Germany’s Just Transition: Can state-driven eco-modernisation deliver for workers and climate?

This blog post was authored by a human with the assistance of Microsoft Copilot (GPT5), an AI writing tool, to help structure and articulate the content. It is based on research and analysis presented in the “Germany Case Report – German labour unions and the Just Transition: state-driven eco-modernisation as strategy for union renewal” report. This report was produced as part of the “Just Transitions: A Global Exploration” project, funded by the Hans Böckler Foundation and led by Professor Vera Trappmann. All interpretations and summaries in this blog post reflect the original human-authored research and report.  
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Germany stands at a critical juncture in its transformation to carbon neutrality. As Europe’s largest economy and its biggest emitter of territorial greenhouse gases, the country’s pathway to net zero by 2045 is not just a domestic challenge – if successful, it could serve as a global signal. Yet, the question remains: can Germany reconcile its industrial backbone with ambitious climate goals while ensuring social justice for workers? 

An industrial giant facing climate reality 

Germany’s economic structure remains deeply rooted in manufacturing, which accounts for 20% of GDP and employs nearly a quarter of its workforce. From automobiles to chemicals and machinery, these sectors are both heartlands of unionised labour, and major sources of emissions. Decarbonising this industrial model is a monumental task, and one that successive governments have struggled to address decisively. 

The Climate Change Act (Bundesklimaschutzgesetz), passed in 2019 and amended in 2021 and 2024, sets a legally binding target of carbon neutrality by 2045. Its original form mandated sectoral emission budgets and imposed penalties for non-compliance.  However, progress has faltered. Industry has made stronger-than-expected emissions cuts, but the transport and buildings sectors have consistently fallen short. Meanwhile, recent political shifts have weakened the original policy design, lowering climate ambition in the 2024 reform. The collapse of the ‘traffic light’ coalition(of Social Democrats, Greens and Liberals) in late 2024 and the rise of far-right forces have pushed climate policy down the priority list, favouring fiscal restraint and competitiveness over transformative action. 

Labour unions: mediators in a polarised landscape 

Against this backdrop, German labour unions – historically powerful actors in policymaking – face the dual challenge of defending workers’ interests while standing firm to their ecological commitments. Our research shows that unions unanimously support the Paris Agreement and national climate targets. The goal is clear - but the “how” of the transition is fiercely debated. 

Unions reject what they see as “market fundamentalism” (i.e. the belief that markets are the best tool to meet needs and allocate resources, favouring limited government involvement) and call for a return to active industrial policies. Their vision of a just transition rests on four pillars: 

1. Massive public investment in infrastructure, renewable energy, and decarbonisation technologies 

2. Binding social and environmental conditions for any state support to employers 

3. Government-backed training and re-skilling programmes to address acute labour shortages and help worker transition into “green” jobs 

4. Streamlined planning and approval processes to accelerate renewable energy expansion. 

Unions’ approach – which we term state-driven eco-modernisation – thus aims to transform industries without dismantling the foundations of Germany’s economic model. It seeks a “win-win”: being the leader in green industrial technologies and securing well-paid unionised jobs. 

Just Transition: A buzzword or a blueprint? 

While German unions are familiar with the term “just transition,” it rarely features in their internal discourse. Instead, they speak of “transformation” or “FairWandel,” of which climate change is pictured as one driver, alongside digitalisation and demographic shifts. This broader lens reflects the lived reality of workers facing multiple overlapping changes, but it also risks diluting the urgency of climate action. 

Justice claims often invoke global solidarity, yet practical strategies remain nationally focused. Initiatives such as regional transformation councils and the new Qualifizierungsgeld (qualification allowance, a kind of “green furlough”) illustrate unions’ emphasis on protecting workers in Germany through re-training and codetermination. These measures are vital, but they stop short of addressing deeper systemic issues, such as global resource inequalities or the exploitative labour conditions underpinning “green” technologies. 

Opportunities and risks ahead 

Germany’s corporatist tradition gives unions a seat at the table in climate policymaking. Through collective bargaining, works councils and formal consultations, they wield significant influence. However, declining membership and structural changes in the labour market have eroded their power over time. Recent gains, such as the membership surge seen in ver.di (the service sector trade union) after successful strikes, hint at a possible comeback, but the road ahead is steep. 

Political realities compound the challenge. The resurgence of climate-sceptical populism and the constitutional “debt brake” constrain the fiscal space for transformative investments. While the new government has pledged €100 billion for infrastructure, competing demands – from roads through public transport to schools – create intense rivalry for resources. 

Why this matters beyond Germany 

Germany’s trajectory will shape debates across Europe and beyond. If the country can deliver a socially just transition, it will set a benchmark for balancing ecological responsibility with socio-economic resilience. If it fails, the consequences will reverberate globally, not only in terms of emissions but also in the credibility of democratic governance to manage systemic change. 

For unions, the stakes are high. Their ability to champion both climate action and social justice will determine whether they remain relevant actors in shaping the future, or become sidelined in a transformation driven by market forces and vested interests. 

Read the full report: German Labour Unions and the Just Transition: State-driven eco-modernisation as strategy for union renewal.

Visit the project website for additional country case studies and insights.