BRIEFING

Al is one of the cornerstones of the growing digitalisation of industry ('Industry 4.0'). Technologies underpinning this process – such as loT, 5G, cloud computing, big data analytics, smart sensors, augmented reality, 3D printing and robotics are likely to transform manufacturing into a single cyber-physical system in which digital technology, internet and production are merged in one. In the smart factories of the future, production processes would be connected and Al solutions would be fundamental in linking the machines, interfaces, and components (using, for example, visual recognition). Large amounts of data would be collected and fed into Al appliances, which would in turn optimise the manufacturing process. The OECD reckons this use of Al can be 'applied to most industrial activities from optimising multi-machine systems to enhancing industrial research'.

McKinsey argues that Al and automation may on one hand facilitate the rise of massively scaled organisations, and on the other will enable small players and even individuals to undertake project work that is now mostly performed by bigger companies. This could spawn the emergence of very small and very large firms, the end result being a barbell-shaped economy in which mid-sized companies lose out. Other likely effects are increased competition, firms entering new areas outside their previous core business, and a deepening divide between technological leaders and laggards in every sector. 'Early adopters', that is, companies that fully absorb Al tools over the next five to seven years, will most probably benefit disproportionately.

If indeed technologies, such as Al, robotics and automation, are widely deployed across the economy, there will be job creation (as a result of demand in sectors that arise or flourish due to this deployment), as well as job destruction (replacement of humans by technology). As a 2018 meta-study of results shows, there is no consensus among experts, with predictions ranging 'from optimistic to devastating, differing by tens of millions of jobs even when comparing similar time frames'. A forecast by think-tank Bruegel warns that as many as 54% of jobs in the EU face the probability or risk of computerisation within 20 years. The effect is likely to be more nuanced, and there seems to be a consensus among researchers that there will be significant workforce shifts across sectors of the economy, accompanied by changes in the nature and content of jobs, which would require reskilling. Furthermore, job polarisation is probable: lower-paid jobs that typically require routine manual and cognitive skills stand the highest risk of being replaced by Al and automation, while well-paid skilled jobs that typically require non-routine cognitive skills will be in higher demand.