Circular economy, trade and employment

Motivation

The growing urgency to address climate change, biodiversity loss, and resource scarcity has put the circular economy (CE) at the forefront of global sustainability discussions. While CE policies are often focused on domestic material reuse and waste reduction, international trade plays a crucial yet overlooked role in advancing—or hindering the transition toward circularity. At the same time, the employment implications of CE trade remain poorly understood, particularly across different regions, sectors, and income groups. This report seeks to address that gap by offering the first systematic global estimate of the number, nature, and distribution of jobs linked to CE exports, both directly and indirectly through global supply chains.

Definitions and scope

In this study, CE goods are defined as traded products that are recyclable, reusable, refurbished, or made from secondary raw materials, based on the convergence of frameworks from the United Nations Economic Commission for Europe (UNECE), Eurostat, ISO, and other international institutions. A novel harmonisation method is applied to identify 159 CE goods within the Harmonized System (HS 2022) classification at the 6-digit level. The concept of CE employment includes both direct jobs (in recycling, reuse, and remanufacturing) and indirect jobs generated through upstream linkages across other sectors.

Methodological approach

The analysis combines trade, employment, and input–output (IO) data using the following steps:

1. Compilation of a CE goods list: identifying CE products using HS 6-digit codes, based on keyword matching and expert validation.
2. Data harmonisation: collecting and aligning trade data (UN COMTRADE), employment statistics (ILOSTAT), and input–output tables (OECD ICIO and GTAP-CE).
3. Direct job estimation: calculating employment-to-output ratios by sector and applying them to CE exports.
4. Indirect job estimation: using a multi-regional input–output (MRIO) model to trace upstream employment effects.
5. Job characterisation: profiling CE-related jobs by formality, gender, age, and skill level, and identifying sector-country employment hotspots.

Results

Trade patterns:

• CE goods account for only 0.52 per cent of global trade by volume and 1.29 per cent by value, highlighting their limited role in the global economy.
• CE trade is concentrated in high-income countries such as the EU, United States, and Japan, however, the employment linked to these exports is largely generated in low- and middle-income countries.
• The leading CE-exporting sectors by value are: basic metals (50 per cent); food and beverages (23 per cent); and paper products (12 per cent).

Employment:

• CE exports support an estimated 5.96 million jobs worldwide, with 27 per cent classified as direct and 73 per cent as indirect.
• Middle-income countries, such as Brazil, India, China, and Indonesia, account for the majority of CE-related jobs, especially in agriculture and food sectors.
• Direct CE jobs are concentrated in food processing (in developing regions) and basic metals (in developed regions), while indirect jobs are largely driven by agriculture and wholesale trade.
• Globally, 58 per cent of CE jobs are informal, and 83 per cent are considered unskilled.
• Female workers hold approximately 1.47 million CE jobs but are underrepresented in indirect employment.
• Youth employment remains low; CE jobs predominantly benefit adult male workers.
• Labour intensity per unit of CE export is higher in developing countries due to lower productivity and greater reliance on manual work.

Conclusions

This study presents the first comprehensive estimate of employment linked to CE trade, demonstrating that even a small share of global trade can have significant labour impacts—especially in informal, low-skilled, and upstream sectors.

However, the analysis also uncovers major challenges:

• CE-related employment is disproportionately informal and lacks quality standards.
• Many countries remain excluded from circular trade due to structural, technological, or data limitations for its accounting.

To address these gaps and improve the accuracy and policy relevance of future analyses, the report recommends expanding employment datasets to allow deeper disaggregation by product, region, and sector—especially in low-income economies.