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FUTURE OF WORK WITH THE INDUSTRY 4.0

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 FUTURE OF WORK WITH THE INDUSTRY 4.0
Ayhan GÖRMÜŞ

Abstract
Historically, technological improvements that develop the production process have been one of the
most determinants for industrial revolutions. Recently, it is suggested that the last point that production
technologies have reached points out a new industrial revolution as it means that it is Industry 4.0-the
fourth industrial revolution. The usage in the industry of advanced technologies such as artificial
intelligence, nanotechnology, quantum computing, synthetic biology and robotics is regarded as the
beginning of Industry 4.0. It is expected that Industry 4.0 creates better prospects in the production process
while bringing with some changes in social, economic, environmental and political systems. Undoubtedly,
among those changes, employment issues and the future of work take part in at the top. With the transition
to Industry 4.0, some suggest that automation and robots are more likely to replace many jobs performed by
labour and lead to massive job losses, others claim that Industry 4.0 will provide net employment increase
by creating new jobs and employment fields. Nevertheless, the effect of Industry 4.0 on employment and
the future of work is still keeping ambiguous. In this regard, the paper aims to present a literature review to
discuss the possible effect of Industry 4.0 on employment and the future of work. In the result of the
literature review, it is concluded that with Industry 4.0, there will be an increase in demand for human
resources that hold new qualifications and skillsets, however, it will bring with increases in the gig
economy with precarious, the lack of bargaining power and legal protection, in non-standard working
forms and in unemployment and underemployment risks.
Keywords: Industry 4.0, Technologic enhancement, Future of work, Employment policies.

Introduction
The industrial revolution may be regarded as technologic progressions that develop production
process. In this sense, the first industrial revolution started with the usage of water and steam power in the
production process. And then it was gone through to the second phase of industrialisation with starting the
usage of the assembly line and electric power in production. Next, a transition to computer and automation
systems in the production process was a beginning for the third industrial revolution. Today, the last point
that production technologies have reached is named as the fourth industrial revolution -Industry 4.0. It is a
composition of the usage in the industry of several advanced technologies like artificial intelligence,
nanotechnology, quantum computing, synthetic biology and robotics. The terms “digitalisation” and
“computerisation” and “second machine age” is also widely used to express the same change in the
industry (Brynjolfsson/McAfee, 2014 cited by Schroeder, 2016: 2).
The term “Industry 4.0” was firstly used in 2011 at the Hanover Fair in Germany to highlight the
competitive strategy model of European Union industries with other international markets. The purpose of
the model is to integrate information and communication technology (ICT) or big data analysis into the
industry (Riminucci, 2018: 2). Recently, Industry 4.0 points out technological developments which become
ambiguous the lines between the physical, digital and biological spaces across industries (Sun, 2018: 4). In
this sense, new technologies such as artificial intelligence (AI), nanotechnology, quantum computing,
synthetic biology and robotics will rapidly substitute for production technologies in the past sixty years
(Hinton, 2018). It is suggested that the fourth industrial revolution will create better prospects in today’s
production process, including mass customisation, flexible production, increased production speed, higher
product quality, decreased error rates, optimised efficiency and better customer proximity (Kusmin, n.d).
However, there are also some commenters arguing that “Industry 4.0 is not a revolution, but an
evolutionary enhancement of the production and business model”. As a result, the revolution or the
evolutionary enhancement that is associated with Industry 4.0 refers to the fourth industrial revolution
(Schroeder, 2016: 1). Actually, Industry 4.0 is related to the “smart factory”. “In a smart factory, physical
systems can cooperate and communicate with each other and with humans in real-time and all of them are
enabled by the internet of things (IoT) and related services that allow a production factory to manage itself


Assoc. Prof. Dr., Department of Labour Economics and Industrial Relations, Faculty of Economics and Administrative
Sciences, Tekirdağ Namık Kemal University, Turkey. e-mail address: agormus@nku.edu.tr

