Company level implications of Industry 4.0 technologies in European peripheries: The changing role of MNC affiliates and the transformation of jobs and working conditions

Publication Type:

Conference Paper

Source:

Gerpisa colloquium, Paris (2020)

Abstract:

This paper investigates the impact of advanced manufacturing technologies in two ‘integrated peripheries’ of the automotive production networks in Europe. It focuses on the impact of digital transformation on two levels. First, it investigates the impact on the role of MNC affiliates in the network of the MNC, local capabilities, and the (prospects of) upgrading. Second, it analyses the impact on employment and working conditions in the affiliates.

The empirical evidence consists of case studies conducted in three central and eastern European countries (CEECs), Czechia, Hungary, and Poland, and in two countries in southern Europe, Italy and Spain. Our sample includes OEMs as well as their suppliers. In addition, where possible, we conducted interviews in headquarters in Germany.

We observe upgrading along various dimensions, including process and product upgrading, and functional upgrading driven by parent companies delegating increasingly advanced tasks to subsidiary engineers. Productivity increases were not accompanied by employment losses given the upward phase of the business cycle. At the same time, the evidence suggests considerable risks as far as the future prospects are concerned. MNCs are likely to reconsider the location advantages of their existing manufacturing facilities as the digital transformation undermines the importance of one of the important existing location advantages particularly in CEECs: the flexibility of the local labour force. Revisiting past location decisions seems inevitable also because the manufacturing facilities in headquarter economies are also upgraded by advanced manufacturing technologies.

As far as the impact on employment and working conditions is concerned, we observe deskilling effect of new technologies on manual workers and increasing requirements on skilled workers. While many arduous tasks are automated, there is also evidence of increased work intensity and worker monitoring. We do not find evidence of workers receiving retraining that would make their employment prospects more secure. Overall, policy response to the observed risk was missing.

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Concéption Tommaso Pardi
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