The Fourth Industrial Revolution?
(This piece builds on the earlier article the ‘Future of the Economy and the World of Work’ (FEWW).
The world is rapidly moving into the Fourth Industrial Revolution also called ‘Industry Four Point Zero (Industry 4.0). Artificial Intelligence (AI) and the Internet of Things (IoT)’. The introduction of robotics, automation, digital transfer and data exchange in the manufacturing industries is bringing about massive transitions in the work place and society in general. Work as we have known it will change dramatically transformed with robots replacing humans in many traditional industries. The fourth industrial revolution is expanding at an exponential rate instead of the previous one which was linear and this will require a totally different set of political and financial strategies and policies. Governments and society have to recognise these transformations in employment and society in general. It will require fundamental reforms and the adoption of new and radical approaches and philosophies
Germany and Japan have already established a number of influential groups looking at the impact of Industry 4.0 and are introducing systems of significant cooperation on such topics as data exchange and the digital technologies. China is also rethinking how it manages its massive manufacturing base. Recent international surveys have indicated that in the next decade or so 20% of jobs will be lost and ultimately only a third of people will be gainfully employed. This raises many fundamental questions about how people and society as a whole will react to these developments and the digital revolution and whether it will create social unrest. A key issue is the relationship between artificial intelligence and human intelligence and what is the relationship between robots and humans? Many countries are also experiencing an aging population which also raises fundamental questions about the structure of the workforce and the need to attract workers from other nations.
As mentioned in the article FEWW we urgently need to reverse the current financial policy/philosophy of product and service trading and work which places the economy over society. The economy is currently driven by banks, other financial organisations and the 1% rich and this is now acknowledged as having massively failed. The new approach should be society over economy putting society and people in the driving seat instead of the financial and multi-international organisations. Obviously this is a very radical proposal which does not fit with current financial practices and entrenched political beliefs.
In addition nations need to move away from a linear economy to a circular economy. This will involve a totally different approach to the manufacturing process. At present it is based on making and distributing products with built in redundancy which guarantees return business and the damping of existing products without any real concern about the damage to the environment and constant depletion of the world’s finite natural resources. This other approach means that recycling will become centre stage in any future manufacturing processes. Hopefully people will also realise how important recycling and energy conservation is and colleges can play a key role in these issues. In addition the further expansion of local sourcing of products and services and vice versa is essential and is already becoming popular with retailers and many businesses particularly micros and S&MEs. For example farmers markets/local produce are proving popular and increasingly active in towns and cities. This approach will keep the economy local and equally important keep the employment local.
These two approaches namely society over economy and the linear economy are now receiving attention from a number of influential economists and policy makers but sadly many others are resisting any major reforms still believing that the current model is still the only viable one.
Equally important is that private/personal debt must be addressed and significantly reduced and if possible completely eliminated. This will allow people to invest and save and this in turn will increase demand and contribute to the health of the national economy. Many people at present are spending what money they have on servicing debt and coping with the costs of living, low wages, frozen annual wage increases and the continuing erosion of working conditions e.g. zero hour contracts. The high costs of covering such items as rent and mortgages continue to dominate their budgets. Sadly the current situation is not helped by many people spending money they do not have or going into massive debt which they cannot manage. The banking business and a rampant consumer culture encourage people to go into debt. The consumer/service society model and business activity in America and Britain represents over 70% of the economy which is unsustainable. These countries need to re-establish a manufacturing base to create a more balanced economy and increase productivity.. Many people live beyond their means and credit cards make it so easy to spend money which they do not possess. In many ways the current economy is based on increasing debt!
The obsession with property ownership in the provision of housing surely needs to be rethought particularly in Britain. The economy is still based on creating debt as governments and many policy makers seem to imagine that the present financial crisis can be resolved by creating even more debt through such strategies as quantitative easing (QA) and negative interest rates. Britain has a government debt of 90% of GDP and this does not include personal, corporate and pension debts which are truly massive and this will create massive problems even if the country exists from the EU. The recent statement by the Chancellor of the Exchequer indicates this will be further increased over the next few years. Other EU countries have comparable government debts e.g. France 97% and other nations in excess of 100%! The future looks very bleak for many EU countries and in particular for Britain which is sleepwalking to financial disaster.
If the economy were to be driven by society and its members many of the current problems would be reduced. As the nature of work is transformed by robots, the new technologies and the consequences of the global economy, developed nations need to urgently review and reform the way they manage employment and the economy. Millions of jobs across the world will be replaced increasingly by robots and other forms of automation. Governments must therefore have a clear vision and policy on the national economy and the future nature of work and how this impacts on workers, citizens and the education and training systems. Previous industrial revolutions have created social unrest e.g. the Luddite movement in England during the first industrial revolution. However this one will be global and its impact will be different depending on the degree to which they are involved with the industries that will be transformed.
An example of the future impact of robots and automation is on male employment in America. At present the largest percentage of American male employment is in driving e.g. lorries, public and private transport etc. These jobs will be ultimately replaced by computer driven vehicles already being piloted across many parts of the world. America is rapidly moving to the introduction of computer driven vehicles as soon as 2020 and other countries are following this development. This raises the question of what jobs will be available for these millions of males as 34 other countries have large numbers of male drivers. Obviously this is just one example of the impact of automation and robotic technologies. One can already see the impact of the introduction of robots and automation in many industries including manufacturing and service based industries.
When the consequences of these digital revolutions impact on society and the majority of people are unemployed how will they financially survive? One possibility is the introduction of Universal Benefit Income (UBI) replacing existing financial benefit systems and will provide people with a basic living amount of financial support. It will replace the traditional approach of welfare benefits. Radical reforms are now needed particularly for the developed nations like America, Britain and the EU and policy makers and people need to radically change the way they live their lives in a future full of uncertainties. Much has happened since I wrote FEWW on the issue of UBI particularly in Germany, Finland and Japan. Switzerland recently held a referendum on UBI and voted 77% against its introduction but since it has become clear the majority of people were ill informed about the initiative and voiced concerns how it would be funded. Germany on the other hand is confident that it can revise tax rates and reconfigure the reallocation of tax revenues to provide approximately 800 Euros per month for each person. Finland has already introduced pilot schemes of UBI along with other countries so it could become a reality within the next few years.
Clearly there is an urgent need to review present practices and priorities in technical and training systems: how they are managed and fundamental reforms worked on in response to these issues. Germany has managed to maintain its manufacturing base in stark contrast to Britain and America. Germany has a long established high quality apprenticeship programmes and an excellent technical and vocational education and training system properly supported and resourced. In addition Germany has introduced appropriate employment protection rules which are aligned with the technical and vocation training programmes giving workers a greater degree of protection.
I hope Further Education Colleges will be involved with reforms that will be so essential in addressing these massive transformations. They will hopefully continue to play a part in preparing people for work however uncertain what that will mean.
Many commenters say that the implementation of Industry 4.0 will be a gradual process more an evolution than a revolution.