We now move on to item 7, which is a debate by individual Members under Standing Order 11 21, and I call on Lee Waters to move the motion. Lee.

Motion NDM6260 Lee Waters, Jeremy Miles, Hefin David, Vikki Howells, David Melding

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.

Motion moved.

Diolch, Dirprwy Lywydd. I’m delighted to have tabled this debate today, along with my colleagues Hefin David, Vikki Howells, Jeremy Miles, and my friend David Melding—genuinely delighted. Just as we pressed last month that we must do all that 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’re 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 and 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 healthcare we receive is set to be transformed beyond recognition as the ability to know your own personal genome becomes ever more affordable. 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. The pace of change is phenomenal. Things I grew up with—floppy disks, cassettes, video tapes—are now meaningless. And, more so, their replacements—DVDs and CDs—are also already obsolete in a generation. Spotify and Netflix are now intuitive for younger generations, and both are driven by big data, which is not just a high-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, versus reusing them multiple times’.

If the same implications hold true for space travel as air travel has had in our daily lives, they are huge. How soon before driverless cars, wireless electricity, 3D printing, and even space travel are as mundane as Netflix and e-mail?

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, and this poses new challenges. The Bank of England’s own methodology suggests that within 20 years—20 years—as many as 700,000 jobs might be at risk in Wales from automation. Computers and algorithms can gather data from far wider sources to make calculated judgments 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 that they could. One example that stood out was the GP who’d listened as half the audience revealed they’d rather receive a diagnosis from a robot than a human, and one in four jobs in Wales is at risk like this.

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 job that is gained. Governments, business, and global institutions are struggling to keep up with the pace of chance, which is hardly surprising—this is unsettling. It’s our role, as policy makers, to prepare for that, and right now we’re doing a terrible job at it. To this end, I’ll be hosting a round table in June with some of Wales’s biggest employers across the public and private sector to discuss how we can brace ourselves for this common challenge, and I am 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 be seizing the opportunities.

At a recent meeting I hosted with the manufacturers’ organisation EEF in my constituency with businesses, one manufacturer revealed to me that automation within his company had not only boosted productivity, it had enabled their company to take on more staff. So, automation needn’t always be seen as a threat to jobs, but as 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 round table I hosted on the potential for precision agriculture in Wales. Now, precision farming isn’t simply about agriculture, and the fourth industrial revolution will not 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 that we’ve built up in farming, and apply these emerging technologies to grow an industry that has global potential. And 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, cybersecurity, big data, the codification of money, the financial markets and genomics, are widely predicted as the key industries emerging from the fourth industrial revolution. And that’s what we should focus on. For too long, we’ve focused on conventional approaches, too concerned about not upsetting the apple cart. I still, for the life of me, do not understand how we can have nine priority sectors, because, when everything is a priority, nothing is a priority. And I applaud the focus that has been brought to bear on Wales’s apprenticeship scheme, and 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, and this will require a deft hand, charting a difficult path through providing patient, goal-orientated 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. And let us be clear, Dirprwy Lywydd: we will fail along the way, and that’s okay. 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, and it urgently needs revision. I don’t want to look back in 20 years’ time and think, ‘I wish we’d done more’. I don’t think any of us do. So, let our challenge be today—and this is a challenge; it’s not a criticism—that we redouble our efforts to address the hurdles and embrace the opportunities, and that we do it fast. Diolch.

I’m pleased to support the motion that has been put forward today. As has been mentioned, the wheels of the fourth industrial revolution are already in motion. Technological developments such as artificial intelligence and driverless cars have the potential to displace traditional jobs, which has considerable significance for jobs in important sectors here in Wales, such as manufacturing and processing, as we’ve just heard.

I concede that the number of jobs that could be displaced through automation is an ostensible cause for concern. As the motion states, 700,000 jobs in Wales are threatened by automation, and those earning less than £30,000 are more likely to lose their jobs than higher earners. As we discussed in the Chamber recently, 40 per cent of people in Wales are employed in the foundational economy—in manufacturing and processing roles for basic materials—and the majority of these jobs are under threat from automation.

As we face the next industrial revolution, we have two options: to fight against it, as the Luddites fought against the cotton machines of the eighteenth century, or we can innovate to survive, and make the Welsh economy one that benefits from these developments. But there are three things that are necessary to do this. Above all, we must ensure that we look to protect workers and ensure that they have the best chance to make the most of these developments. We must ensure that the education system develops a workforce with the necessary skills to work with new machinery. We must also ensure that lifelong learning opportunities are available to support those who are in roles threatened by automation.

