Fear of the World of Robots and How German Trade Unionists Have Been Dealing with This Issue

Ljubljana Conference 04. April 2017 „New Industrial Revolution is here. Where are you? Grand hotel Ljubljana

“Fear of the world of robots and how German trade unionists have been dealing with this issue” Achim Vanselow, German Confederation of Trade Unions (DGB) North Rhine-Westphalia

Thank you very much for the invitation to this important event and for the opportunity to bring the perspective of trade unions in. I take this as a proof that the host of this conference wants to underline that the process of digitalisation, the fourth industrial revolution or whatever you like to call it – will not be successful without a concept for the dimension of work. I fully agree with that.

1. Introduction

Fear of the world of robots and how to deal with automation – this issue is not new for the trade unions in Germany; nor is the fear of technological unemployment. Of course people are scared when they read in the newspaper that millions of jobs will be destroyed by robots and other technological arte- facts. And of course they start to think, when managers demonstrate ostentatiously that the costs for a robot are much lower than the labour costs of a qualified worker. The International Federation of Ro- botics estimates that until 2019 nearly 2 million robots will be established in production plants – many of them “cobots”. This is the term for machines with cooperative capacities. But it is worth to notice: a recent survey of the national Ministry of Labour shows that 4 of 5 employees who are afraid to lose their jobs have other reasons for that – not digitalisation.

From the perspective of trade unions, we see a great opportunity in the digitalisation process – not only to create new sustainable jobs, but also to make existing jobs better. The great challenge is how to shape the transition process in the best way for the workers. The position of German trade unions is: 1

How can we reduce the risks of these changes and improve the success factors How can we avoid massive job losses and a decline in job quality? How can we tap the potential of digitalisation for more and better jobs? In this paper I will try to sketch out, what this means and how trade unions deal with the challenges in North Rhine-Westphalia.

2. Digitalisation in North Rhine Westphalia

The German federal state North Rhine-Westphalia (NRW) is located in the centre of Europe, in the western part of Germany, near the Netherlands and Belgium. It is the most populous and the most densely populated of the 16 federal states in Germany. 17.7 million people live here, roundabout 8 million employees. The largest cities are Cologne and Düsseldorf in the Rhine area and Dortmund, Essen and Duisburg in the Ruhr area.

To give you a taste about the economy in our region:

. NRW generates a gross domestic product at 646 billion euros (21.3 % of Germanys GDP,

2015)

. GDP per employed person amounts to 70,314 €

. 18 of the 50 top-selling German companies are based in NRW (e.g. Bayer, Bertelsmann,

Deutsche Post, Deutsche Telekom, Henkel, RWE, ThyssenKrupp)

. NRW is home to large industrial corporations. The industrial enterprises in NRW generate

18.6% of industrial sales in Germany. 18% of employees are working in the industrial sector.

More than 190 industry-related service providers depend on this sector.

Structural change from industry to services started in the 1970s and is still not finished. In 1970, 56% of the state´s GDP was generated in industry, only 42% in the service sector. By 2015, this ratio has re- versed: now the service sector dominates with 72 %. The employment has grown by more than 1 million to 7 millon since 1970.

At the same time, NRW is a state of small and medium enterprises (SMEs). 750.000 SMEs are the backbone of our economy. 80% of the workforce (employees subject to social security system) are employed 2 here. SMEs provide more than 80% of training positions in NRW. Shaping the future of work in NRW means especially: shaping workplaces in SMEs.

From a trade union perspective, another development is important. Although we have to face a decline in trade union membership, collectively binding agreements and works councils density for many years, we can state that the situation in NRW is still better than in other German federal states. 63% of employees in NRW are working in a company with a collective agreement. 41% of employees in West-Ger- many are working in a company with a works council. This means: the conditions for a social partnership approach are in NRW better than elsewhere in Germany.

The alternative is very clear: If trade unions are able to deal successfully with the challenges of “Indus- try 4.0”, if we are able to create new solutions that make the working life of people better and have a positive outcome for the company, than trade unions will have a good future in our region. If we fail than we will shrink continuously and will be only present in the blue collar segment of traditional sectors and companies.

The strategic decision of the TU was a few years ago: It is completely useless to stand aside and moan about technological developments and its critical implications on employees. We want to participate at a very early stage of technological development and bring the perspective of labour in.

2.2 Economy 4.0 in NRW

The challenge in our region is to innovate in “mature industries” like manufacturing, chemical and steel industry. We have many “hidden champions”, SME who are market leaders, some of them even on a global level. However, most of them started business before World War I. Investments in start-ups are rising in NRW (141 million € 2016, 90 million € 2015), but other German regions are better, with Berlin at the top (1 billion € venture capital in 2016).

