Just Transition a Guiding Principle
05. February 2026New Varða Report Highlights Unequal Capacity of Workers to Respond to Labour Market Change
Major changes to the labour market are expected in the coming years, driven in large part by technological developments and the impacts of climate change. The rapid advancement of artificial intelligence is projected to increase demand for technology-related occupations, while more traditional office and service roles are expected to decline.
A new report from Varða – the Labour Market Research Institute – shows that workers are not equally positioned to respond to these changes. The findings underline the importance of just transition policies that ensure economic and technological transformation does not disproportionately disadvantage specific groups of workers.
Just transition as a guiding principle
The concept of just transition refers to the need for economic and societal transformations to be socially fair. Its central aim is to ensure that the costs and risks associated with change do not fall unevenly on those already in a vulnerable position.
According to the Varða survey, nearly one quarter of employees affiliated with unions under ASÍ and BSRB report that their job has already changed, or is likely to change, as a result of new technology or climate-related developments. Among those affected, the consequences of change are distributed unevenly across different groups in the labour market.
Job security concerns greatest among migrants and low-income workers
More than one third of workers in occupations that have changed, or are likely to change, report concerns about their job security as a result of technological or climate-related developments. These concerns are significantly more pronounced among migrant workers and those in the lowest income brackets.
Workers in these groups are also less likely to believe that they would be able to continue in their current role, or transition to another role within the same workplace, through retraining or skills development. This points to unequal access to learning opportunities and highlights the need for targeted support for those most at risk of labour market exclusion.
Increased workload following technological and climate-related change
Changes linked to technology and climate policy are also associated with increased workload. More than four in ten respondents whose jobs have been affected report that work intensity has increased following such changes.
The proportion is considerably higher among migrant workers, lower-income groups, and employees in certain sectors, including food production, culture and creative industries, and pre-primary education. These findings suggest that technological change can intensify work demands, particularly in sectors where workers have limited influence over how new systems are introduced.
Technology seen as an opportunity – but not by all
Despite the challenges identified, the majority of affected workers believe that technological change will ultimately make their work easier. Nearly two thirds of respondents share this view. However, optimism is far from evenly distributed.
Workers with higher earnings are more likely to view technological change positively, while employees in sectors such as pre-primary education and cleaning services are less likely to believe that new technology will improve their working conditions. This highlights how the perceived benefits of innovation are closely linked to position and power within the labour market.
Training and reskilling remain insufficient
Respondents who reported that their work had been affected by technological or climate-related change were asked whether they had received appropriate training or reskilling when new systems were introduced. Slightly more than half indicated that they had received such support.
While this represents a significant proportion, it also means that a large share of workers are navigating substantial change without adequate preparation. The findings point to the need for more systematic and inclusive approaches to skills development.
Clear implications for policy and social partners
The Varða report is based on responses from nearly 25,000 workers and represents the largest survey conducted to date on the living conditions of employees affiliated with ASÍ and BSRB. The results send a clear message: labour market transformation is unavoidable, but its social consequences are not predetermined.
Ensuring a just transition will require coordinated action by government, employers, and trade unions, with a strong focus on equity, access to training, and protection for those most exposed to change.
The full report is available in Icelandic on Varða’s website.