Due to the numbers of people we have employed in these sectors, we have the potential to move with these developments and facilitate expertise in these fields. However, to do this, we need investment and support for companies to develop the necessary infrastructure and skills. As the World Economic Forum has already said, governments must work together to develop business and innovation in the private sector through the development of workforce skills and networks for sharing good practice in the field of innovation. Currently, businesses can take advantage of funds such as SMART and SMART Innovation, which offer grants to develop innovation, but these funds are partly funded through the European regional development fund until 2020. As we leave the European Union, we have to look at the continuation of these vital funds to ensure that companies are able to move with the times.

Finally, we must ensure that businesses are aware of these developments and ensure that they have the equipment to move with the times rather than being left behind. As the manufacturing research organisation EEF has said, only 42 per cent of manufacturing companies are aware of the possible changes that may emanate from automation, and only 11 per cent believe that the United Kingdom is ready for them. We must therefore show the way in Wales by investing in workforce skills development, investing in innovation, and ensuring that our businesses are prepared for these changes.

So, as we look towards the horizon of the fourth industrial revolution, we should not fall into the trap of being pessimistic and fearing a dystopian future. By planning and working with these developments, rather than against them, and by working with employees and businesses, Wales can be at the forefront of these changes, and can light the way for the rest of the world. Thank you very much.

Today’s debate marks a change in focus from that on the foundational economy a few weeks ago, but it is an area that we must equally get right if we are to craft the Welsh economy of the future. For my contribution, I’d like to focus on the scale of the challenge automation could represent, the opportunities we have to rise to this challenge, and the skills our workforce will need in order to do so. As the motion reminds us, an estimated 700,000 jobs in Wales are at risk through automation, a figure all the more staggering when set against the fact that the number of people in employment in Wales stood at a little over 1.4 million in December 2016. This means that automation could threaten 1 in every 2 Welsh jobs.

Automation does indeed cast a long shadow. This is particularly true for sectors such as manufacturing; 11.6 per cent of the Welsh workforce works in this sector, higher than England, Scotland or Northern Ireland. The northern Valleys have a disproportionate number of people employed in manufacturing. Automation clearly moulds the shape of any future industrial strategy. An article by academics from the Massachusetts Institute of Technology and Boston University says we may already be too late. Noting the fourfold increase in robots in western Europe and the US over a 15-year period, the article says automation has already impacted on jobs and wages.

Yet secondly, as the motion recognises, here in Wales we have the expertise, skills and resources to enable us to take a lead amongst these emerging industries. Professor Klaus Schwab, founder of the World Economic Forum, has suggested that our management of natural resources will be a key manifestation of the fourth industrial revolution. In a previous debate, we explored the potential of the blue economy provided by the waters all around us, and I spoke about the opportunities to the Welsh economy inherent in the marine renewables sector. The evidence from tidal lagoons is particularly persuasive: six lagoons, many around the Welsh coast, representing a £40 billion investment, creating 6,500 long-term jobs, generating nearly £3 billion of GVA annually; businesses in Wales, and in the northern Valleys in particular, benefiting from an enhanced supply chain.

I have already mentioned the importance of manufacturing as an employer in the Valleys. It is not too great a jump to see that this is an area where productivity, and work, could be enhanced by learning the lessons of the future. Just as our approach must be rapid and more agile, companies succeeding in the fourth industrial revolution may need to be smaller and more flexible. Not only could companies operate more closely to their customer base, for example, here in Wales, but manufacturing could become more sustainable in high-wage countries.

Cheap labour, it has been said, won’t be cheap. Instead of fewer employees, companies will need what have been described as different employees, with different skills. This is the third point I wish to cover. I am glad that education and skills were central to the last ‘Innovation Wales’ strategy. I hope they would retain their place in any refreshed document; in particular, that there would be consideration of adult learning and upskilling. We know these are key to ensuring automation doesn’t lead to job losses.

I had a useful discussion with Colegau Cymru on Monday about skills and apprenticeships. This could be a great chance to strengthen our FE sector. The ‘Innovation Wales’ strategy spoke of integrating innovation into all aspects of the curriculum. We must give our children and young people the skills of the future.

I would like to briefly offer my congratulations to Optimus Primate. This was a team of year 9 students from Ysgol Gyfun Rhydywaun in my constituency, who recently won the Tomorrow’s Engineers EEP Robotics Challenge. They built, programmed and controlled Lego robots. They also developed their own solution to a scientific problem set by NASA and Lego Education. These are the workers of the future, of the fourth industrial revolution, and it is encouraging to see they are developing the skills they will need right now.

To close, I would like to note that the first industrial revolution was marked by significant socioeconomic changes and a staggering increase in poverty. We must ensure that, like the pupils of Ysgol Gyfun Rhydywaun, the current and future Welsh workforce develop the necessary skills so that they can make a success of this fourth industrial revolution.

David Melding.

