Thoughts turn to revolution in Davos

"Waiter"! While improving lives, robots may also take jobs. Reuters

Intelligent robots and drones, 3D printers, self-driving vehicles, data mountains, smart production lines, fintech and blockchain – the fourth industrial revolution is here. The World Economic Forum’s (WEF) annual Davos meeting will ponder the potential, limitations and societal impacts of “Industry 4.0”.

Will the transformation of the workplace create jobs or unemployment? Will it close the gap between industrialised and developing economies, rich and poor – or widen it? For Swiss firms, can the new technological revolution ease the pressures of the strong franc?

Speaking ahead of the annual meeting in Davos, WEF founder Klaus Schwab called on world leaders to revise policies to accommodate the coming changes. “We are not yet sufficiently prepared for this fourth industrial revolution that will come over us like a tsunami and will change whole systems,” he said.

“My fear is that if we are not prepared we will create a world where particularly the middle class is frozen out. That would lead to a new problem of social exclusion that we absolutely have to avoid.”

Switzerland is also grappling with the possibilities and potential pitfalls of Industry 4.0, which is being billed as the biggest disruption to the economy and society since the birth of the internet.
 

Switzerland’s efforts are being led by the usual mix of large industrial and financial players, smaller niche firms whose expertise dovetails with new technological demands and research being churned out by the federal institutes of technology and other learning centres.

Swiss opportunity

On the face of it, Industry 4.0 is the perfect tonic for Swiss manufacturing exporters bedeviled by the strong franc or banks facing expensive regulatory changes. Smart production lines and digital wealth management platforms seem a better answer than relocating manufacturing to eastern Europe or closing down altogether.

The problem, as ever, is finding a way of turning dreams into reality, particularly for smaller firms. “Small and medium sized enterprises (SMEs) have limited resources,” Swissmechanic Director Oliver Müller told a recent Industry 4.0 conference in Zurich. “They possess a lot of know-how about their current procedures, but it is not always easy to come out their comfort zone to address something unfamiliar.”

Such an overwhelming array of new technologies could also backfire on firms that choose the wrong strategy or simply become overwhelmed by the sheer volume of data being hurled their way, the conference heard.

But all is not lost. According to consultancy firm Roland Berger, Switzerland is well placed to become one of the Industry 4.0 front runners in Europe. This is due to Swiss firms specializing in high value innovative products. Switzerland regularly takes top spot (or at least in the top three positions) in global innovation studies.

In addition Switzerland (at 19%) is one of the few European countries to have retained its manufacturing base since the turn of the Millennium (as measured by % of value industry contributes to total economic output).

“If Swiss firms incorporate Industry 4.0 to their full potential, they could contribute an extra CHF15 billion ($15 billion) in added value to the economy by 2025,” Roland Berger Switzerland managing partner Sven Siepen told swissinfo.ch.

Jobs threat

But there are a couple of potential banana skins along the path of Industry 4.0. WEF delegates will analyse the recurring theme of data security, a particular bugbear of Swiss banks. Davos debates will also focus on the possible consequences of making machines intelligent, with one debate asking the question: “What If: Robots Go to War?”

But perhaps a more pertinent enquiry for the everyday lives of people is: what will the workplace look like in the age of smart robots and automated customer service points?

There have been many studies predicting the death of many lower skilled jobs in the coming decades. Last year Deloitte Switzerland forecast that half of the current jobs currently available in Switzerland could be lost to automation. Top of the hit list are administrative, secretarial and agricultural jobs, but other studies have even hinted that accountants and pilots might have cause for concern.

The trade union Unia also fears the end of many retail, factory production line and healthcare jobs. Why do you need people to produce certain goods if a 3D printer can do the job just as well, asked Vania Alleva, Unia President in December. “Work that is currently carried out by people will be taken over by networks of machines and robots,” she said at a press conference on the subject.

Unia is also concerned that the workplace will become fractured with more people working freelance or from remote locations. This could destroy the power of collective labour bargaining, the union fears.

However, other observers have pointed out that – just as in other industrial revolutions – Industry 4.0 will undoubtedly create jobs as well. Robots will need to be designed and programmed and big data will have to be expertly analysed for it to be of any use.

“Workers trained in manual assembly will continue to be replaced by automated processes because Switzerland cannot afford to retain these work processes,” Roland Berger’s Sven Siepen told swissinfo.ch. “But this is nothing new. Some production sites in industrial cities such as Winterthur have long gone but employment levels have remained strong [unemployment ended 2015 at 3.3%].”

WEF Davos

The 46^th annual showcase event of the World Economic Forum will take place in Davos from January 20-23 under the title: “Mastering the Fourth Industrial Revolution”. Some 2,500 delegates will attend from the worlds of business, politics, civil society, culture, religion and science. Some 40 heads of state, including British Prime Minister David Cameron, US Vice-President Joe Biden, Canadian Prime Minister Justin Trudeau and Greek Prime Minister Alex Tsipras will be there.

In addition to the fourth industrial revolution theme, WEF debates will also focus on the ongoing global threats to security, including terrorism, and on environmental issues following the successful Paris Climate meeting last December.

WEF was started by Klaus Schwab in 1971 at Davos, initially under the name “European Management Symposium”. It was designed to connect European business leaders to their counterparts in the United States to find ways of boosting connections and solving problems. The forum took its current name in 1987 as it broadened its horizons to provide a platform for finding solutions to international issues.