For the federal state government, a coalition of the Social Democratic Party and the Green Party, the digital transformation has a top priority. Concrete activities are:

. Extending the digital infrastructure: targets are to establish a NRW-wide broadband network

until 2018 (at least 50 mbit), and in a second step to establish a NRW wide light-wave cable

net until 2026.

. Improving the cooperation between start-ups, industry and SMEs: six digital hubs started last

year.

. Supporting “industry 4.0”: information, consultation for SMEs, support for projects.

However, digitalisation of the industry (we are not talking about the service and public sector yet) can´t be a stand-alone-issue. It has to be embedded in a strong strategy for the production sector – at the

European level, nationally, and in the region. In the last years the federal state level has become more and more important. The EU and the national state are important players, no doubt. They create a framework that needs content. This is the role of the federal state and the regions. A recent study shows that industrial policy at the federal state level in Germany is very diverse. A special characteristic of industrial policy in NRW is a long tradition of participation and dialogue – due to the heavy structural change in the past. One consequence is that the role of trade unions maybe stronger here than in other parts of Germany.

You can take as a proof the new adjustment of industrial policy in NRW. One pillar are the new “Indus- trial policy guidelines” from December 2016. These guidelines – from December 2016 - should be the framework for the industrial development in the next years. They are the result of a one-year-process with conferences, workshops, consultations with actors from policy, economy and trade unions. The aim of these guidelines is to develop the industrial structure in North Rhine Westphalia in a way, that it is part of a sustainable future. The guidelines include strategies and instruments in different fields of action like the modernization of infrastructure, energy policy or a skilled workforce – just to mention a few. The guidelines include quantitative targets that will be monitored in the next years. The monitoring and the indicators are again subject of a participation process which includes the trade unions.

Digitalisation is a central action field in this strategy. And it is worth to mention that these guidelines include one chapter about social partnership and co-determination, as a success story of German industrial policy. The positive role of employees and interest representations for innovation is acknowledged.

And it is stated that co-determination has to be adapted and strengthened in times of industry 4.0.

However, the digital transformation and its consequences is not only a project for individual companies.

The new established Alliance Economy and Work 4.0 NRW wants to accelerate digitalisation and change processes in the economy and society. High level representatives from policy, economy, trade unions and science are represented here. You will find similar committees also in other regions of Ger- many (Task Force Industry 4.0 etc.). But NRW places a special emphasis on the combination of “economy” and “work” and the participation of trade unions.

One central project of this alliance is a project of three industrial trade unions and the DGB to support employees and interest representatives in concrete change processes, “Work 2020”. But before I out- line what we do in this project, I want to give you a rough picture about the effects of digitalisation on the labour market.

3. Heaven or hell: Digitalisation and the labour market

The public debate in Germany about the consequences of the digital revolution for the labour market is very controversial. Heaven or hell? You will find arguments and scenarios for both.

The study of Frey and Osborne (2013) has started an intensive debate about the consequences of digitalisation on jobs in Germany. The central message of this study was that 47% of the existing jobs in the US are threatened by computerization. Another consequence would be the polarisation of jobs: a high share of low skilled and high skilled jobs, and the medium employment being the loser in this game.

The Institute for Employment Research (IAB) has developed a model to check this for Germany and to look at the development through the lens of a macroeconomic perspective (production sector). The outcome was:

. The scenario shows an increasing creation of value (increasing productivity, higher require-

ments on employees, growing wages)

. The employment level does not show significant changes: this means, Industry 4.0 is neither a

job-machine nor an employment killer.

. However, the scenario shows great changes in occupation fields and economic sectors.

490.000 jobs will be lost in one part of the economy, while 430.000 jobs will be newly created

in another part within 10 years beyond the baseline scenario.

In the meantime the institute has produced another scenario with a wider scale for the whole economy

(economy 4.0). The central message is very similar. The absolute number of gainfully employed will not change dramatically. But “economy 4.0” will accelerate the structural change towards more services.

This means: the underlying assumptions of the IAB-model have a positive effect on the economic development. However, the consequence is: if Germany fails to establish “economy 4.0” we will export less and demand more “new” goods from abroad, with negative effects on employment.

In the meantime the IAB has reproduced the study for the situation in North Rhine Westphalia, and pre- sented the results at a conference last month. How high is the share of jobs that can be done already by computers or computer integrated machines? Central messages are:

. 44.8% of gainfully employed are working in jobs with a risks between more than 30% to 70%.

. 15.6% are working in jobs with a risk higher than 70%.

Compared to other regions in Germany NRW ranges in the midfield.

A closer look at occupations shows that jobs in manufacturing have the highest risks, but also jobs in IT and industry related services. Very low risks have jobs in cleaning, security, social and cultural services.

The analysis regarding qualification shows that employees in low skill jobs have the highest risk

(22.1%; GER: 20.6%). But also 17.5% of qualified employees and 13% of specialists (Meister, bache- lor) have a high risk.