Thank you, Deputy Presiding Officer, for your indulgence in calling me. Can I congratulate Lee Waters in proposing this motion? I think it’s very insightful, and just the sort of thing that we need to discuss more, really, anticipating and allowing ideas to flourish.

I think the period between 1945 and 1980 was probably what will be viewed by historians as the great age of the blue-collar worker, with incredible gains in terms of income and worth and equality. A lot of that started to break down in the 1970s. It was really a remarkably exceptional time, but since then we’ve seen a series of forces affect those who are in what we would perhaps normally call the more traditional parts of the economy.

These factors are well known, but let me just repeat what you’ve heard: the digital revolution, the decline of traditional industries through competition elsewhere, the shift to a less unequal global economy. But this has been achieved largely at the expense of the traditional sectors in the mature economies. The decline in global poverty is absolutely astonishing if you look at the latest figures and see the advances that have been made in Asia, in Africa and in South America in particular.

But it has pressed very hard on our economic situation. Added to that, we obviously have this revolution in automation. I think these trends explain to some extent phenomena like Brexit and even President Trump’s victory, because they’ve been matched by a general loss of faith in the governing classes, post the financial crisis, which is why we really need to earn our own privileged position and justify it by coming up with some answers and anticipating things and perhaps suggesting some key innovations in public policy ourselves.

At the moment, it is definitely the case that our workforce is divided, roughly speaking, between those highly skilled and adaptable who perhaps embrace the challenges of not only possibly having 10 jobs in a working life but three different careers within that working life, and then the other half who look back with nostalgia on the stability of traditional employment. We need to be aware of those people and equip them for the change.

I think this explains why some people have called for universal income, for instance, as a response to this more divided world and also a response to automation. If you can’t get a job, at least you can get the dignity of a working income. But I think we need to be very careful indeed about moving away from seeing work as a central organising force in most people’s lives. I’d much prefer to see a radical reassessment of what’s a reasonable working week than to say that lots of people just won’t be able to work 37.5 hours or more and will not be economically active.

So, I do think there’s going to be some profound changes there. I’m reminded—I think is was Sir Henry Mackworth of the Gnoll in Neath who first came up with the idea of a structured working week. Most industrial workers until then would have most of the time been working in some rural occupation and then increasingly shifted over to that. That was a huge innovation. It had advantages and disadvantages, very certainly—but it’s that sort of imagination.

Skills and innovation are clearly key to generating confidence, entrepreneurship and adaptability. We need to be much better at looking at those who do feel left behind, because they are capable of upskilling and, when they get confidence, they will also get an appetite for doing that. We really need to focus on that.

Finally, we need to recognise, as well as the great innovations that will come—and we could be in a position to take advantage of those gaps and fill them—but also we need to recognise the value of work in the community, volunteering and citizens’ work. I think we need a whole re-examination of what we want from citizens. Just as we expect citizens to work on juries, perhaps we should expect them to do some equivalent political service and help us with our own inquiries here or to look at particularly difficult issues of public policy and pay them for that. I mean, why not?

We need to look at what people can do, what citizens can do, and really think and earn our position in Welsh society at the moment, and come up with some of the answers. Thank you.

Can I thank Lee Waters for bringing forward this important debate today? These debates are a valuable opportunity to look at the bigger picture and also, occasionally, to scan the far horizons of an issue, which I hope to do in these remarks.

The advance of technology presents opportunities for our economy, and that’s doubtless. The city deal for the Swansea bay city region is predicated on supporting my region to become an internet coast with serious investment in our digital capacity. The recent economic forum I hosted in Neath looked forward to some of these economic and work opportunities, and—as we’ve heard this afternoon—how we can equip ourselves for those opportunities. But it also recognised some of the challenges that lie ahead.

One of the challenges—as we’ve heard from many speakers—is the potential that automation has to eliminate jobs in all parts of our economy. And not all people doing the sorts of jobs we will lose are going to be able to take advantage of the new jobs that are created, and that is a reality that we need to address. Generally speaking, technology is cheaper for business than labour. Some of the extra profit which that creates for a business may be passed on in lower costs to the consumer, but much of it, obviously, accrues to the business owner.

The challenge for our society is how we capture some of that surplus value from technology and harness it for the public good, not solely as financial return. Why do we need to do this? Well, because with every job lost to automation we may lose a wage which sustains a household and which is spent in the local economy and, of course, which generates tax revenue. Bill Gates recently advocated a robot tax—a levy on technology to fund public services. This has been, unsurprisingly, attacked as unworkable in some quarters, but it’s not hard to see that even if it did work, this would make up only a fraction of the lost value that we potentially face in the wider economy from lost wages, again, spent in local shops, not to mention the heavy potential individual costs. So, we may need to think bolder, and I think David Melding has acknowledged some of these points already in his contribution and I thank him for pointing out the role of Henry Mackworth from Neath.

