The initial review of the literature identified a dearth of information and studies conducted on the FIR and its impact in the South African context. Globally, however, the FIR has already been embraced by many countries and so it is increasingly clear that there is a widening gap between those countries accepting the influence of the FIR and those that are still trying to understand how to fully implement its ubiquitous nature. The following critical aspects will be considered in this study, along with any additionally identified gaps in the understanding of this phenomenon:
1.6.1 Infrastructure and the response to change
Since the widely acclaimed final report of the German Academy of Science and Engineering’s ‘Industrie 4.0 Working Group’ in April 2013, academia and industry experts have struggled to fully grasp the impact of the FIR on manufacturing, especially as it relates to manufacturing IT systems. Almada-Lobo (2016) states that manufacturers could begin to define their target manufacturing models and ultimately plot a transformation roadmap. However, in spite of the hype around the subject, the exact implications for manufacturing operations, or when these will happen, remain unknown, aside, that is, from the clear belief that the later-movers will in all likelihood be forced out of the market (Almada-Lobo, 2016). These inconclusive findings represent a gap that will be investigated by this study.
1.6.2 Skills and jobs
The technological changes happening in all of the digital domains, including robotics, big data and connectivity, will have a far-reaching impact on the employment market. Borg (2016) cites estimates from Oxford University’s Carl Benedikt Frey and Michael Osborne that 40% to 50% of all jobs will either undergo transformation or cease to exist in forward-looking economies. Post the 2008 global financial crisis, the number of jobs added have not been traditional, full-time jobs with full social benefits. Instead, seasonal work, self-employment, part-time employment and short-term contracts have dominated and the impact has undermined job security (Borg, 2016). In the WEF’s 2016 ‘The Future of Jobs’ report, it is estimated that the FIR will eliminate approximately 7.1 million jobs over the period 2015 to 2020 (World Economic Forum, 2016). What should also be noted is that, as Dmitriev et al. (2016) point out, the FIR
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will create fewer new jobs in new sectors than the previous three IRs (Dmitriev et al., 2016). Inconclusive findings or incomplete information concerning how this challenge will affect the South African environment create another serious a research gap that will be covered in this study.
1.6.3 Less tax and reduced revenue
The effects of the FIR on fiscal policy will be particularly complex. If robotics and digitalisation are indeed going to disrupt job opportunities, as Borg (2016) contemplates, this will clearly have a negative effect on tax revenues. If computers and machines replace jobs, then the capacity to tax labour earnings will be reduced on a longer term basis, which will likely mean that the social expenditures of taxes relative to lost employment and reduced GDP will increase. Taxes are expected to return lower revenues, which, in turn, will lead to even costlier negative side effects for society (Borg, 2016). This is further corroborated by Burda (2015), who suggests that the long term sustainability of an economic policy would be weakened by an erosion of taxes and the need for higher outflows, thus necessitating the urgent action on a number of issues, including a significant cut in the spend on social security, solving the problems of social framing the great number of migrants and refugees, and finding a speedy solution for youth employment (Burda, 2015). In the South African context, there is little information available that can assist with the decisions required from such challenges, and they therefore present an opportunity for further research in this current study.
1.6.4 Lack of government effectiveness and adaptability
Balkaran (2016) provides evidence that previous technological revolutions occurred as governments undertook bold missions to maximise innovation without focussing on minimising government failure. The introduction of technology in any sphere means that the work conditions are transformed and the environment is altered. It demands the corresponding revision or possibly even new creation of policies, practices and regulations to ensure their validity and appropriateness for the new environment. “The most significant driver of change, across all industries, is the changing nature of work itself. The public sector has little choice but to improve the way it operates online. To do so, it needs to take its digital revolutions deeper, past the delivery of online services via e-government portals, into the expansive business of government itself. That
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means looking for opportunities to improve productivity, scale, cooperation, process efficiency and innovation” (Balkaran, 2016). There does not appear to be sufficient information available that indicates that the South African government is completely ready for the FIR, hence this is another research gap identified for further analysis under this study.
1.6.5 Inequality
Dmitriev et al. (2016) highlight a recent study by Oxfam which shows that inequality has accelerated over the last few years and that its current maximal level is significantly higher than previous levels. In the USA, for example, with the largest economy in the world, the number of beneficiaries of food stamps increased from 27 million to almost 50 million under the Obama administration. Income inequality in both developed and developing countries received attention at the WEF conference in Davos in 2016, and a number of other significant reports have analysed the problem of inequality in economic, gender, racial and other terms (Dmitriev et al., 2016). The subject of inequality in the South African scenario, however, requires further investigation as the potential impact of the FIR has not been appropriately analysed.