Global socioeconomic challenges have exacerbated development disparities at national and international levels. The current climate change crisis, intensification of natural disasters, food insecurity, disease outbreaks, and geopolitical conflicts further risk the widening of socioeconomic inequality gaps. Developing countries face the brunt of these pressures on their economic and finance structures, in addition to extra strain on the public sector. The disproportionate climate change impacts on developing regions are observed exponentially due to the nature of economic structures in these countries relying on primary sectors. Heavy reliance on traditional, primary industries exposes them to transition risks such as threats of worker displacement and destruction of traditional sectors, especially in countries with prominent informal economies.
With international trends of markets evolving toward structuring resilient economies, green finance, net-zero carbon frameworks, and tools, it is the role of national governments to reassure their constituents that these changes do not compound existing vulnerabilities. The progression of automation in agriculture, green industries, and alternative energy sectors indicates an urgent need to legislate the protection of workers from job displacement associated with technological advancements. Using sustainability frameworks such as the Sustainable Development Goals (SDGs); Environmental, Sustainability and Governance (ESG); and Just Transition frameworks as guidelines could serve in defining clear strategies for inclusive development.
Just transition frameworks take into consideration the domino effect and consequences of sustainable economic transformation by minimizing transition risks. Just economies are characterized by inclusivity, quality of work, and the protection of livelihoods while addressing climate change and poverty reduction by using sustainable practices. Without a Just Transition, the risks of worker displacement and inequality gaps are difficult to contain. Inclusion of marginalized workers: women, youth, unskilled laborers, disabled and migrant workers should be prioritized with inclusive policymaking. Through coordinated and coherent public policy, governments with support from the private sector can etch the necessary pathways based on research and evidence. Policy actions include industry and sector-specific policies; leverage investments toward sustainable activities (impact investments); labor policies; education and training; social support and protection.
Historically, the South African economy relied on the extraction of natural resources (coal, minerals, gold, and diamonds). Decarbonization of the global economy will disrupt the country’s coal value chain, this demands the South African government to be proactive in its approach. The pervasive high unemployment rates, especially amongst South Africa’s youth, and persistent poverty remain the legacy of institutionalized discrimination during apartheid. These challenges are escalated by poor economic performance. In 2020 the South African president established the Presidential Climate Commission (PCC) to facilitate the design and development of a Just Transition framework which was adopted on the 27th of May 2022. Multiple studies commissioned by the PCC; public engagement and international best practice standards were utilized to align and inform the development of the framework. The Just Transition framework (2022) identifies 5 “At Risk Sectors”: Coal value chain; Auto Value chain; Agriculture; Tourism; Trade and outlines transition phases. Another important contribution that the framework makes is the inclusion of key policy areas. These include Human Resource Development and Skill Development; Industrial development, Economic Diversification, and Innovation; Social Protection measures.
South Africa’s efforts are supported by international partnerships with the European Union alongside the British, American, French, and German governments. These partners have made a declaration to mobilize finances with an initial amount of $8.5 billion to assist South Africa in achieving its commitments to confront climate change. Economic transformation is a process of trial and error, requiring flexibility in its approach to adjust to newly gathered insights. The purpose of Just Transition is not for perfection, but rather to minimize transition risks. South Africa has demonstrated that proactive governance is imperative for tackling climate change through legislation and collaboration with international partners. Granted that the country is in the early stages of a Just Transition, it could also be beneficial to include regional provisions in its Just Transition framework as the impacts will be observable in neighboring countries. Developing regions can review these insights for paving the way toward inclusive and climate-resilient economies.