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virtually” (Dutton, 2014 cited by Morrar et al., 2017: 13). Zheng and his colleagues (2018) define smart
manufacturing systems as “fully integrated and collaborative manufacturing systems that respond in real-
time to meet the changing demands and conditions in factories and supply networks and satisfy varying
customer needs”. The main sources of data gathering and analysis in Industry 4.0 are the smartness of
industrial applications that consist of the smart design, smart machining, smart monitoring, smart control,
smart scheduling (Zheng et al., 2018: 139).
Essentially, the industrial revolutions mean far more than technologic improvements in reality. In
this line, every industrial revolution brings with foreseeable and unforeseeable changes in social, economic,
environmental and political systems (Hinton, 2018). Undoubtedly, among foreseeable changes, skill-mix
needed by Industry 4.0 and the future of work take part in at the top. Also, there is a high risk of being
unemployed or underemployed for lower-skilled workers in case of the lack of coherent active and passive
employment policies, since low-skill and routine jobs are more likely to be substituted or replaced by
automation and robots in the next ten to twenty years. On the one hand, these robots will perform tasks at
multiple times with higher accuracy and speed than labour and become a more productive substitution for
the labour (BRICS Business Council, 2017: 5). On the other hand, in case of the transition to Industry 4.0
achieves successfully, a reduction of the manual workload and shift to more satisfying tasks for workers
might considerably create a positive effect on the future of work (Riminucci, 2018: 3). For the International
Federation of Robotics, robots are a substitution for labour activities rather than replacement of works. In
fact, robots offer better prospects for labour to engage higher-skilled, higher-quality and higher-paid jobs
(IFR, 2017: 2). However, the effect of Industry 4.0 on the future of work is still ambiguous and its success
or failure is closely related to the labour market and relationships of workers, unions, employers and public
authorities each other. In this regard, the paper aims to present a literature review to debate the possible
effect of Industry 4.0 on employment and the future of work.
Literature Review
The labour markets have deep dynamics which are intensely influenced by the determinants of
labour demand and supply. In this line, it is expected that the effect of Industry 4.0 on the technology,
production and organisation structure will affect employment and the future of work. Actually, industries in
the whole economies, as well as employment, are constantly transformed by changes in markets and
technologic progress. The usual circulation process in market economies is so-called by Schumpeter as
“creative destruction” (Schumpeter, 1942: 82–85). For Martin Ford’s view (2009), the majority of tasks
that have traditionally made by labour will be ultimately fulfilled by automation technology and robots.
Also, creative destruction will eradicate old industries while generating new ones and they are more likely
to be technology-intensive. Finally, with the transition to a technology-intensive production, the general
economy will arrive at a “tipping point.” Beyond this point, firms will prefer to primarily employ more
automation and robots in production rather than the labour force (Ford, 2009: 211). In this sense, World
Economic Forum (WEF) estimates that total task hours which are performed by automation that are
average of 29% across the 12 industries in 2018 will rise to 58% by 2022 (WEF, 2018: viii). Here, the
critical question is that: how will the transition to Industry 4.0 affect employment and the future of work?
In this issue, academic and institutional discussions are still ongoing between two opposite views. On the
one side, pessimists who argue that Industry 4.0 will lead to massive job losses if a lot of current jobs are
replaced by new sophisticated technology and robots. On the other side, optimists who argue that Industry
4.0 will create new jobs and employment fields, and therefore increase the employment rate (BRICS
Business Council, 2017: 5-6).
From the side of pessimists, a group of researchers1 argue that technological progress in robotics
and automation will result in net job losses or lower wages as labour is gradually replaced by automation
and robots. They suggest that job losses will be far more experienced in low- and middle-skilled
administrative and routine jobs, such as bookkeeping, product testing and machine operators (Balliester and
Elsheikhi, 2018: 8-9). Frey and Osborne (2017) examined the relationship between the likelihood of
computerisation, wages and educational attainment for 702 detailed occupations in the USA. To do this,
they separated occupations as high, medium and low-risk occupations on the basis of their likelihood of
computerisation and predicted around 47% of total US employment is at the high-risk category.
Additionally, researchers of the Mannheim Centre for European Economic Research (ZEW) who apply
Frey and Osborne’s approach to Germany concluded that 42% of jobs in Germany were at the high-risk due
to automation. While automation risk rises to 80% among workers with elementary and primary education,
1
Frey and Osborne (2017), Arntz, Gregory, and Zierahn (2016), McKinsey Global Institute (2016), Decanio (2016).

