Научная статья на тему 'INDUSTRY 4.0 AND IMPACT ON THE LABOR MARKET IN KAZAKHSTAN'

INDUSTRY 4.0 AND IMPACT ON THE LABOR MARKET IN KAZAKHSTAN Текст научной статьи по специальности «Экономика и бизнес»

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INDUSTRY 4.0 / LABOR MARKET / ENTREPRENEURSHIP / EMPLOYMENT / TECHNOLOGICAL UNEMPLOYMENT

Аннотация научной статьи по экономике и бизнесу, автор научной работы — Bespalyy S.V.

In the 18th century, when industrial production began, the use of steam and mechanized production caused major changes in the economy. As a result, production costs decreased along with an increase in the quantity and quality of products. During this period, production underwent a revolutionary transition from manual labor to mechanization. The article examines the evolution of production development, when mass production using electricity led to the Era of Industry 2.0, and then the emergence of the digital revolution, the use of electronics and information technology in production processes, marked the beginning of the Era of Industry 3.0. The aim of the article is to investigate the impact of Industry 4.0 on the labor market. The article establishes that at present, the Internet of objects, industrial networks, cyber-physical systems and the introduction of robotic technologies into production have brought the era of Industry 4.0 onto the scene. Industry 4.0 created a new manufacturing model in which robots are effectively used in manufacturing, this new manufacturing model began to change daily life, manufacturing and working relationships as deeply as the first industrial revolution. The article shows that the potential impact of Industry 4.0 on labor markets remains an under-explored scientific field. It is estimated that Industry 4.0 will lead to technological unemployment by changing the employment structure and will bring new structural problems in terms of unemployment and labor relations. Likewise, automation and robotic manufacturing are expected to have a major impact on the unskilled workforce and cause a drastic reduction in the workforce of vulnerable sectors of society, i.e. women, migrants, youth and the elderly. Findings. This study assesses the possible impact of the fourth industrial revolution on labor markets. Through a literature review and analysis of emerging trends in Industry 4.0, the risks, opportunities and challenges of the process are explored in a comparative perspective.

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Текст научной работы на тему «INDUSTRY 4.0 AND IMPACT ON THE LABOR MARKET IN KAZAKHSTAN»

Для цитирования: Беспалый С.В. Государственная поддержка развития и интеграции аграрного бизнеса Казахстана и России // [Электронный ресурс]

URL: http://rectors.altstu.rU/ru/periodical/archiv/2021/1/articles/1_3.pdf DOI: 10.25712/ASTU.2410-485X.2021.01.003

УДК 330 JEL J21

ORCID: 0000-0002-7462-5340 Индустрия 4.0 и воздействие на рынок труда в Казахстане

С.В. Беспалый1

1 Инновационный Евразийский университет, г.Павлодар, Казахстан E-mail: [email protected]

Introduction

Industry 4.0 as a whole represents applications for the use of robots in industry and manufacturing, manufacturing with 3D printers, the development of artificial intelligence and big data research. These changes, also known as the Internet of Things, the Internet of Everything, or the Industrial Internet, are characterized by four distinct features from previous industrial revolutions: cyber-physical systems, big data and digital information exchange, smart robots, and digital industrialization. Accordingly, smart factories, factories automatically adapt production conditions to current conditions and organize production plans according to order requirements. Robotic technologies promise to increase the impact of the Fourth Industrial Revolution, in this regard, artificial intelligence, which is key to this transformation, is the ability of a computer or computer-controlled machine to perform various actions, analyzing the methods and techniques of human thinking.

The difference between the Industry 4.0 revolution, which will bring many changes from industrial relations to social relations, from cultural structures to political movements, is that it promises to evolve into a coordinated structure, causing the development of technology, scientific progress. In this context, with the advent of Industry 4.0, there will be a transformation in employment patterns. It is expected that some professions will appear, while some others will start to disappear and be significantly reduced.

Materials and methods

The study focuses on the fourth industrial revolution Industry 4.0 and its impact on the labor market and employment. The impact of Industry 4.0 on employment and the labor market was studied through comparative analysis and synthesis. The logical method was used to identify the characteristics and qualities of processes and phenomena that influence and have an impact on the labor market and new professions that emerge as a result. The synthetic method and statistical analysis were used to

quantify the current state of the labor market and the stages of implementation of Industry 4.0.

Research results

Industry 4.0 usually consists of the following 3 structures:

— Internet of Things;

— Internet services;

— cyber-physical systems.

