Circular Economy Growth Signals Major Labor Market Changes: ILO

Between 121 million and 142 million people work in activities linked to the circular economy, according to a new global assessment urging governments to strengthen labor protections, formalize recycling chains, and align environmental policy with social safeguards. The report, released by the International Labour Organization (ILO), Circle Economy, the World Bank Group, and UN-PAGE, identifies the scale of labor involved in repair, recycling, second-hand retail, and waste management as countries expand circularity efforts.

Casper Edmonds, Head of the Extractives, Energy and Manufacturing Unit, ILO, says the study sheds light on the workers who provide “essential services for our societies and our planet,” noting that many participate in circular activities out of necessity rather than choice. The findings emphasize the need to pair circularity investments with measures that support decent work as part of a just transition.

The report shows that the Americas and Asia-Pacific have the highest shares of circular employment, at 6.4% and 5.8% of total non-agricultural jobs respectively, with most activity concentrated in the Global South. More than 74 million workers operate in informal conditions where wages, safety, and social protections are limited, creating regulatory gaps as circular models expand. Repair and maintenance account for almost half of circular jobs worldwide, followed by manufacturing and waste management. Sectors central to long-term circular transitions, such as construction and mining, remain far less integrated.

As governments evaluate pathways to link circularity with labor rights, the ILO released its first global guidelines for improving labor conditions across recycling chains. The framework, developed during a tripartite expert meeting in Geneva in 2025, outlines responsibilities for employers, workers, and authorities in areas including decent employment, rights at work, social protection, and social dialogue. It draws from the ILO’s Decent Work Agenda and seeks to formalize informal recycling systems, strengthen workplace safety, eliminate child and forced labor, and expand universal social protection.

The guidelines give labor organizations a tool “to advocate for better conditions of work for all workers of the industry,” reinforcing the need for just transition policies, says James Towers, Vice Chairperson of the Workers’ Group, ILO. They can also support efforts to “minimize waste, foster circularity, and recognize the value of every job in the recycling chain,” says Ann Coenen, Government Vice-Chairperson, ILO.

Mexico is among the countries evaluating regulatory measures to advance circularity. Industry groups continue to await congressional approval of a federal circular economy law intended to harmonize producer responsibility rules and recyclability criteria for packaging. Companies argue that fragmented state-level regulations slow investment in sorting, recovery, and processing systems. A unified federal framework could give companies legal certainty to scale recycling infrastructure, says Francisco Ríos, Corporate Affairs Director, Mars.

Rising waste volumes increase pressure on regulators. According to INEGI, Mexico generated an average of 108,146 metric t of municipal solid waste per day in 2022. At the National Chemical Industry Association’s plastics forum, participants noted that domestic production reached 3.5 million t in 2024, supported by imports of 5.7 million t. Without coordinated policy, speakers warned, collection and recovery rates will lag behind production growth.

Industry associations and companies highlight that design and material innovation will be essential. Manuel Bárcenas, Marketing Manager, Dow Chemical Company, says packaging designed for recyclability and increased post-consumer content could drive the most significant mitigation gains, though price differences between virgin and recycled materials remain a market constraint. Raúl Mendoza, Director General, ANIPAC, emphasizes responsible use and correct waste separation as priorities for recovering valuable materials.

Service providers working directly with recycling workers state that extended producer responsibility rules could expand operational scale. Carlos Jara, Founder, Soluciones Ecológicas México, says clearer regulation and mandatory source separation for large waste generators would accelerate formalization and growth.

Waste management is also gaining relevance in the energy sector, where end-of-life treatment for solar panels, batteries, and wind equipment is emerging as a regulatory challenge. As new infrastructure expands, countries face rising volumes of energy-related waste requiring recycling or controlled disposal. Market estimates suggest the waste-to-energy sector could grow from US$46.4 billion in 2024 to US$72.4 billion by 2033, driven by interest in converting waste into power or heat. Proper waste management can reduce dependence on imported fossil fuels, diversify energy systems, and enable material recovery that contributes to emission-reduction targets.

Global waste generation could increase from 2.3 billion metric t in 2023 to 3.8 billion by 2050 without improved management systems. Analysts argue that general solid waste laws are no longer sufficient for new technologies, and that energy-specific waste regulations — alongside extended producer responsibility policies and incentives for critical material recovery — will be required to support circularity.

Parallel transitions are underway in agriculture. Mexico and the International Fund for Agricultural Development (IFAD) recently outlined strategies to reduce methane emissions from cattle ranching, presenting a baseline of national emissions and a roadmap aligned with climate goals. Livestock accounts for 12% of global greenhouse gases, according to FAO, and 72% of Mexico’s livestock-related emissions originate from cattle. Officials say increasing productivity across the value chain, improving feed quality, selective breeding, and using digestion-supporting additives could reduce emissions while supporting producers. Integrating rural communities into planning is essential, adds IFAD.

Financial institutions also play a role. Carlos Rodríguez, Deputy Director General of Sectoral Intelligence, FIRA, says financing models should support “a complete system” rather than isolated agricultural production, describing regenerative livestock practices as part of a broader circular economy approach. 

Across sectors, the ILO report and related policy developments indicate that circularity is expanding beyond waste management into labor governance, energy planning, agricultural restructuring, and industrial design. The organizations argue that integrating social protections and labor rights into circular strategies will determine whether the transition delivers equitable outcomes for workers who sustain recycling worldwide.