318
that risk drop to 18% among those who have a doctorate degree. At the income levels, as income level
increases, the probability of automation falls down (Schroeder, 2016:4). Moreover, Deloitte (2014)
estimated that the proportion of jobs which would be made redundant by new technologies were about 35%
for the United Kingdom in the next 15 years. The World Bank (2016) predicted that automation and the
robotics could displace 66.6% of existing manual jobs in the developing world. For the prediction of
McKinsey (2015), 45% of existing jobs currently performed by labour could be replaced by automation,
while technology could totally substitute 5% of full-time jobs (Balliester and Elsheikhi, 2018: 9-10).
Actually, the effect of Industry 4.0 on works is closely related to the skill level of workers and whether a
job is routine or not. The majority of the studies admit that the impact of Industry 4.0 on high-skilled
workers will be fewer. However, some studies argue that lower-skilled workers will be far more affected
while others suggest that medium-skilled will be more impacted (Choi, 2017).
In the side of optimists, there are some studies argue that Industry 4.0 could increase job prospects
by creating new professions, especially in architecture, engineering, computer and mathematics fields.
Actually, it is suggested that historically, technological progress has been a positive effect on employment.
In France, for instance, the internet led to 500 thousand jobs lost in the last 15 years, however, it created 1.2
million new jobs (Balliester and Elsheikhi, 2018: 14). With the usage of Industry 4.0 technologies, the
spillover effect of increased productivity along an industry’s value chain can generate new job prospects in
target industries, depending on increasing in demand. Although automation and robots have a positive
effect on labour demand and wages for highly-skilled workers, a reduction in the employment rate of
middle-skilled workers lead to some concern in terms of increasing income inequality. These concerns can
be resolved by updating the skills of lower and middle-skilled workers (IFR, 2017: 2). Additionally, it is
expected that traditional jobs in the financial sector such as accountancy, banking and legal assistance will
be substantially restructured and replaced by The Blockchain (BC) technology. Also, this technology might
trigger to be created new works such as The Blockchain developers, internet of things, architects and
cognitive computer engineers (Balliester and Elsheikhi, 2018: 13). Also, Martin Ford (2009) states that
although technology eliminates some jobs in some fields, with economic growth and innovation that are
provided by technology, new businesses arise, new products and services are developed and new jobs are
created. Boston Consulting Group also predicted that implications depending on Industry 4.0 technologies
could create more than 100,000 new jobs in mechanical engineering and construction by the time 2024
(Maier & Student, 2014 cited by Bonekamp & Sure, 2015: 35). Some experts believe that job loss will not
be experienced because of the usage of Industry 4.0 technologies, even if it does not ensure a net
employment increase. In this context, they consider that Industry 4.0 will create an increase in labour
productivity and production quality. In this process, admittedly, low-skilled jobs will be eliminated;
however, a demand increase for quality products will constitute a positive effect on the job creation for
higher-skilled workers. As a result, the job losses for low-skilled workers will balance with the creation of
new highly-skilled jobs to a large extent (BRICS Business Council, 2017: 6). In this sense, WEF predicts
that the proportion of emerging professions to total employment will increase from 16% to 27% by 2022,
while the share of declining occupations to total employment will fall back from 31% to 21%. Also, WEF
estimates that there will be 0.98 million job losses versus 1.74 million job gains (WEF, 2018: viii).
New jobs with higher skills created by Industry 4.0 will require new qualifications and new
skillsets. In this sense, self-organization, management, teamwork, or communication skills are more likely
to increase importance (Kergroach, 2017: 8). Boston Consulting Group highlighted that the importance of
IT and programming skills will increase in terms of employability (Maier & Student, 2014 cited by
Bonekamp & Sure, 2015: 35). Moreover, firms will recruit human resources that hold new qualifications
and skillsets, and restructure their organizational structure and practice new management techniques for
using more efficient of their assets (Kergroach, 2017: 8). In the near future, creativity and decision-making
skills and technical and information and communication technologies (ICT) expertise will be capabilities
that are the most sought by employers. ICT, big data and cybersecurity expertise will become the top
occupations of the labour markets in developed economies (Davies, 2015: 6). For WEF (2018), up to 2022,
professions that substantially utilise from technology such as Data Analysts and Scientists, Software and
Applications Developers, and E-commerce and Social Media Specialists will be far more demanded by
firms. Additionally, occupations which prominently benefit from human skills, such as customer service
workers, sales and marketing professionals, training and development, people and culture, organizational
development specialists and innovation managers are more likely to grow (WEF, 2018: viii). Also, new
qualifications and new skill-mix demanded by Industry 4.0 will need to be changed educational profiles, as
well as education and training policies (Kergroach, 2017: 8). In this line, education systems should work on