The fourth industrial revolution is not only about intelligent and interconnected machines and systems, its scope is much wider.

With Industry 4.0, a new production model will emerge, in which automation systems, data exchange, 3D printers and robots will be effectively used in an environment of intelligent factories [1,2].

Industry 4.0 forces labor markets and production methods to transform, classical production methods and production relations cannot resist this transformation. Together with Industry 4.0, it is expected that changes and transformations in the methods of production of goods and services will cause changes primarily in industrial relations and ultimately in socio-economic and cultural structures [3,4].

It is assumed that the efficiency of production systems will be ensured by saving resources. In addition, these savings are expected to be sustainable and productivity will rise while costs decline. Production systems are transforming into more complex structures every day. Thus, with the transition to automation / control systems, there is a decrease in the number of active personnel and an increase in the level of education of personnel. There are plans to simplify data processing with supercomputers and intelligent systems, and even develop computers that will have the computing power of the human brain in about a decade. In the process of creating value, the use of 3D printer systems in the manufacturing process will reduce production processes. As the value chain grows, customer satisfaction will be maximized and the Industrial Internet will allow new business models to emerge [5].

Due to the introduction of new technologies, employment in the world will grow every year in the following areas:

— big data — 2.95%;

— mobile Internet and cloud technologies — 2.47%;

— Internet of Things — 2.27%;

— production automation — 0.36%.

Table 1 shows how digital technology can affect employment.

Table 1. How digital technologies can affect employment: different estimates

Organization Evaluation

Oxford University 47% of workers in America are at risk of losing their jobs due to automation

PricewaterhouseCoopers 38% in the US, 30% in the UK, 21% in Japan and 35% of jobs in Germany could be eliminated due to automation

ILO (Chan & Hyun) ASEAN-5: 56% of jobs could be lost due to automation in the next 20 years

McKinsey Out of 60% of all workplaces, 30% can be technically automated

24 Grand Altai Research & Education Issue 1(14)'2021

Organization Evaluation

OECD OECD average: 9% of jobs — high risk. The risks of full automation are small, but a significant number (50 to 70%) of workplaces can be automated

Roland Berger Western Europe: 8.3 million industrial jobs will be lost, but 10 million will be created in services

The World Bank Two-thirds of jobs in developing countries can be automated

In Kazakhstan today, if these goals are not met, any delays will increase social spending. In Kazakhstan, within the framework of Industry 4.0, the priority is the creation of new technological infrastructures and expert personnel who can work with these infrastructures. To be able to compete in global markets, it is vital to take advantage of this new industrial era because non-innovative organizations will be removed from the market in the near future.

With Industry 4.0, more and better products can be produced at lower costs and can be delivered to consumers faster using new transportation technologies such as drones and unmanned vehicles from robotics and automation-based enterprises [6].

Industry and Industrial Relations: The Impact of Technological Advances on Employment and Labor. Industry 4.0 is a transformation based on minimizing costs and increasing production line productivity. The fact that traditional milling is being replaced by intelligent technology gives the impression that the structural characteristics of the labor market are about to change.

With the new industrial revolution, some professions will come to an end, and new and high-profile professions will appear, requiring high knowledge and technology. On the one hand, while unemployment is expected to rise, on the other hand, employment will increase in the new jobs and professions that will emerge. In this new era, it is expected that the first countries that can develop and use technology will reduce unemployment, and those that cannot, will increase the share of the unemployed population [7].

Research by Future of Jobs says that by 2020, «the global labor market will have 2 million jobs, but 7.1 million will not. Jobs will appear in the intellectual and hightech sectors, and in the real sector of the economy... and administrative work will be reduced...» The report says that «by 2020, the number of jobs in mathematics and computer science will increase by 4.6%, in management — by 1.4%, in the financial sector — by 1.4%, in sales — by 1.3% per year, but according to the same data, the number of office jobs will be reduced by 6.1% per year. At the same time, the Internet of Things sector will see an increase in employment in computer specialties by 4.5% per year, and in design and engineering specialists — by 3.6%. These changes will also affect the reduction of specialists in maintenance, repair and installation of equipment by 8% per year, and office workers by 6.2%. New manufacturing technologies and 3D printing and robotics, as well as the development of automatic transportation, will have a strong impact on employment in various industries. Employment will grow where big data analysis and management of complex technological processes are required, and will decline where there is a large share of routine, unskilled labor» [8].

