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Industry 4.0 and the Future of Quality Work

By Mark Dean, Research and Data Officer at AATIS

Academics and researchers are engaged in debates over key concepts widely viewed as shaping how we think about jobs, skills, industries and societies. Industry 4.0 – the rapidly growing integration of digital technologies like automation and big data with manufacturing production is one such concept. Another is the Future of Work – a field of research from which a range of different views have sprung relating to the ‘hows’ and ‘whys’ digitalisation might be leading the transformation of jobs, skills, whole industries and even nations in particular directions.

Along with my colleague, Al Rainnie, I’ve recently written an article that looks at these two areas of academic work and puts them under a microscope, but not to look closer at what’s there, but instead to see what’s missing.

With our findings in mind, this article aims to dispel some of the common misconceptions about what’s happening in the world of work and digitalisation. Beyond this, it aims to highlight the fact that in all of our talk about the future and a world of work split down the middle by robots, there is still a great lack of attention paid to important factors that can help us augment jobs and skills – particularly the critical role of VET in helping to avoid some of the pitfalls we may face in the training and labour markets of the digital age.

The mainstream view of Industry 4.0 and the Future of Work

Today it’s difficult to avoid any reference to the idea that ‘robots are taking our jobs’ when the future of work and digitalisation are brought up in conversation. But this is not a new debate and gloomy and rosy predictions alike are practically as old as the science fiction writing that first introduced us to the possibilities of a future shaped by robots and other smart technologies.

Debates in academic and business circles often fail to critically examine how easily the future of work is seen as one entirely shaped by automation and artificial intelligence (AI), with little place or role for humans in the development of production and service systems that will shape the economies of future societies.

Industry 4.0 represents not a new technology but a new concept about how the future of work will be shaped by a range of technologies that, when integrated, can transform entire production systems and bring efficiencies to supply and value chains that permit innovative forms of product development and business model innovation.

Ultimately, this phenomenon should goad us to think about what such changes will mean for not only business models, but jobs, skills, qualifications and the transition of many workers into forms of employment that can barely be described yet – such is the pace of digitally driven change.

But when researchers and business consultants do produce work that takes a critical view on all of this, it is easily sensationalised and misinterpreted for public consumption.

This in turn shapes negative attitudes of and resistance towards digital technologies and their role in the future of work. Indeed, a 2018 study showed that less than half of all Australians view the possibility of automation and AI as creating net positives.

Arguably, the media has much to answer for with this outcome.

Most often, the media has turned a now well-known Oxford University study of automation’s impact on employment into the prime example of how information is sensationalised and misinterpreted, producing possible negative social and cultural consequences for how we negotiate digital change to work and employment.

This particular study suggested that 47 per cent of jobs in the US labour market could be automated with current technology. It predicted a ‘polarisation’ of job availability between two classifications of occupations: those considered low-skill, low-income and often comprised of manual, routine tasks that, despite being easily automatable, are still cheaper to pay humans to do; and those considered high-skill, high-income requiring critical thinking, data interpretation and other cognitive, non-routine competences that cannot yet be replicated by AI and other technologies.

The overwhelming number of occupations considered highly susceptible to automation were those in the middle-skill, middle-income category – largely those we might consider typically white-collar, professional jobs – consisting of a mix of manual, cognitive, routine and non-routine tasks.

In summary, the study predicted that in the USA, decent middle-income jobs could be wiped out over the next decades given that much of what they entail are the kinds of activities that a computer or robot could easily replicate.

This is a scary prediction, particularly when we consider that the structure of Australia’s labour market is comparable to that of the USA – in fact, the Australian Government's Office of the Chief Economist carried out a similar study of automation’s impact on the labour market, producing a very similar result of susceptibility, 44 per cent.

Yet, the initial Oxford study itself revealed major flaws and biases – the researchers collaborated with colleagues that were not subject matter experts to determine whether or not to view a particular occupation as automatable.

Nevertheless, in reporting these findings the media ultimately claimed that computerisation was already substituting humans for robots. A lasting impact of this is that the phrase ‘robots are taking our jobs’ is now part of pop culture.

Furthermore, the media failed to acknowledge that in presenting a model of substitution, Frey and Osborne looked at the susceptibility to automation of whole occupations, not the tasks within those occupations.

Occupations are jobs, whereas tasks within jobs are the various activities that comprise an entire occupation.

For example, the data in the study showed that jobs like law clerks, surveyors and taxi drivers have a high susceptibility to automation because they are made up of low-skill, manual tasks that can be programmed and computerised.

As a result, the media ran with headlines spelling out the end of work in such occupations.

Stop the press: there’s more to the story of automation

As our lives have increasingly been augmented by digital technologies, have we suddenly found ourselves doing less? Or have we instead learned new skills, developed new ways of working and increased our utilisation of technologies to change the shape of the work that we do?

The reality is that more jobs have always been created than have been lost. Particular tasks within occupations that are highly susceptible to automation, although being easily computer-programmable and therefore capable of being automated, will likely be replaced by new tasks that cannot be computerised as easily.

This means we will always see new jobs that require whole new skillsets and forms of qualification and training.