319
not only developing basic STEM (science, technology, engineering and mathematics) education but also
improving human skills, such as creativity, empathy, systemic thinking, that will be impossible to be
fulfilled by robots (Deloitte, 2015, McKinsey Global Institute, 2017, cited by IFR, 2017: 11). Additionally,
in developed countries, increasing in the usage of Industry 4.0 technologies that require high-level skills
may lead to flow the employment from developing to developed countries. This is because the labour-cost
advantages of producing will reduce in developing countries (Balliester and Elsheikhi, 2018: 11).
Figure 1 Expected increase or decrease in occupations and industries

Computer, Engineering and Mathematics

The Block chain developers,
IoT architects and cognitive computer engineers,
ICT, big data and cybersecurity expertise

Office and administrative,

Transportation and logistics,
Accountancy, Banking and Legal assistance,
Electrical appliances and electronics, Textile,
clothing and footwear industries,
Agriculture

Source: Balliester and Elsheikhi, (2018).

Researchers believe that Industry 4.0 is more likely to change substantially the nature of jobs,
future workplace and labour force. On the one side, a lot of existing jobs will be replaced by a set of new
jobs because of the digitalisation and automation of many work activities. On the other side, with a
transition to Industry 4.0, demand for highly-skilled workers will increase while demand for the low and
medium-skilled workers will fall. For example, jobs requiring the low level of social interaction, creativity,
mobility and dexterity are more likely to become automatic. Also, most of the routine jobs that require
measurement, processing, pattern recognition or manipulation will be far more vulnerable against
computerisation and automation (Makhoul, 2018). Also, as Industry 4.0 advances, automation and robots
may far more substitute for the labour force and the skills deficit for the labour force may gradually
increase. Studies confirm that computerisation and digitalisation lead to a polarisation in the skill demand.
In this regard, the evidence suggests that computers will complement non-routine cognitive tasks while
substituting for middle-skilled routine tasks, however, they will not have an effect on non-routine manual
labour (Flynn et al., 2017: 3). For Brynjolfsson and McAfee’s view, technological developments arising
from Industry 4.0 would be inclined to eradicate not only routine works but also high-skill required works
identified as pattern recognition and cognitive non-routine tasks (Brynjolfsson & McAfee, 2014 cited by
Bonekamp & Sure, 2015: 34). Additionally, they claim that robots and computers will replace a lot of jobs
performed by manual labour across many industries, as automation grows. Therefore, Industry 4.0 will
result in increasing inequality in the labour markets, particularly low skilled/low paid workers will
encounter more arduous conditions (Sun, 2018: 5). Hirsch-Kreinsen (2014 cited by Bonekamp & Sure,
2015: 35) who examined the outcomes of Industry 4.0 on operational, indirect and management tasks and
activities finds that intelligent and cyber-physical systems would displace those who work in lower-skill
required jobs consisting of elementary and repetitive activities to a large extent. Martin Ford (2009) tried to
predict the effect of cyber-physical systems and computer technology on employability and work
organisation, by using a scenario. He (2009) suggested that low-wage, uneducated workers would not be
primarily affected by artificial intelligence, machine learning and software automation applications,
however, majority of the jobs that require significant training and education would be increasingly fulfilled
by computers.
Existing literature on the practices of Industry 4.0 on human resources and work organization
highlight that teamwork, interdisciplinary cooperation and partner networks are more likely to grow
importance. In addition, with Industry 4.0, it is estimated that the flexibility of work-life and demand for IT
and programming skills will increase (Bonekamp & Sure, 2015: 37). Furthermore, for 2018 the World
Economic Forum (2018), the demand for technology-related and non-cognitive soft skills increases faster