Since the First Industrial Revolution, the need for a more skilled workforce has always increased at different times. The professions that will be in demand include technical professions, information technology specialists, internal audit expertise, digital human resources expertise, digital marketing expertise, interface design, data analytics, big data management, etc. When we look at the historical process, we see that every innovation and change leads to the emergence of new professions, at the same time leading to the loss or loss of some professions. For example, professions such as copper working, tinning, blacksmithing, saddle making, stone carving, wooden spoon handling, basket weaving, and pottery stand out as lost professions.

It is expected that in many areas the characteristics of the workforce will change, many professions will disappear, new professions will appear, in other words, the workplace will evolve. At this stage, it is important to ensure compliance with the process and correctly identify opportunities and threats. While these issues are no different from the 18th century, they will certainly be different in terms of what the experience will be. The fourth industrial revolution has many opportunities and threats.

One of the most important employment concerns is the fear that robots could replace humans in the future and that unemployment could rise. However, instead of saying that manufacturing robots will lead to unemployment, the workforce must adapt to the needs of the new era and realize its potential in areas such as robotics and automation on the one hand, and in areas such as social sciences, anthropology, service sector, natural life, organic products, education, agriculture, livestock and technology business. New professions, new products, new processes, new production methods and new technologies must be produced by people. The transformation of the manufacturing process into a digitalization process does not mean that it will negatively affect all employment. On the contrary, people must respond to this process with more than one transformation strategy and innovative change [9].

One of the consequences of globalization is that international capital is directed to countries where labor is cheap and that labor in the country of origin faces unemployment.

Frey and Osborne of Oxford University estimate that 47% of current US jobs will soon be at risk of being replaced by computer technology. A similar study was carried out for Germany, which indicates that 59% of jobs are at risk as a result of the digital revolution. For member countries of the Organization for Economic Cooperation and Development (OECD), this figure is 57%. A deeper analysis shows that the degree of substitution of computer technology varies considerably between different work groups. Another labor market study found that more than 50% of Sweden's current jobs could be replaced by computers and robots over the next 20 years. Obviously, this process of change will not affect the labor market in the same way. At this stage, it is assumed that the labor market will be divided into such segments as low-skilled / low-paid workers and high-skilled / high-paid workers [10].

It can be seen that two-thirds of people in the United States believe that most of the work that humans do is done by robots, but 80% of these people believe that their

work will not be affected by this process. It is argued that the first impact of Industry 4.0 on labor markets is primarily technological unemployment, as in other industrial revolutions.

Industry 4.0, however, will leave unemployed primarily skilled professionals and professions that have the ability to work independently with an unskilled labor force. Sooner or later, the work of many different professions, such as lawyers, financial analysts, doctors, journalists, accountants, insurers, and librarians, will be partially or fully automated before most people figure it out.

It can be foreseen that Industry 4.0 will tend to increase the supply of skilled software, coding and robotics labor in the labor market. The fact that qualifications can be realized in the short term under the Fordist model of production has had little impact on the characteristics of labor markets. In the development of Industry 4.0, the acquisition of skills in the vocational education of the workforce is an unpredictable compensation policy in the short term. In this case, short-term unemployment in the labor market may be more concentrated on unskilled workers, and the skilled workforce will not be able to respond to the increase in supply during this short-term period. This would lead to the fact that the labor market, on the one hand, would increase the wages of a small number of skilled labor, on the other hand, would reduce the tendency towards wages of unskilled labor [11].

According to the World Economic Forum's 2018 Global Gender Gap Report, professions that employ both men and women are at risk of automation. Unemployment will be higher as a result of automation in male-dominated sectors such as manufacturing, construction and assembly. However, the increased capabilities of artificial intelligence and the ability to digitize tasks in the service sector are the result of automation, and this will also lead to a decrease in labor demand in professions such as call centers and the retail sector, where women traditionally occupy a higher place. In other words, due to the automation of many jobs, the female workforce is expected to face the greatest job losses. It is assumed that the creation of new jobs to replace the lost ones will not be as proportional as the jobs created in previous revolutions.

It is clear that the blue collars of past industrial revolutions are no longer needed, and white collars will only work in areas that cannot be filled with automation and robotics. However, the skilled gray-collar and gold-collar workforce are able to work in accordance with their ability to benefit from their knowledge, skills and experience.

According to the World Economic Forum's Future of Jobs report, 65% of the future occupations of primary school students will be in as-yet-unknown occupations, and these occupations will require high levels of creativity, problem solving, logical and mathematical thinking, and visual ability.

