Industry 5.0 and the future of work (JRC 2023)

The European Commission's expert group on the economic and societal impact of research and innovation (ESIR) has on several occasions supported the aim to promote a systemic industrial transformation that goes beyond the deepening of digital technology in industry, in order to embrace a human-centric, resilient sustainable paradigm. The “Industry 5.0” approach, still far from universally acknowledged, is key for the future of the European economy, and a much-needed step to ensure that industry becomes a protagonist, rather than a passive factor of transformation. In this policy brief, ESIR looks specifically at the intersection between industrial transformation and the future of work.

The future of work is going through a perfect storm, made at once of increasingly warning signs of labour displacement and skills shortage, and equally worrying tendencies to discard labour disruptions as less important than other emerging problems, including those related to economic competitiveness and strategic autonomy. In this brief, ESIR unpacks many dimensions of the future of work debate, placing them in the context of current EU industrial and innovation policies. The research focuses in particular on the debate on industrial transformation, under an Industry 5.0 lens.

Section 1 of the brief argues that the reference paradigm for industrial transformation, the so-called Industry 4.0, takes insufficient account of the jobs and skills dimension as well as the related societal impacts; and that similarly, the current emphasis on “net zero” does not place sufficient emphasis on the jobs emergency. ESIR thus proposes that the EU adopts a comprehensive Industry 5.0 strategy, aimed at making systemic industrial transformation a protagonist of future resilience and sustainability, rather than an obstacle on the way to a more prosperous future. This Industry 5.0 approach has to include the future of work as an essential dimension of future sustainable development, at the same level as other essential goals such as protecting climate and biodiversity and, more broadly, ensuring long-term resilience. We also propose that this approach be accompanied by strategic foresight and horizon scanning, given the uncertainty associated with the evolution of industry (and work) in the coming years. The long-term future of work, it must be recalled, entails too many uncertainties for any safe projection.

Section 2 proposes a step-by-step approach to mainstreaming jobs in EU industrial policy, both at the EU and at the regional level, based on foresight and backcasting. This approach would help policymakers consider key issues such as:

1. “What future”, or better: what alternative futures may emerge, with different consequences for the future of work, and how to account for increased uncertainty and the poly-risk world when planning for the future of work;
2. “What jobs” will emerge in Europe, in terms of quantity, quality and specialisation; and
3. “What skills” will be needed, especially if a human-centric approach to the digital transformation is adopted, calling for complementarity between humans and machines, and the primacy of the former over the latter.

This will lead us beyond the traditional emphasis on “STEM” and coding, towards a broader recognition of critical thinking, social and soft skills, as well as domain knowledge, creativity and imagination as distinctive traits of future human occupations. ESIR also propose methodologies to map Europe’s relative technological specialisation and the potential to create future jobs, in a way that accounts also for the regional specificities of the EU territory; and argue in favour of mainstreaming the creation of “good jobs” in all EU policies.

In summary, the EU does not currently have a comprehensive strategy for the systemic transformation of the economy, which includes adequate consideration for the quantity and quality of future jobs. The recent launch of the Net Zero Industry Act and of ad hoc “academies” to create the necessary skills is a promising move; however, even this welcome step fails to give sufficient importance to the issue of job creation and skills nurturing. Furthermore, Europe’s ambition to become a world-class destination for green investment, which in turn would enable the creation of new jobs, seems to have been frustrated by the revival of industrial policy in competing destinations such as the United States, where several policy measures (including most notably the Inflation Reduction Act) are attracting investments in clean energy with the promise of tax credits and comparatively lower regulatory burdens.