320
than ever before because of the technology and shifts in job roles and occupational structures. This process
leads gradually to enhance the need for new types of education and training. Also, underemployment risk
will far more rise for people without occupational education. The reason for this, technological change that
Industry 4.0 will demand new requirements for work content and processes, as well as necessary
qualifications and competencies (Schroeder, 2016: 4-5). Besides, Frey and Osborne (2017) found that there
is a strong negative relationship between wages and educational attainment and the probability of
computerisation. Their findings imply that as technology progresses, low-skilled workers will have to shift
to tasks requiring creative and social intelligence and gain new creative and social skills (Frey and Osborne,
2017: 268-269). In this regard, organising re-training programs to assist to gain new skills are so critical for
workers at high-risk.
It has been experiencing a transition from the labour force to robotics and automation in many
industries. Undoubtedly, the worker group at the most high-risk are the low-skilled workers. As for workers
who are compatible with Industry 4.0 technology, they may also get greater autonomy and more interesting
or less arduous jobs (Davies, 2015: 6). Electrical appliances and electronics, textile, clothing and footwear
industries take place among the most sensitive industries in terms of the robotics and automation (Balliester
and Elsheikhi, 2018: 13). For Frey and Osborne (2017), most workers in the service sector who engage
transportation and logistics, office and administrative support, as well as labourers in production works,
could be substituted by automation and robots relatively soon. The other sector affected by Industry 4.0,
particularly in developed countries, is agriculture. For example, it is expected that 223,000 jobs in
agriculture, forestry, fishing and hunting will be lost in the USA by 2022 (Balliester and Elsheikhi, 2018:
13). Those who oppose this view argue that it is unlikely to eliminate all jobs in those areas where
technology substitutes for labour (Balliester and Elsheikhi, 2018: 11-12).
In terms of decent work, with the usage of Industry 4.0 technologies in production, jobs will be
separated into smaller parts to support global and digital production. Also, new jobs created by Industry 4.0
may be in non-standard forms such as part-time, temporary, on-call, etc. rather than the standard full-time
employment models. In this respect, WEF (2018) reported that automation is more likely to cause some
decline in the labour force who work in full-time jobs by 2022. Therefore, the number of workers engaging
non-standard jobs may increase and the future of work may become a more fragmented structure that a
person has to work more than one job to compensate for income from their regular work (Kergroach, 2017:
7; Sun, 2018: 12). Moreover, it is expected that non-standard works with low-wage and the lack of social
protection and security, as well as “the gig economy”2 that offers precarious, the lack of bargaining power
and legal protection, will become more prevalent in the near future (Balliester and Elsheikhi, 2018: 38).
Conclusion
In the paper, it is tried to present a literature review on the positive and negative effect of Industry
4.0 on employment and the future of work. Most of the studies highlight that Industry 4.0 will lead to the
destruction of some jobs in the industries while providing to emerge new jobs and occupations. However,
the process of job destruction and creation might be spread out over a longer time period (Balliester and
Elsheikhi, 2018: 10). Moreover, although the debate on the impact of Industry 4.0 on the future of the work
goes on, it appears that the future of work is still considerably keeping ambiguous. Nevertheless, jobs in the
near future are more likely to be required higher education and skills. Also, new jobs seem to consist of
non-standard works and the gig economy offering more fragmented job opportunities that a person has to
work more than one job. It means that underemployment risk will increase much more in the future.
Overall, all of these expectations make it necessary to develop some employment and skill
development policies. Firstly employment policies should be developed to meet job-skill requirements
needed by Industry 4.0 technologies. In this sense, it is worth to mention that the education contents should
be re-designed on the basis of basic STEM education and focus on human skills like creativity, empathy,
systemic thinking. Secondly, sufficient passive employment policies should be developed for unavoidable
costs are minimised and shared equally, since Industry 4.0 will bring with both the new job opportunities
and the new unemployment and underemployment risks. Finally, workers, unions, employers and public

2
“A way of working that is based on people having temporary jobs or doing separate pieces of work,
each paid separately, rather than working for an employer” (Cambridge Dictionary). “The term gig is a slang word meaning
a job for a specified period of time. Musicians, photographers, writers, truck drivers and tradespeople have traditionally
been gig workers” (Frazer, 2019).

321
authorities should act together to manage a successful transition to Industry 4.0 in the processes of making
employment policies and decisions.
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