In addition, the same report predicts that data analysts will be more in demand in all sectors in the future. Programmers, software developers, and information security analysts will rank second in computing and mathematics. In second place are architecture and engineering, sales specialists, top managers, product designers, HR and organizational development specialists, and government relations specialists.

Almost every sector, every area of business will be digitized, as already mentioned, and each will become a separate line of business [12].

The expected changes in working life can be summarized as follows:

— the need for unskilled labor will be reduced;

— the need for skilled workforce and digital skills will grow;

— instead of the lost professions, new professions and jobs will be created, many new jobs will appear;

— the importance of flexible structures that can quickly respond to changes in working conditions will increase;

— there will be a transformation in the social structure;

— occupational health and safety will be supported by robots, and more stringent measures can be taken against these risks;

— in the face of cybersecurity risks, the concepts of vocational education and training throughout life will gain more and more importance;

— trade unions will lose their importance and strength;

— working hours will be reduced by improving working conditions and balance between work and personal life;

— freelancers will increase due to human-cloud platforms;

— the wages of unskilled workers will fall;

— the wages of skilled workers will rise.

It is believed that highly hazardous work will be performed by robots, and human losses will be reduced due to industrial accidents.

According to forecasts of the Ministry of National Economy of the Republic of Kazakhstan, by 2022 the number of people employed in the economy will grow to 8.6 million people, of which 33% will be employed in the real sector, and 67% in the service sector.

The greatest decrease in demand is expected in the agricultural sector, where the release of workers will amount to 240 thousand people. And the biggest growth is in the «social economy». Sectors such as education, health care and public administration will provide an increase in employment of 121.5 thousand people.

The most favorable conditions for employment growth are developing in the regions that determine the dynamics of secondary modernization and the service sector in Kazakhstan. The axis of business activity will remain Almaty-Karaganda-Nur-Sultan. In these regions, the main intra-republican migration flow is formed.

Until 2022, the national economy will need about 459.0 thousand workers.

Due to the change in the structure of demand for labor, it is expected to reduce about 288.4 thousand jobs.

According to estimates, the number of potentially unemployed and workers requiring retraining will be 208.1 thousand people by 2022.

According to forecasts of the Ministry of Labor and Social Protection of the Population of the Republic of Kazakhstan, by 2022 in the country as a whole, the most demanded professions will be workers providing individual services, architects and

engineers, employees of services for the protection of citizens and property, middle administrative and managerial personnel, health professionals [thirteen].

The least in demand will be unskilled agricultural workers, crop and livestock producers, tent and market sellers.

As a result of technological transformations, new professions will appear and old ones will disappear or partially change. An assessment of the impact of modernization on the release of labor in Kazakhstan shows that today already 16% of enterprises (out of 10 thousand surveyed enterprises) are planning technological re-equipment, automation of production processes, labor mechanization, digitalization or other modernization. This eliminates the need for mid-skilled and low-skilled labor while the demand for highly skilled workers is booming.

In Kazakhstan, in the structure of employment in terms of qualifications, an increase in the share of workers with high and medium qualifications is expected (+459 thousand), while the share of workers with low qualifications will significantly decrease (-288.4 thousand). According to the forecast, by 2022, the economy will employ about 1.5 million people with low qualifications, 5.0 million people with an average and about 2.0 million people with a high level of qualifications [13].

In the future, a number of professional specializations in the field of science can be attributed to the number of diminishing or disappearing professions, which is caused by the aging of the personnel. The replacement process will affect a number of professions with standardized functions in industries, primarily in the mining and metallurgical sector (miners, drifters, drillers, blastmen, foundry workers, furnace operators, etc.).

At the same time, the cost of labor will slow down the disappearance of professions and the replacement of people with machines. Technological renewal requires large investments, while in the short term, job retention can lead to cost savings for enterprises. However, without the necessary qualifications of workers, the productivity of enterprises will remain at a low level.

Findings

Thus, a study of the likely impact of Industry 4.0 on Kazakhstan in different dimensions is essential.

1. As in many other areas, Industry 4.0 has opened the door to radical social and economic changes. It is inevitable that in Kazakhstan, the Industry 4.0 revolution will bring many changes from industrial relations to social relations and transformations.

2. In Kazakhstan, Industry 4.0 will bring about a critical transformation in labor relations. In Kazakhstan, the processes of industrial transformations have not yet been completed, and the education system is only transforming to prepare a high-quality workforce, which will subsequently create an economic system based on products with high added value.

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