What does this mean in absolute numbers? 2 million qualified employees have a risk (30-70%),

660.000 even a very high risk (more than 70%). All other groups are much smaller. We also must have in mind the existence of great differences between industries and regions. One-size-fits-all-solutions will not work.

From the point of view of trade unions it is evident: the occupational group in the production sector - which is the backbone of trade union membership - bears the highest risk of being replaced by intelli- gent machines. So, it is absolutely necessary for trade unions to care about industry 4.0.

3.1 Risks and opportunities

Now we leave aside the world of macroeconomic models and have a look of what is going on in companies from the production sector. We can state that many elements of “industry 4.0” are already there. Advanced robotics, big data, wearables, internet of things, 3 D printing and others. Also, the interaction of men and machines is already reality in many areas of the company: production, construc- tion, storage and logistics, service, planning and control.

The question is: Is the worker controlling the machine or is the machine controlling the worker? What is the effect on job quality? More support for the worker, or even higher pressure, more stress, and de- qualification?

There is room for manoeuvre how to design the workplace of the future. Let´s take again the example of interaction of employee and machine:

. tasks can be designed more narrow or wider, with more or less influence of the worker

. the work organisation can give more autonomy or reduce the scope of action

. automation can be implemented to release workers from work load and pressure or it can de-

stroy jobs

. Qualification can be used for upskilling or can be reduced to “learning on the job” with no per-

spective for advancement.

In a more general way: it is evident that technological change has both aspects: risks and opportunities.

For trade unions is key: What is the perspective of employees on this topic? The German Confederation of Trade Unions introduced in 2007 the “DGB Good Work Index”. It is a measurement tool for monitoring the quality of work, based on data from an annual survey. In 2016, the focus was on digitalisation and job quality (n = 9.737). Here are some main outcomes:

. 82% of the employees stated that they are affected by digitalisation processes at their work-

place (60% high or very high degree).

. 46% said, digitalisation has increased the workload, 45% no change and only 9% the work-

load is reduced.

From our point of view, the effects on job quality are not determined by technology, but by management decisions, this means by human beings. Therefore, effects by digitalisation on employment and job quality are not a exclusively a question of technology, but also a political issue.

And we have good reasons to be optimistic. Most studies use the technological change as a starting point to look for effects on the labour market. Only a few use the employee perspective – their qualifi- cations, experience, ability to adapt to change positively. A recent study by Prof. Sabine Pfeiffer et al uses this approach to check the digital world of work in NRW today. The outcome was very positive from our point of view:

. The qualification structure of employees in NRW is a good precondition for digital change. 78%

have at least a vocational training. 13% are academics. The mixture of academic and voca-

tional training structures of employees brings NRW in a good starting position for digital

change. Knowledge by experience must be added.

. More than 70% of employees has to use their working capacity (experience knowledge, how to

deal with imponderabilia) to a high degree.

This means: It doesn´t make much sense to speculate about a “world without work”. The question is: how can we incorporate the work capacity of employees in the design of industry 4.0?

4. Trade unions perspective: Good digital work

There is one important difference between this new wave of technological change and similar developments in the past (think of “Computer integrated manufacturing” and its predecessors). The perspective of labour has become very early an important element of the debate about technological change – due to the engagement of the trade union IG Metall. If we have learned anything from labour research than this: don´t take technological visions for reality on the shop floor. Employees are not only objects of change. The idea that clever engineers design new workplaces, smart managers implement this, and the role of the worker is just to accept and adapt – this is the shortest road to disaster.

Our experience is different from that, and we can proof that with outcomes from labour research. As the sociologist Martin Kuhlmann wrote: “The development and use of the qualification and the ability to cooperate of the employees – and their willingness for active co-design of production and labour processes are important resources for productivity and innovation”.

“4.0” will not work without the human beings. This means: we will have to deal with different inter- ests, we will have to negotiate about the best solutions, and we will have to solve conflicts. This will happen anyway. The question is: Will the fear from the world of robots become a massive barrier for innovation? Or can we find better ways to shape the workplaces of the future?

The trade union position is:

. The future of work is not determined by technology. Different scenarios are possible.

. Companies with a good culture of cooperation between capital and labour will develop better

solutions: more security for the production site, more and better jobs, and a sustainable future

for the company.

. We need a concept for “good digital labour” and emphasis to bring this into life. The “White

book”-draft of the national Ministry of Labour is a good starting point.

Our landmarks for “good work” are (beyond others):

. to take the claims of employees for “good jobs” serious

. to balance flexibility and security fairly in a new way

. to preserve employability.

Approaches to shape the new workplaces and the institutional framework are - just to mention a few:

. openness for technological developments

. information, orientation

. adequate vocational and further training

. opportunities for learning on the job

. fair solutions for all groups of workers

. participation, co-determination

. modern health and safety system

This is a large reform program for policy and for the social partners for the next years.

