Presentation at 60th IPM Convention "Gearing up for Fourth Industrial Revolution" in Johannesburg, South Africa

1. Pavel Luksha
SKOLKOVO School of Management
Global Education Futures
BRICS Skills Development Working Group
Facing consequences of
Industry 4.0 revolution:
global & BRICS perspective

2. Two events that “sent shockwaves over
planet” in last six months
Donald Trump wins Britain votes Brexit

3. 3
Who voted for it? Older and less educated (and
white, concerned about immigration)
Donald Trump wins Britain votes Brexit
AGE GROUP
EDUCATION LEVEL

4. 4
One of the key reasons in the US: increased
mortality of middle-aged working white population
Life span of US white decreases –
unlike all EU countries
(non-white US – increases)
Major reason for early death:
alcohol, drugs & related diseases
This group is “killing itself”
Source: http://www.pnas.org/content/early/2015/10/29/1518393112

5. 5
Something similar happened in Russia
a decade earlier

6. 6
Primary reason:
uncertainty about their future
US “Rust Belt” after mid-1990s Russia after 1990
Destruction of jobs due to globalization, technological changes, and closure
of “inefficient” or “obsolete” sectors creates mass-scale stress of industrial
workers - especially if they realize that strikes don’t solve the problem
… and so they vote to “make their country great again”,
to reverse things as they were

7. This is just the beginning: Industry 4.0 brings
the wave of automation & autonomization
7
Existing (industrial)
model: 60-70% of jobs
directly or indirectly
serve systems of mass
production
Economy 2035: production
& logistics can be up to 95-
99% unmanned, and up to
50-70% of jobs in related
services can be replaced
by AI
Technologies of automation &
autonomization (2016-35): robotics, Internet
of Things, Big Data & Artificial Intelligence,
autonomous energy generation & smart grids,
unmanned transportation & logistics, designed
bio ecosystems, etc.

8. 8
… further enhanced by range of complimentary
technological & social disruptive innovations
Biotech: biofuel, food, materials etc.
3D printing: from organs to houses
Fintech: cryptocurrencies, smart contracts etc.

9. 9
Mass extinction of blue & white collar jobs
2 BILLION JOBS WILL BECOME OBSOLETE GLOBALLY
IN NEXT 15-20 YEARS
Source:http://www.bbc.com/news/technology-34066941

10. 10
We should realize that Industry 4.0 is
a job destroyer on a mass scale
Source:
http://www.forbes.com/sites/anthonykosner/2015/02/04/google-
cabs-and-uber-bots-will-challenge-jobs-below-the-api/#6ddf97d42470

11. 11
Are we ready for it?
… at least, it’s on the radar of global leaders

12. How may the transforming economy look
in next 15-20 years?
Mass-scale industrial
manufacturing (e.g. energy, natl
resources, food, chemistry & new
materials, machinery & equipment
etc.): highly autonomous cyber-
physical manufacturing systems
Customized end-user
manufacturing (consumer
electronics, consumer transport,
apparel, furniture etc.): localized
personalized production based on
3D manufacturing
Manufacturing sector
Digitalized & machine-assisted
massive use services (e.g. digital
health, digital entertainment,
unmanned transportation, post-
retail distribution, etc.)
Customized highly-personalized
services (e.g. wellness,
psychotherapy, fitness & tourism,
hospitality, personalized art &
entertainment, etc.), both digital
& physical
Service sector
Standardizedoutput
(largelyautomated)
Customizedoutput
(“humantouch”)
Source: Global Education Futures

13. 13
Human centered services:
most likely, the main job creating sector
~60% of jobs directly or
indirectly serve systems of mass
production (incl. design &
engineering, finance, marketing
etc.)
Existing (industrial) model
~5-10% of jobs “feed” us
(agriculture)
~20-25% of jobs are human-to-
human services (incl. education,
healthcare, wellness, govt etc.)
Not more than 10-15% of high-skilled
jobs (direct + indirect) remain in
food, commodity & goods mass
production due to automation
Explosive growth to 50-60% of
jobs in human-centered services
(incl. new services) as they are
least susceptible to automation
Emerging model of 2035
25-30% of jobs migrate into
personalized manufacturing &
urban-related jobs
Source: GEF estimates
Various
technologies of
automation &
autonomation
(2015-30)
Massive shifts of job market structure within less than one generation will require
multiple mechanisms to smoothen transformation (including education & training)
~10% of jobs: urban-related
services & products

14. 14
Furthermore: emerging and less
developed economies may get left behind
4th industrial revolution begins to reindustrialize developed countries
(including the production of food in these countries), potentially further
enhancing global inequalities

15. 15
Strategies that may help cope
with emerging global realities
New sector
creation
As developed countries (esp. US, Japan, South Korea, and
Germany) continue to implement their strategy of Industry
4.0 (and related technologies), “gearing up” seems to be
the only feasible option for emerging economies, even
though it will come with job destruction
Human centered
services
Human-centered services (and highly customized
production) are sectors less susceptible to automation. A
recipe for success: anything with “human touch” coupled
with self-employment skills
Rise of virtual
economy
Citizens of developed & developing countries will
increasingly spend their time online (already 6 hours / day
in US and 4 hours in SA). In 15 years, economies inside
virtual worlds may arise as leading job creators