This is not to mention the fact that the Oxford study also indicated that sometimes jobs comprising manual, routine tasks are still overwhelmingly done by humans due to the need for flexibility and adaptability. Robots simply cannot respond as quickly as humans – after all, people programmed them in the first place!

Which brings us to a very important point – humans possess something robots don’t: experience which we use to carry out roles and take on new ways of performing when necessary.

Extensive critical sociological research has demonstrated just how important experience is. Over several years, sociologists observed and documented the impact of automation on Germany’s automotive industry, the backbone of its world-leading manufacturing sector.

Their research has argued convincingly that humans retain significant advantages over machines – even when we consider manual, routine tasks.

Quality control stands out as a good example: humans can recognise a car part that is faulty, or one not meeting minimum standards based on experience alone.

Often training robots to do this is achieved by ‘machine learning’, engaging robots in studying millions of images of a component so that it becomes familiar with what the correctly manufactured unit looks like.

Humans use not just their eyes but a whole range of senses not shared by machines – and these senses are honed with experience.

Our haptic senses and tactile perceptions kick in before we even look at a product, meaning quite simply that a manufacturing plant employee with decades of experience enjoys huge advantages over a machine in accurately predicting, analysing and executing decisions at crucial points of production and often only using their eyesight to confirm what their hands have already told their brain.

Before picturing the kinds of dystopian future portrayed in genre-defining films like The Terminator and The Matrix, with some insight it is in fact more accurate to simply analyse human decisions already shaping the future of work to grasp how technologies already have negative employment implications for many.

The real challenges of Industry 4.0 and the future of work

So far, we’ve looked closer at the realities of the future of work to suggest with greater clarity that humans can, and will, be the key decision-makers in the shaping of technology and its impact on jobs and industries.

But presently, our rapidly digitalising global economy is being driven by the use of digital technologies to create ‘digital platforms’ that leverage benefits for some at the expense of others.

Namely, platforms like Uber and Deliveroo use technologies to exploit low-skilled workers by acting as intermediaries between consumers and workers, with these workers expected to work under the on-demand conditions that accompany mass consumption in a world shaped by AI, big data, automation and other digital services rolled into the ‘internet of things’.

Although workers in developing countries have been visibly impacted by digital platforms, workers in developed countries like Australia also experience the consequences of insecure and precarious forms of employment made the norm for many via digital platforms.

But beyond this, the arrival of Industry 4.0 and its integration of digital technologies with traditional forms of production in manufacturing and services industries is widely predicted to usher in an ‘industrial internet of things’ – marked by the embedding of smart web-connected technologies in products that seamlessly connect customers to complementary services.

This means that the consequences of platform capitalism could be significant for Australian workers more broadly where existing jobs across the whole spectrum of work become increasingly susceptible to being done by workers engaged via digital platforms and focused on customer-oriented outcomes – the highly automated treatment of Amazon workers in Australia, the UK, the USA and elsewhere are the ‘canary in the coalmine’ of just what digital technology is capable of applying to traditional workplaces for commercial ends, and a first step towards a negative potential for the future of work to be determined by the individuals who have great control over technology and how it is used.

Industry 4.0 and a sustainable future of work: what can be done?

A deeper dive into the murky waters that often obscure the future of work suggests that what is often said about job transformation leaves much out of the conversation. To really think about what will shape the digital age is to acknowledge that there will be an increased reliance on VET skills and education. Arguably, the jobs thought to be protected from digital transformation may not be as safe as has been predicted in the past.

Only in 2019 has a Brookings Institution study found that when AI technologies are isolated from other digital technologies like automation and robotics, we can reasonably expect a disproportionate impact of AI technologies on the kinds of jobs often thought safe from automation – high-skill, high-income white-collar occupations.

This study's approach isolated AI from automation technologies and is based on the keywords used in patents for technologies that will be in the market over the next decades.

As we have seen in other studies above, lower-skilled work is experiential work and not so easily replaceable by robots. If nothing else, we should take away from comparison of the initial Oxford and the recent Brookings studies that all that is certain is that automation, AI and other digital technologies will impact all forms of work and at all levels of employment, income and education.

Skilled workers of all levels and all types are essential to digitally transformed economies and societies in which not only technological competences but also human competences will play a central role.

This means vocational education and training should feature as a primary focus in policymaking for the digital age. A major challenge here is that VET qualifications must find ways to embed both social competences and digital competences in qualifications to best prepare apprentices and trainees for future work and workplaces.

But we face a structural problem in Australian education – more people are going to university where it is now widely thought that a degree offers protection from the impact of computerisation on employment. Therefore, many young people are not actively considering a qualification in VET and the kinds of pathway that lead to enhanced development of skills and competences that snowball into experience and may, after all, safeguard the occupations of lower-skilled workers from threats of digitally-driven deletion.

So how do we make the future work for all? There is an important role for government to develop policy and be its champion to help create leadership on shaping the future of work across the whole of economy and society, beginning with augmenting the VET sector with an emphasis on social and digital forms of knowledge and experience development.

This will require raising awareness of the role of VET sector apprenticeships, traineeships and career pathways development in meeting skills and qualifications demand under Industry 4.0. This can help us to avoid digitalisation lowering the quality of work and to help prepare all aspiring learners – whether in VET pathways or other – for a new industrial era.