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THE ECONOMY 4.0: SOCIAL CHALLENGES

The technology of realizing a product or service is defined by the development of production levels. Defining long waves and technological paradigms by economists is directly linked to this fact. Each of these periods is marked by a certain staff structure which is co-dependent with the production process. A great number of employees was required in the period of industrialization and mass production. Therefore, industrialization presupposes the need of numerous “blue collar” employees that possess skills of successful manufacturing processes implementation.  The industrial development and replacement of manual labor by machines has resulted in the prevalence of “white collars” in the employment structure; these employees already have management experience. With the arrival of digital economy, the Internet goods and enormous data, the manufacturing ideas instead of production means started to compete. The current digital economy already affects the customers’ behavior and personalization of services and goods which leads to redistributing the resources and production chains. The emergence of products is put much closer to the customer. The number of automated manufacturing procedures that are run without human interference is constantly growing. Every slight change of manufacturing technologies leads to the decrease of employees with old skills, decrease of unemployment levels and, as a result, to social distress. The key question remains whether the countries are ready for the global social crisis that can be a result of the 4th industrial revolution?

‘The 4th industrial revolution’ is a notion that is widely used by economists after K. Schwab’s report. At the same time, one cannot say that this notion has been previously disregarded. The global economic crisis in 2008 and a subsequent recession were connected with the emergence of basic innovations within a new technological order. The dynamic development of digital technologies and their implementation in most spheres resulted in the total change of the social structure, management techniques, the specialization of countries and requirements towards working skills of people.

However, can robots substitute employees in all spheres and industries? We agree with Eric Reinert, who claims it can happen that the capital won’t be able to implement innovations, production growth and productivity increase. As an example in E. Reinert’s research, one can see the recruitment of household workers, cultivation of crops that cannot be automatized (strawberries, cucumbers, tomatoes, etc.), preparing baseball equipment (balls). In further research, the author concludes that concentrating on manual labor production reduces the opportunities of the government to innovation, thereby bringing it to a technological dead end. Further technological progress affects the welfare levels among various social groups. Does that mean that the 4th industrial revolution won’t affect such a country and it will “prosper” in poverty?

Taking the life cycle of innovations and its distinguishing diffusional distribution into account, one can surely say that innovational technologies will penetrate into all the countries regardless of the levels of life within them. However, this does not mean that innovations in countries with high poverty levels will lead to the enrichment of people. Innovations and the technological progress strive to employees with much higher educational levels. But, in countries that find themselves at the technological dead end, the increase of well-educated people results in a higher percentage of immigrants. Thus, a more active group of people that want to move to countries that provide a higher income will always exist. Therefore the inflow of migrant workers to countries with higher income levels can always be guaranteed.

The 4th industrial revolution poses new social challenges to the countries by increasing the productivity of work and contributing to the economic growth and development: increasing unemployment levels among qualified personnel (the so-called “white collars”); widening the gap between rich and poor people; increasing the migrants’ inflow. That is to say, attention should be put first at the employment policy, offering people jobs and giving them an opportunity to requalify in order to acquire some new knowledge that is crucial in the economy 4.0. Are the universities able to face this challenge by themselves while they are also affected by the digital era? Will they also be criticized about getting far away from practice and dwelling upon theoretical knowledge?

The solution to these important problems can be found only by creating a social dialogue between entrepreneurs and universities. Primarily, the list of key skills and competences necessary for the economy 4.0 should be created. The government’s role is defined by enabling people with insufficient qualifications to acquire new competences for employment. Still, one question remains open – should the government interfere the employment policy by means of providing dotation to unproductive sectors despite the decreasing demand for workforce?  In our opinion, the state’s policy should concentrate on the development of innovational technologies by means of providing the population access to new skills and competences.

CHALA NINA, Doctor of Sciences in Public Administration, Professor

National University of Kyiv-Mohyla Academy

E-mail: n.chala@ukma.edu.ua

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