Let us consider two pieces of information. First, sportswear giant Adidas has announced that it is to establish a fully automated factory for the production of sports footwear in its home country, Germany, in 2016, in order to catch up with its more advanced competitor, Nike. Second, one of the most sought-after participants in Davos this year wasn’t a central banker, CEO or politician, but a prize-winning South Korean robot called HUBO. Korea is the world’s third most advanced robot manufacturer, with the automotive industry taking the lead in introducing them to production processes.
Robots are set to perform exactly the same operations previously performed by people for footwear manufacturers and the automotive industry, among others, and this will happen not just in China, but also in Serbia. The main topic of this year’s World Economic Forum in Davos was the so-called Fourth Industrial Revolution (Industry 4.0), with the proclamation that the world’s 15 most advanced countries will lose more than five million jobs by 2020 as a result of automation. Obviously, that warning shouldn’t be treated in Serbia as a bell that tolls to alert someone else. Think about Geox in Vranje and Yura in Southeast Serbia, for a start.
That said, the World Economic Forum (WEF) is neither the pioneer nor the mesmerising fortune teller when it comes to issuing such a warning. Automation and its effects on labour have been debated since the 1980s. Many believe that the pace at which robots have so far been introduced is linked to the decision of major industries to relocate to China, as its cheap labour proved more cost effective than investing in robotic innovation. However, with Chinese labour costs rising and customers growing increasingly impatient to receive their products faster, at least some industries have decided, among other things, to set up their production in the Western Balkans, as stopgap solution before the introduction of full automation in their home countries.
The WEF warning that many jobs will soon be stolen by robots shouldn’t be treated in Serbia as a bell that tolls to alert someone else
Industry 4.0 has been a top priority for Germany since 2011 and last year this most advanced European country in terms of robotics struck a deal with China to join forces on automation. In the U.S., meanwhile, General Electric has already taken major steps towards an industrial internet that represents an integral part of the fully robotised process. Thus, the WEF warning is merely an echo of something anyone can read about in regular McKinsey Institute updates.
The major topic at WEF, which was set long before the actual gathering occurred, wasn’t just old news, but was also particularly poorly suited. Everyday worries – such as failing global trade and GDP levels, terrorist threats and the migrant crisis – kept some major world leaders at home this year, sending instead their second-hand choices to Switzerland, which spoiled even the famous mingling effect of Davos.
As reported by many media, what was most evident in Davos was a clear lack of vision – when asked about their best idea to reinvigorate production and restore the pre-crisis growth rate, many CEOs in Davos (when they were not staring at their smart phones to see their wealth melting on most of the world’s stock exchanges) said: trading fast with emerging market stocks. This is the same idea, or lack thereof, that they have been repeating for the last three years.
Davos cannot be an exception to the everyday picture, in which the lack of fresh political and economic ideas is quite visible. As reported by Oxfam International, today the richest 62 individuals have the same amount of wealth as the 3.5 billion poorest. It takes more than flirting with ideas from leftfield, as Davos attempted to do last year, when the major topic was inequality, and again this year, by debating about the future of labour, to solve the following puzzle: how to make the merry-goround work, given that the 62 richest people cannot buy 3.5 billion toothbrushes, or cars or meals, and nor can those stuck at the bottom of the wealth ladder.