Industry 4.0 could create millions of new jobs

Industry 4.0

The digital revolution is changing how we live and work.

Headlines like these are causing people to panic:

  • “How the robots will take your job and kill the economy” (Fast Company, 2015)
  • “Automation could kill 73 million U.S. jobs by 2030” (USA Today, 2017)
  • “Job loss from AI? There’s more to fear!” – (Forbes, 2018)

However that story is more balanced than these headlines imply.

Industry 4.0

Industry and business are being transformed by a new wave of digital technology.  

Mobile sensors can track inventory from the manufacturing floor, all the way through the shipping channel, to a retail shelf or a customer’s door. Machines send out alerts about quality control, errors, supply shortages or breakdowns. Predictive software automatically schedules maintenance for trucking fleets based on travel data and past repair timelines. Behavioral analytics help financial institutions spot suspicious activity in bank and credit card accounts.

All of this is enabled by various technologies: mobile, cloud computing, analytics, automation, artificial intelligence (AI), the Internet of Things (IoT), 3D printing, autonomous robots, and augmented- and virtual reality (AR/VR).

This type of intelligent, interconnected ecosystem has been dubbed the fourth industrial revolution. Known simply as Industry 4.0, it’s a potent combination of technologies that adds accuracy, efficiency, productivity and personalized customer service to business and industry in unprecedented ways.

Industry 4.0 will also lower the cost of doing business.

A 2017 Accenture study estimated the average U.S. company could save $85,000 per employee via the integrated deployment of five technologies: AR/VR, autonomous vehicles, big data, machine learning and mobile.

In an extensive research paper released last year, McKinsey Global Institute calculated that intelligent automation technologies could save employers worldwide a staggering $15 trillion in wages by 2030.

Those massive labor savings raise a giant question: how will Industry 4.0 affect the job market?

Jobs displaced …

“About half the activities people are paid to do globally could theoretically be automated using currently demonstrated technologies,” McKinsey concluded, estimating between 400 and 800 million current occupations could be displaced by 2030.

McKinsey cited jobs involving physical labor, data collection/processing, manufacturing, retail, and accommodation/food services as the most vulnerable during the shift to Industry 4.0.

When researchers look at the bigger picture, however, it actually appears far brighter.

If history is any guide, we could expect eight to nine percent of 2030 labor demand will be in new types of occupations that have not existed before.

McKinsey Global Institute (MGI), “Jobs Lost, Jobs Gained: Workforce Transitions In A Time Of Automation” (December 2017)

… Jobs created

If you’re feeling anxious, take a deep breath; we’ve been here several times before, including the early 1980s.

That’s when a shiny new gadget called the personal computer swept into homes and offices, transforming how and where people work. McKinsey estimates that between 1980 and 2015, the introduction of the PC displaced 3.5 million jobs in the U.S.  — but also created 19.2 million new ones. The think tank believes we’ll see similar spinoff employment growth from Industry 4.0.

“If history is any guide,” McKinsey researchers note, “we could expect eight to nine percent of 2030 labor demand will be in new types of occupations that have not existed before.”

In its 2018 Future of Jobs report, the World Economic Forum (WEF) predicted strong employment growth in emerging sectors like AI, robotics and blockchain – but also in non-tech positions such as customer service, sales, marketing, training and skills development.

Combined with anticipated employment growth in sectors like elderly care, green technology, and consumer goods and services, McKinsey projects the overall creation of 555 to 890 million new jobs by 2030, declaring that “this job growth could more than offset the jobs lost to automation.”

The road to Industry 4.0 won’t be completely free of speed bumps or detours, however.

For this monumental workplace transition to work, employers, governments and employees around the world must do their part.

Making it work

McKinsey estimates 75 to 375 million people will have to switch occupations and learn new skills by 2030, “implying substantial workplace transformations and changes for all workers.”

For this monumental workplace transition to work, employers, governments and employees around the world must do their part, according to the WEF analysis.

“It is critical that businesses take an active role in supporting their existing workforces through reskilling and upskilling, that individuals take a proactive approach to their own lifelong learning, and that governments create an enabling environment, rapidly and creatively, to assist in these efforts,” the forum recommended.

In McKinsey’s view, that means employers seeking effective ways for humans to work with machines – not just replacing people with tech to cut labor costs.

“Our analysis shows that humans will still be needed in the workforce,” McKinsey concludes. “The total productivity gains will only come about if people work alongside machines. That, in turn, will fundamentally alter the workplace, requiring a new degree of cooperation between workers and technology.”

Panic? This might just be a better idea: prepare.

About Futurithmic

It is our mission to explore the implications of emerging technologies, seeking answers to next-level questions about how they will affect society, business, politics and the environment of tomorrow.

We aim to inform and inspire through thoughtful research, responsible reporting, and clear, unbiased writing, and to create a platform for a diverse group of innovators to bring multiple perspectives.

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