The Fourth Industrial Revolution

Speech delivered to the National Assembly on 5th April 2017

I’m delighted to have tabled this debate today along with my colleagues Hefin David, Vikki Howells and Jeremy Miles and my friend David Melding. Genuinely delighted.

Just, as we pressed last month, that we must do all we can to bolster the so-called Foundational economy, we must also look at the external trends that are set to change our lives, and our economies.

We are in the early stages of a fourth industrial revolution - marked by our ability to combine digital technologies with physical and biological systems.

Just as the first industrial revolution was brought about through our ability to harness steam power; the second by our capacity to generate electrical power - driving mass-production; and the third industrial revolution was prompted by the development of electronics and computers.

This fourth industrial revolution sees machines, data, & algorithms becoming embedded into every aspect of our lives

Our money is increasingly virtual, our homes are becoming smarter - technology now controls our kettles, our boilers, even our ability to park; the health care we receive is set to be transformed beyond recognition as the ability to know our own, personal genome becomes ever more affordable, and whilst we’ve become accustomed to our factories  having machines where once there were workers,  this automation will continue apace.

Technology has crept into our lives with stealth, to the point that it is now near impossible to imagine a world without it.

And the pace of change is phenomenal. Things I grew up with - Floppy disks, cassettes and videotapes - are now meaningless. As are their replacements - DVDs & CDs : already obsolete, in a generation.

Spotify and Netflix are now intuitive for younger generations - both driven by Big Data, which is now not just a hi-tech phenomenon, it is everywhere and it is shaping everything.

Our assumptions of what is possible are constantly being challenged.

Just this week we heard of Elon Musk’s ability to reuse a rocket. As he said “It’s the difference between having airplanes that you threw away after every flight, verses reusing them multiple times”.

If the same implications hold true for space travel - as air travel has had on our daily lives - they are huge.

How soon before driverless cars, wireless electricity, 3-D printing and even space travel are as mundane as Netflix and email.

And there is much going on behind the scenes that we aren’t yet aware of.  

Change isn’t just happening in one industry, as in previous industrial revolutions, it's happening simultaneously across multiple sectors

This poses new challenges.

The Bank of England’s own methodology suggests that - within twenty years - as many as 700,000 jobs might be at risk in Wales from automation.

Computers and algorithms that can gather data from far wider sources to make calculated judgements on anything from tax returns to cancer treatments.

I’d recommend listening on iPlayer (which itself didn’t exist 10 years ago) to Radio 4’s ‘The Public Philosopher’ which held an eye-opening debate on this very issue.

What was stark was the total disbelief by the vast majority of the audience that any robot could do their job better than them.

And the audible shock when they realised the possibility they could.

One example that stood out was the GP who listened as half the audience revealed they’d rather receive a diagnosis from a robot than a human.

One in four jobs in Wales is at risk like this.

And - let’s be clear - this impact is gendered.

The World Bank recently warned that for every three male jobs lost, one will be gained. For women the situation is far worse - they will lose five jobs to automation for every one that is gained.

Governments, businesses and global institutions are struggling to keep up with the pace of change. This is hardly surprising, it is unsettling. But it is our role as policy makers to prepare for that.

And right now, we’re all doing a terrible job at it.

To this end I’ll be hosting a roundtable in June with some of Wales’ biggest employers - across the public and private sectors - to discuss how we can brace ourselves for this common challenge. I’m delighted that both the Cabinet Secretary and the Future Generations Commissioner have agreed to join.

But as well as preparing for the challenges, we must also seize the opportunities.

At a recent meeting I hosted with the Manufacturers’ Organisation - EEF - with businesses in my constituency - one manufacturer revealed to me that automation within their company had not only boosted productivity, it had enabled their company to take on more staff.

Automation need not always be seen as a threat to jobs, but a tool for growth.

And technological advances have the potential to create new sectors which will spur new jobs.

This is a hugely exciting time.

Julie James, as the Minister responsible for Data, recently attended a roundtable I hosted on the potential for precision agriculture in Wales.

Precision farming isn't simply about agriculture. And the fourth industrial revolution won’t respect departmental boundaries.

A whole new industry is being driven by our ability to collect and analyse data at speeds that were previously unimaginable.

But Wales has a short amount of time to capitalise on the generations of knowledge we’ve built up in farming, and apply these to emerging technologies, to grow an industry that has global potential.

To understand where these opportunities are. Where our domain expertise  - our USP - can offer us clear competitive advantage, an immediate and urgent strategic review is needed.

Robotics and automation, cyber security, big data, the codification of money and financial markets, and genomics are widely predicted as the key industries emerging from the fourth industrial revolution.

That’s what we should focus on. For too long we’ve focussed on conventional approaches - too concerned about not upsetting the apple-cart. I still don’t understand how we can have 9 priority sectors?  When everything is a priority, nothing is a priority.

I applaud the focus that has been brought to bear onto Wales’ apprenticeship scheme. We must do the same to our entire economic strategy - enabling the most efficient targeting of scarce resources.

And there must be clear guidance on what this new industrial landscape demands in terms of approach.

This will require a deft hand.

Charting a difficult path through providing patient, goal-oriented finance and support - setting a long-term goal for which we’ll provide long-term support.

But combined with an experimental approach to reach that goal.

We will fail along the way - and that’s ok.

We must be open about it in order to learn from it.

If we think back to many of the inventions I spoke of at the beginning of my speech - the iphone, space travel, driverless technology.

The origins of each of these can be traced back to long-term, patient, government finance.

Ostensibly, this blueprint, this difficult course, is what the Innovation Wales strategy has set out to do.

But - speaking frankly - this is a strategy that is only remarkable in its lack of ambition.

It urgently needs revision.

I don’t want to look back in twenty years time and think, I wish I had done more.

I don’t think any of us do.

So my challenge today - and it is intended as challenge, not as criticism - is that we redouble our efforts to address the hurdles. And to embrace the opportunities.

And that we do it fast.

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To propose that the National Assembly for Wales:

1. Notes that the commonly-termed 'fourth industrial revolution' presents both challenges and opportunities to Wales' economy.

2. Notes that an estimated 700,000 jobs are at risk in Wales over the next two decades as a result of automation.

3. Believes that Wales has existing expertise that offers competitive advantage in emerging growth industries.

4. Recognises that, to capitalise on these emerging industries, we need to focus on rapid, agile approaches which adapt easily to changed circumstances.

5. Calls on the Welsh Government to revisit the Innovation Wales Strategy with a view to ensuring it reflects the scale and scope of the disruption we face, and commits to a strategic review of opportunities in emerging, high-growth sectors, where Wales has the potential to establish early market dominance as part of its work on developing a new economic strategy.