At the COP26 climate talks in Glasgow, countries around the world, including India, reached a historic decision to phase-down coal power. A less-famous decision they made was to support a just transition away from coal power. In some countries, this transition has already happened, and India could learn important lessons from them since its own future transition could easily turn sour.
The coal industry in the U.K. shrunk steadily from the mid-1950s driven by the availability of cheaper energy alternatives like oil and the decline of heavy industries, later helped along by Prime Minister Margaret Thatcher. In just over a decade starting in the mid-1980s, the British government closed most coal mines and left more than 2 lakh miners — then almost 90% of the industry’s workforce — without jobs.
According to a new paper published in the Journal of Public Economics, these workers incurred significant losses even many years after they were rendered jobless.
Specifically, in the year after a mine was closed, miners’ earnings fell by 40% and remained depressed by 20% up to 15 years later. This result was driven by lower wages. The depressive effect on their incomes ballooned to 90% when the authors included miners who couldn’t find alternative employment within four years.
Essentially, the paper shows that even in a country like the U.K. with geographical mobility, economic opportunity, and government support like severance packages and unemployment benefits, miners and their communities never fully recovered. And so, plans and support for workers in a country like India have to be “more ambitious,” Juan Pablo Rud, lead author of the paper, told this reporter. Rud is a professor of economics at the University of London.
Such ambitious plans ought to entail, he added, labour market policies like sectoral training programmes, public investment, and income support, which are standard recommendations that have had some success in different contexts.
Socio-economic dynamics of coal transition in India
The demand for coal in India will likely peak between 2030 and 2035, according to the Ministry of Coal. And while coal production is increasing today with new mines also opening up, many old mines are also shutting down because of depletion of coal reserves and financial non-viability.
Coal India, Ltd. alone has shut down 130 mines since 2009 and around 300 overall. Experts have previously pointed to a need to study what is happening with respect to mines that are already closing down and develop transition frameworks accordingly.
“The paper provides valuable insights into the socio-economic consequences of phasing out coal in the U.K. India must prepare to mitigate similar financial impacts for its displaced workers,” said Pradip Swarnakar, a professor at IIT-Kanpur and founder and coordinator of the Just Transition Research Centre. He added that the focus ought to be on informal workers and the local community since it is likely that formal workers will be taken care of by the companies.
The U.K. is a more formalised economy than India and most of its workers across sectors, including coal are formal workers. But in India, around 90% of workers across sectors, including coal are employed under informal arrangements and precarity. This makes the socio-economic impact of mine closures particularly severe.
Many regions, especially in states like Odisha, Jharkhand and Chhattisgarh are heavily reliant on coal mining as the primary economic activity. Towns and villages often develop around coal mines, and the livelihoods of many families are tied directly or indirectly to coal mining like in the transport sector or even grocery and other retail stores in mining regions that comprise consumption multipliers of coal mining activities.
And therefore, targeted support like employment schemes for these specific demographics and regions is necessary. The study too underscores a need to understand socio-economic dynamics. It shows that older miners and those from less economically developed regions like Yorkshire, North of England and South Wales faced worse outcomes. On the other hand, workers with transferable skills like managers and technicians fared slightly better.
Part of a larger problem however is that conducting such a study in India would be next to impossible. “The government does not collect such micro labour data; it’s very difficult to track individuals or households over decades at scale,” said Rohit Chandra, assistant professor at IIT-Delhi.
The study was based on 50 year data from the U.K. New Earnings Panel Survey. It is one of the world’s most comprehensive surveys that collects earnings information from a representative sample of individuals in the U.K. “The richness of the data allows us to construct a longitudinal dataset tracking more than 2,000 displaced coal miners many years before and after job separation,” the study notes.
But even if such studies are not replicable in India, “its findings are quite obvious. Anyone who has been to coal-bearing areas in India understands that the transition will be catastrophic for local economies,” Chandra added.
Re-skilling and regional planning
A commonly cited measure to equip workers for the energy transition is re-skilling. It refers to training programmes for coal workers to enable them to find employment in sectors other than coal like manufacturing. But this is far easier said than done, especially in the context of poorer countries.
“Re-skilling is always challenging and mostly discussed in the context of high-income countries and technological change,” Rud said. In the case of coal miners in India, he explained, a good policy should look to work with local communities, trying to get a good understanding of sectors where the alternative jobs, current and future, may be and what are the appropriate skills and the constraints to occupational mobility.
Planning a transition also goes beyond planning for coal industry workers since entire regions and communities are dependent on coal mining.
“Can you imagine Dhanbad or Korba or Asansol without coal? This is the problem,” Chandra said, pointing to how nothing else exists in these regions that can provide the kind of employment and state revenue that coal currently does. These areas also do not attract private investment even from small and medium businesses.
“Economic diversification for these regions requires planning and a business case post-coal which can attract private investment and lending from financial institutions,” Chandra said. He also pointed to opportunities within the existing welfare schemes like the Mahatma Gandhi National Rural Employment Guarantee, government pension schemes and the Public Distribution System to support communities in coal regions in a more targeted way.
Rishika Pardikar is a freelance journalist.
