. reproduction oriented activities aimed at the maintenance of society and the environment, care for and the cultural- development of people, etc. They advocate that wages be set according to the development of labour productivity in the care-oriented , transductive sectors, and that the gains of additional productivity changes elsewhere in the economy should be collected by society and transformed into funds to finance transductive activities Thus, there would be a guaranteed flow of financial means expressing themselves as a demand for such typically labour intensive activities. Mainstream economists fear that this will have potentially dangerous repercussions in the long run: those sectors where the gains of innovation are taxed away will have much less of an incentive to continue their R&D and in the long run they will lag behind their international competitors and this will lead to a loss of material welfare. It might, however, be possible to design practical methods of applying this mechanism that would at least limit this welfare loss, and, of course, societies might prefer a situation with. a better security and care system and less than maximum material consumption over and above one of maximum consumption and social decay.

Finally, economies could allow unemployment to rise. if there are no (or low) welfare benefits, this will put downward pressure on wages (see the US example). In the 'social welfare economies' of Northwestern Europe this would lead to much less downward pressure on the wage level, but rather to high welfare expenditures that, on the one hand, would have to be reclaimed by higher taxation (thus even raising gross labour costs), and on the other hand would help maintaining higher levels of demand for goods and services.

2.d Growth and Environment

Economic growth (increased production and/or consumption) also has significant environmental repercussions: it implies increased levels of natural resource inputs (energy and other material resources) and of waste and pollution: moreover, increased activity will lead to spatial claims at the expense of natural Systems and processes leading to environment degradation (over-exploitation and extinction, reduced productivity declined amenity, etc.: this will not be elaborated here). In the traditional approach this has long been recognised but ignored (Pigoti 1920, Marshall 1920). Mishan (1967) was the first economist to acknowledge the significance of environmental degradation. Even after this was recognised, the traditional approach has been that the welfare losses from environmental degradation were outweighed by, or could be neutralised from economic growth m the traditional sense, Economies could, it is alleged, set aside the means for mitigating the adverse environmental impacts of economic growth and still have net increases of income. Given this perception of things, mainstream economics still feels justified in treating environmental impacts of economic activities as fairly minor negative "externalities" that can be accommodated and handled basically within the economic system and by the economic process.

2.e Resume

On balance, then, growth is typically regarded by the mainstream not only an inherently good thing but it even is seen as a necessity to maintain welfare in a broad sense: not only material welfare or consumption, but also employment, and even environmental quality.