In Europe, as in the rest of the world, innovation and digital transformation are contributing to the emergence of what has been called the fourth industrial revolution. The concept of Industry 4.0 has emerged to describe this digital transformation in industry across all sectors. Integrating digital innovations into their business strategies is a key means of value creation, and digital integration and linking systems can create seamless digitalised value chains.
The objective of this study is to present policy options for the use of taxation and labour market intervention, in light of emerging developments in industrial digital platforms, AI and related technologies, and to analyse how these options can affect economic growth and social cohesion, as well as the development of Industry 4.0 in Europe.
It is operationalised by taking into account taxation and labour regulation instruments in terms of their effects on the economy, society and policy. Despite extensive discussions on the impact of AI and robots on the workplace and the labour market, there is little systematic evidence. Recent estimates of the effects of automation on jobs show strong variations in potential job losses, ranging from 9 % to 40-60 % of current jobs by 2030.
The
prevailing view is that automation replaces and complements human work. But also that traditional full-time employment contracts seem to be further replaced by other forms of employment, such as temporary employment, self-employment, mini-jobs, small jobs intermediated by digital labour platforms, etc.
In summary, from a policy perspective, the report highlights the following points:
- Depending on the political consensus achieved, a balanced combination of elements in both scenarios can be built, creating a work friendly environment with technical and social innovation leading to economic growth and social cohesion.
- The political consensus could be created by including other additional measures, for example a strong industrial policy based on investments to stimulate the development and uptake of European platforms or new regulation on data sharing and competition.
- Internal political cohesion in the EU is essential to achieve the right balance for Industry 4.0 to deliver economic growth and social cohesion with European solutions. InvestEU, Horizon Europe, Digital Europe and related deployment, capabilities and cohesion programmes under discussion can support this process.
- The creation of a coalition of labour market decision-makers and innovation/technology decision-makers in Europe could be considered to find such a balance. EU unity is needed to manage global capital and technology forces, for example through the OECD.
- If Europe were to be pushed to the end of the ultra-liberal scenario, European Industry 4.0 platforms are likely to be marginalised.
- A balanced transformation can be financed by higher growth, more common but selective approach to taxation and, if necessary, temporary budget deficits.