Davos leads on Industry 4.0
January 20th 2016
The World Economic Forum which meets every year in Davos in the Swiss Alps, attracting a mixture of leading industrialists, world leaders, central bankers, NGO heads, and prominent thinkers, is frequently seen as a gathering of the world's most influential people. This year the key subject for discussion is Industry 4.0.
Throughout the four day event, the world's political and business leaders will engage in discussions around the theme "Mastering the Fourth Industrial Revolution".
According to Klaus Schwab, founder and chairman of the World Economic Forum, "We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before."
Schwab warns that Industry 4.0 has the potential to increase social inequality, as society could split increasingly into educated elites and unemployed masses.
In a contentious introduction to this year's Forum, Schwab, who founded the Davos event in 1971, writes "In addition to being a key economic concern, inequality represents the greatest societal concern associated with the Fourth Industrial Revolution. The largest beneficiaries of innovation tend to be the providers of intellectual and physical capital — the innovators, shareholders, and investors — which explains the rising gap in wealth between those dependent on capital versus labor. Technology is therefore one of the main reasons why incomes have stagnated, or even decreased, for a majority of the population in high-income countries: the demand for highly skilled workers has increased while the demand for workers with less education and lower skills has decreased. The result is a job market with a strong demand at the high and low ends, but a hollowing out of the middle."
On the plus side, Schwab concedes that Industry 4.0 will also yield a transformation of industry that will spark new economic growth, and reduce the cost of goods: "In the future, technological innovation will also lead to a supply-side miracle, with long-term gains in efficiency and productivity. Transportation and communication costs will drop, logistics and global supply chains will become more effective, and the cost of trade will diminish, all of which will open new markets and drive economic growth."
Although Davos rarely effects direct change, it tends to be a trend setter, influencing thought and debate at an international level. This year's Davos is likely to elevate the subject of Industry 4.0 firmly to the board room of every multinational.