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Industry 4.0: An Evolving Social Contract for EconomiesUnder Rapid Change

May 26, 19:53 UTC+3
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Robotics, biotechnology, 3D printing, alternative energy, artificial intelligence and other facets of the Industry 4.0are playing an increasingly large part in peoples lives. Robotised systems are replacing traditional jobs, creating demand for new professions and skills on the way. Russia has yet to find the right spot in the new international division of labour.

In the next 20 years, robotic machines and computers may replace up to 45% of the existing jobs in developed economies. These reshaped industries will then be in urgent need of highly skilled talent. The 2016 Future of Jobs Report presented at the World Economic Forum in Davos predicts a disruption of 35% of the skill sets of today’s workforce.

  • The Atlas of Emerging Jobs by the Agency for Strategic Initiatives and Skolkovo shows that many jobs that are currently widespread in Russia (accountant, banking clerk, government service operator, etc.) will become obsolete in the future. At the same time, new professions will emerge: medical robot operator, city farmer, equipment supervisor, etc.

Industry 4.0 envisions the integration of cyber physical systems into production processes, which will involve:

  • automatic readjustment of production chains to meet the order specifications;
  • automatic integration of supplier and consumer networks;
  • decentralised production based on proximity to the consumer;
  • use of Big Data and analytical tools;
  • unmanned, highly efficient labour, with human input necessary only at control points.

Mature economies with expensive labour will be able to leverage these changes to avoid outsourcing production to emerging markets.

These processes will pose new challenges for Russia and other emerging markets:

  • Will the country be able to fully keep up with and benefit from the progress of IT, mechatronics, engineering and science?
  • Will Russia be able to afford the technology in order to gain and sustain competitive strength?
  • What is the right approach to vast redundant labour force and growing income inequality?

Russia's transformation to an Industry 4.0 country is expected to be a journey full of both new opportunities and risks.

Some of the strengths are:

  • Russian developers are recognised worldwide and are a valuable asset for the country. They may be one of the driving forces behind an economic leap forward that would help Russia catch up to developed markets faster.
  • The new industrial revolution will contribute to decentralising and dispersing production and services.
  • Small and medium-sized businesses will be able to take advantage of the new technologies.
  • The share of self-employed population, and owners of SMEs may grow, which will partially mitigate the redundancy issue.

The biggest hurdle is the limited experience of Russians when it comes to entrepreneurship and management.

  • It may take a long while to establish an entrepreneur class with the required engineering and creative competences.
  • There may be a transition period, when the industries of yesterday are no longer competitive, yet the country has insufficient IT talent to fully adapt to the new realities.
  • With Industry 4.0, people are not bound to a production site, social group or country. This raises the risk of a brain drain to countries with a better living environment and a higher quality of life.
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