The question is: what is already happening in companies? A short look at collective agreements at the company level shows that digitalisation is becoming more and more important. Especially “protection of data privacy” was a top issue in the last 3 years.

To make a little bit more concrete, what trade unions in NRW do to give support to employees and works councils I want to introduce to you the project “Work 2020 in NRW”.

5. The trade union project “Work 2020 in NRW”

The starting point was to get a picture, what is going on the shop floor. What is the perspective of local trade union reps? What are the questions of works councils? To give the bottom-up perspective a voice the IG Metall union has organised conferences and workshops in early 2014. After it became evident

10 that “industry 4.0” is relevant on the shop-floor the trade union organises a meeting of works councils with the prime minister of NRW to get political support for a flagship project.

In the summer 2015 starts the project “Work 2020 in NRW” carried out by three trade unions from the industrial sector (IG Metal, IG BCE Nordrhein, NGG NRW) and the DGB NRW. We work together with experienced employee-oriented consulting agencies. In the first project phase (July 2015-June 2017) we worked together with 38 companies. In the second phase – planned from July 2017 to the end of 2019

– another 50 companies will follow. We made the experience in the first phase that the interest to join the project was bigger than the capacity.

The targets of the project are:

. to support works councils in “4.0”-change processes: analysis of the recent situation on plant

level, requirements for action and co-determination

. to take employee´s fears away and to see the opportunities

. to develop a common perspective with the management

. to work together with the management on the implementation of “4.0”

. to negotiate rules, a road map, for the implementation

Our driving ideas are: Firstly, companies that adapt 4.0-strategies successfully will be able to produce much faster, cheaper, and to a higher quality. Companies which ignore the need to innovate will have problems to keep jobs and create new jobs. Secondly: successful innovation needs cooperation of human beings.

Our analysis takes much more into account than just technological details:

. the strategic level of the company

. technologies and work organisation

. working conditions.

For the analysis we use a tool that was developed by our consultants: the company map. The map gives an overview about the recent state of digitalisation at the plant level, how many employees are affected, which departments, impact on working conditions. We use a simple colour-coded ranking list for the evaluation.

No doubt, that we could have used more elaborated instruments to analyse the individual dimensions strategy, technology and the employment system. But we make the experience that our own instrument is working excellently in our context: to start a meaningful dialogue at the shop floor about shaping the

4.0-future in this specific company in a social partnership approach.

What are the first results? Here are some headwords:

. need for qualification

. technological upgrading results in higher workloads

. higher complexity of work

. risk of downgrading and de-qualification

. more employer-driven flexibility

. deficits in leadership demand a new culture of leadership

. 4.0-strategies are often combined with choices of industrial locations

. the development of new business models for the digital world is just at the beginning

. the role of works councils in change processes can be optimized, the role is very demanding

(competences)

To put our experiences it in a nutshell:

. We see a great gap between the glamorous “industry 4.0” visions and the reality on the shop-

floor.

. Only very few companies have a coherent 4.0-strategy. More often, 4.0-elements are applied in

a fragmented way.

But this means: Many companies have not decided finally about their 4.0-strategy. There is still room for manoeuvre, and opportunities for dialogue and cooperation.

6. Outlook

North Rhine Westphalia, like Germany, is in a transition period on the way to an “Economy 4.0”. So, it is too early for meaningful conclusions.

The recently most ambitious labour market scenarios tell us: there will be no mass destruction of jobs by robots nor is digitalisation the new job machine. But there are considerable changes of jobs and occupations behind this general picture, particularly in manufacturing. Our task is: how can we manage these changes?

Trade unions have seen many management fashions come and go in the last decades. And many consultants trying to sell the perfect solution, the blueprint for success by plug and play. However, do not waste too much time looking at Silicon Valley and their way to manage the “Internet of things”. Cali- fornia has the internet - but we have the things. Better look at your own capacities to change, your own strengths, and create adequate solutions for your company, together with the people who work for you, and create strong networks, in the region and beyond.

Digitalisation is an excellent opportunity to proof that companies with a good social partnership find better solutions – for the company and the employees. The lesson from NRW is furthermore: Industry

4.0 is not an isolated issue for a single company. Industry 4.0 is embedded in a concrete local and re- gional situation and a political framework. Policy matters!

The approach of the trade unions from the production sector in NRW is to overcome the fears, to underline the opportunities, and to bring workers in a position to participate right from the start actively in the shaping of the new world of labour and to get a fair share of the gains. In my presentation I have tried to sketch out our targets, strategies, and instruments.

I can´t tell you right now, whether the digitalisation strategy of North Rhine Westphalia will be successful or not. But I know that the circumstances for a positive development are very good. It is up to us how we use this transition period. The trade unions invite everybody to work together for a better future, for good work and for a better life in a new digital world.