China should strive for inclusive growth

As Industry 4.0 changes our lives, we need to adapt and prepare ourselves for Society 4.0 and the challenges it presents

Industry 4.0 will transform the world we live in with artificial intelligence, robotics, advanced sensors, automation, interconnected and autonomous machines and biotechnologies. At its extremes, it will blur the boundaries of human and machine interaction, as robotics and artificial intelligence integration bring science fiction into reality. Already, we have seen deep-learning machines that act like the neural networks of our brain beat the best of men in chess and Go.

The previous three industrial revolutions brought us mechanization, mass production and advanced digital capabilities that power our economies, drive productivity improvements and connect us globally as never before. Now, the brave new world of Industry 4.0 is staged to drive increasing benefits, but many say it could also challenge our global society and employment.

In the next wave, we are not just replacing basic labor with machines that require operators or automating straightforward processes of the past. For the first time, we are at the stage where we are substituting machines for human intelligence and broad-scale labor.

China is a global leader in manufacturing and each year implements about 30 percent of the world's robots. But robots today are mostly single-function machines that can weld, assemble products or other functions. What happens to the next wave of more complex jobs when we increase the flexibility of robotics and embed artificial intelligence?

Autonomous vehicles are expected to move beyond the test stage and be on our roads in as little as five years. While the benefits would free us from the needs of driving and enable the next wave of transportation efficiency, it would also transform the way we think of vehicles and eliminate the needs for millions of drivers of truck, taxis and other commercial vehicles.

Kiosks and mobile apps are already showing up at fast food restaurants to replace the labor of cashiers and order takers. Can you imagine a fast-food restaurant with fewer or no people?

Combining artificial intelligence, robotics and connectivity will ultimately prompt the question of what is man's role in the world. Noted scientists and entrepreneurs like Stephen Hawking and Elon Musk have worried about the dangers. They view the pace of change as exponential, and Musk has said that "the risk of something seriously dangerous happening is in the five year time frame".

In the past, Luddites smashed mechanized weaving looms as they worried about the future. Each wave of technology has threatened segments of our current employment and societal structure. Yet, each time we have not only survived but have advanced our society.

The benefits of the next wave of technology and Industry 4.0 are relatively easy to see with the results of increased productivity, reliability, accuracy and a new wave of innovation. However, the potential disruption caused by the substitution of technology for advanced labor and intelligence will affect not just manufacturing and services sectors, but also professional jobs.

Our society has always moved forward and created the next wave of opportunity in employment. Farm jobs have moved to mechanized plants, manufacturing has moved to services and now we see tools to unleash increasing creative and innovative services.

The challenge ahead is not just Industry 4.0, it is "Society 4.0". The biggest challenge is the potential pace of disruption and ensuring that people are prepared and provided the opportunity to transition to new jobs if and when disruptive technology affects their employment.

Inclusive growth provides opportunity for all segments of the population and distributes the benefits fairly among all. However, today, as technology allows for greater centralized scale, the benefits of advancement often tend to concentrate wealth in entrepreneurs, those able to invest in new ideas or management teams while workers are often left behind with lower wages or disrupted jobs.

We have already seen some of the challenges at a global level of the devaluation of labor with a struggling middle class and a focus on the concentration of wealth in the 1 percent. As we head forward, the newest technologies are likely to increase those pressures to both labor and society if they are not addressed in the short term.

As nations and a society, we will need to prepare for the viable transition of jobs that will be disrupted by Industry 4.0 and the next wave of technology. There are many opportunities ahead in new services, creative roles, healthcare, travel and leisure and many more. We need to ensure that there is as much focus on creating and transitioning to these roles as there has been on the technology.

Additionally, we need to ensure that the benefits of technology driven productivity and growth are inclusive and fairly distributed to all people. Only with a sustainable middle class that has sufficient wages and purchasing power to drive economic growth will global economies continue to grow and thrive.

China has already navigated its role to leadership in manufacturing and as a rapidly growing, consumption-based country with a diverse mix of services and manufacturing industries. The lessons of the path can provide a course for the future to help sustain China's economy with an inclusive growth focus. This can be done by:

Investing in the broader services-sector job creation of Society 4.0.

Ensuring that education not only provides a foundation for the new technology roles, but also provides for the new and emerging services of the broader economy.

Integrating business and education more closely to align curriculums and to provide increased internships and vocational training.

Preparing society for a role of continuous learning and career transition.

Ensuring that support mechanisms are in place to aid those whose jobs are disrupted by technology.

Continuing to enable innovation and provide for the fair distribution of benefits.

Regardless of how Industry 4.0 changes our lives, one thing is clear: The future is coming at a faster pace and we will all need to adapt and prepare ourselves to live in this new reality of Society 4.0.

The author is managing director and partner of A.T. Kearney Greater China. The views do not necessarily reflect those of China Daily.

(China Daily European Weekly 06/30/2017 page9)