16. 16
To catch up with new realities,
economies need new employee skills
• Concentration & attention management
• Flexibility & adaptability
• Self-development + ability to unlearn / relearn
throughout life
Meta-skills
Key
professional
skills
• Multidisciplinary work (T-specialist to m-specialist)
• Multicultural + multi-lingual competencies
• IT competencies
• Working in distributed (IT enhanced) environments
• Problem- and opportunity oriented thinking
• Entrepreneurial skills: acting in uncertainty & taking
responsibility (for VUCA environments)
• Creativity (incl. “right-brain” creativity)
• Collaboration
• Empathy & emotional intelligence
• “Ethics of responsibility” (social + environmental)
Soft skills
Source: Skills 2030 Foresight, Global Education Futures

17. … and new types of managerial skills, too
17
Collective intelligence AI-enhanced real-time management
Fluid organizations: removal of artificial
barriers (work / learn / play / serve)
Human focus / meaning above process

18. 18
Will we be able to prepare it with the
existing education model?
Check www.edu2035.org for some answers!

19. 19
How is BRICS faring?

20. BRICS situation: shifting from resource-
based to knowledge based economies
20
BRAZIL 2025?
RUSSIA 2025?
CHINA 2025?
INDIA 2025?
SOUTH AFRICA 2025?
• From manufacturing to full
scale knowledge-based
economy
• New centers of economic
activity
• Sustainable energy &
infrastructure
• Development of
infrastructure for
economic transformation:
• Growth through new hi-
tech sectors (National
Technological Initiative
etc.),
• Cultural innovations &
growth of creative
industries
2025?
Sources: working group discussion results,
for China: China State Council 10-year plan
Generation of jobs (12 mln jobs annually) with high
economic growth
• manufacturing+ green economy;
• infrastructure development;
• energy security + renewable energy (esp. solar),
• ICT sector development
• Nation building + social
equality
• Infrastructure development
for the country & macro-
region of Africa
• Growth through new sectors
• Developed infrastructure for the country and
South America
• Emerging actor in knowledge economy
around new manufacturing sectors
• Shifting towards “green”
economy, incl. renewable
resources &
sustainable agriculture

21. 21
BRICS situation: looking for breakthroughs
in Industry 4.0 and emerging sectors

22. 22
Enabling new sector creation in Russia
through skills development: some cases
Clusters with skill dev component:
InnoPolis Hi-Tech City
Innopolis is a new Russian city, located in the Republic
of Tatarstan. The city’s economy is based on high-tech
industries. In Innopolis, a unique environment has been
created that combines a modern residential infrastructure
in harmony with the nature, safe environment, and broad
opportunities for education and professional
development. Innopolis University is a Russian higher
education institution focused on education and research
in the field of IT and Robotics.
Next gen technical universities:
Moscow Polytech University
Founded in 2016 on the base of the Engineering University
& Moscow State University of Printing Arts One of the
largest technical universities in Russia. The mission of the
University is to train engineers and managers for
enterprises of the real sector of the economy, including
the military-industrial complex, and engineering elite, who
would have competences of project work.
Partnership with SAP on skills of Industry 4.0
STEM Clubs for Youth:
“Super-Engineers of the future”
Program targets children & youth between 10 &
18. Search for talents in new sectors (robotics,
IoT etc.), primarily in large cities covered by
Quantorium Youth Technoparks program.
Partnership with top Russian IT companies
(ABBYY, Kaspersky, Yandex, …) and leading
MNCs (IBM, Microsoft etc.)
Competitions focused on tech talent:
WorldSkills HiTech & JuniorSkills
Competitions based on WorldSkills methodology
that are centered on talents necessary for
Industry 4.0 skills and advanced manufacturing
skills. New types of competitions: life cycle
management, competition of experts.
“Laboratory” for new skills (e.g. “neuropiloting”)
and new training methodologies (e.g.
biofeedback-enhanced hard skill training)

23. 23
(Very rough) assessment of BRIC
countries readiness for the new reality
China
Brazil
India
Russia
New sector
creation
Human centered
services
Rise of virtual
economy
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~ ?
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South Africa: you are welcomed to assess

24. Looking beyond Industry 4.0:
is there light at the end of the tunnel?
Top 10 challenges of next
decade according to WEF
Key solutions: shift of
the model of economy & society
Do you see an opportunity for job creation?
Or – can you see much more?
6 out of 10:
humanity-nature relationship!
 Technologies of sustainable manufacturing:
renewable energy & materials, recycling etc.
 Changed model of economy: network based
regenerative localized economies
 Changed model of urbanization: cities as nature re-
creators / natural eco-systems
 Changed (global) governance: global coordination of
long-term development & risk management
 Water crises (#1)
 Weak climate change
response (#2)
 Extreme weather (#3)
 Food crises (#4)
 Biodiversity loss (#6)
 Natural catastrophes (#9)
All of these transformations are driven by new mindset
& behavior - enabled by new skills & knowledge