The 4th industrial revolution, ‘Economy 4.0’, is coming at us at lightning speed. The million dollar question is how it will impact on society. The performance of the labour market and the extent to which it can mobilize all talents and assets will be key to this. We have to inspire all key stakeholders to build that competitive and inclusive labour market and economy.
Meanwhile, we observe a number of challenges that impede the responsiveness of the labour market to current and future trends.
1. Employers: More than 90 percent of all employers in Europe employ between 2-19 staff. Combined, these micro SMEs employ 40 percent of the total labour force in Europe. However, they often lack an HR infrastructure; they have limited resources to implement structured job profiling, and staff development. This leads to high 3rd party costs and difficulties to retain talents.
2. Individuals: Labour contracts have become more flexible over the years and this trend is expected to increase over time. As a consequence of this development, every individual has to work actively on their ability to stay economically relevant while at the same time to generate a decent income.
3. Education: The way formal education is organized in Europe (and in most places) hampers its ability to respond to changing demand for labour across all sectors of the economy.
4. Public Sector: The public sector is faced with different labour market challenges that prevent from mobilizing all talents in a region. Be it underemployment, legacy software systems, or data availability: these problems lead to an underutilization of talents in the region and is a hindering factor in economic development.
The four phadses in the Economy can be described as:
Economy 1.0: Operational Efficiency. Asset utilization; Operational cost reduction; Worker productivity.
Economy 2.0: New Products and Services. New business models; Software-based services; Data monetization
Economy 3.0: Outcome-based Economy. Pay-per-outcome; New connected ecosystems; Big Data driven services
Economy 4.0: Autonomous Pull Economy. Continuous demand sensing; End-to-end automation; Resource organization
Each Economy phase has its own effect on the labour market. hence, we can say that Labour also is going through 1.0; 2.0; 3.0 and 4.0. We are now somewhere between Economy 3.0 and 4.0. In this paradigm shift, there is a need to adjust the labour market again and develop Labour 4.0.