But we may need to look again at how work is distributed in a future economy. Previous periods of automation led to a reduction down to a five-day working week. Will there come a time when a three- or four-day working week becomes the norm, or perhaps longer periods spent in statutory education, delaying the start of working life? All of which we should reflect upon. But for many, of course, involuntary early retirement or reluctant part-time work already means this, and their experience will tell you that this means more or less the same outgoings for less pay. Most people need to work for the basics. So, the fundamental challenge is how we harness technology to drive down the cost of everyday basics, for housing, energy, transport and food, which form a large proportion of most people’s monthly outgoings. How do we use technology to help us reuse and maintain our assets, as we heard in an earlier debate, rather than discard or even recycle, so that a decent life is sustainable with less work?

Governments have a major role to incentivise developments in these sectors and in devising an innovation policy that defines high-value activities not just in terms of economic growth, but also in terms of more affordable living. Others—less optimistic of a sustainable model—have called, again, as David Melding mentioned, for a universal basic income, paid to all, regardless of work, to help with the costs of sustenance. At the moment, I can see many more obstacles than opportunities, but it’s right that we should explore and pilot some of these options. In my opinion, any new system of support should reflect the principle of contribution, and yet an expectation of contribution solely through work can no longer apply in that environment. So, maybe the time has come to devise a means of accrediting individuals for the unpaid caring; the civic activity; the volunteering; the charity work that so many people do and upon which our society fundamentally depends. We fail to value that kind of work in our economy, as we fail to value what we might call the economy of personal relations—those jobs where care, empathy, and the human connection are all; jobs in health, well-being, social care and so on; areas where there is ongoing demand and which tackle some of the most enduring features of our modern world—changing family structures, mental ill health, living longer, independence and physical inactivity. So, in a rational world they’d offer growth in employment, and in a compassionate world growth in decent, properly paid employment. Perhaps the main legacy we should hope for from automation will be the rediscovery of time to connect, of a communal impulse, where technology removes back-breaking work, where it’s driven down the cost of living, and where it enables a more mutually supportive sustainable way of living. Perhaps that’s a vision that we can all embrace.

There is, of course, a temptation when addressing this motion to contemplate its—forgive this word—luddite-esque credentials. However, I should declare at the first instance that I believe this debate to have huge merit in seeking to address this important issue in a constructive and thoughtful manner.

It is true to say that the increasing use of robotics, be it in the guise of automated checkouts or the mechanisation of assembly lines, poses a real challenge to those engaged in protecting and even enhancing jobs across the whole of the industrial, retail and, indeed, public sectors. The banking sector is wholeheartedly embracing cyber technology, much to the detriment of counter staff and customer service personnel, and there are myriad other examples across a broad economic base where the effect of automation is beginning to impact on jobs traditionally carried out by humans.

So, are we to react as luddites, or is there an alternative solution? I think the proposals laid out in this debate do give a positive alternative to a bleak future for job opportunities. The fourth industrial revolution is basically a range of new technologies that is impacting all disciplines, economies and industries, and, in extremis, challenging ideas about what it means to be human. The resulting effect is that we live in a time of great promise, but also great peril. With vast digital networks, the world has the potential to connect billions more people, which has the ability to dramatically improve the efficiency of companies and even manage assets in ways that can help to regenerate the natural environment in which we live. It also has the potential to undo much of the damage of previous industrial revolutions.

These are the possible positive effects of this new industrial revolution, but there are also many scenarios where it has a seriously negative effect on global economies and the people who work in them. Amongst these is the ability of organisations to adapt to these changes, and, of course, the impact on the working population, particularly in the semi- and unskilled sectors, where robotic technologies are likely to have the greatest impact. This has the potential to exacerbate inequality amongst the whole of the population and even the breakdown in the structure of society.

So, how do we in Wales prepare ourselves for the fourth industrial revolution? As stated in the motion, it is estimated that as many as 700,000 jobs may be at risk due to many of these roles being undertaken by robots. It is true that these machines are now part of daily life, and it is inevitable that, over time, industries will seek to use them wherever possible to cut down on high-cost human labour. It is extremely important that Wales prepares for these changes and has a strong economic strategy to deal with them. We, therefore, have to identify where Wales has a competitive advantage and how we can capitalise on those skills that we already have in Wales.

Wales is an extremely diverse nation, and we can draw upon this to assist with the changes brought by the fourth industrial revolution. For instance, there is a strong tourism sector in Wales—undoubtedly, more focus and consideration will be needed in this arena. The hospitality sector is one where it is difficult to replace the human element.

I wholly endorse points 3, 4 and 5 in this motion, and would reiterate the call for agile economic strategies to deal with the changing face of technological advances. There is no doubt that our universities and innovation centres will play a pivotal role in helping the industrial sector to cope with these new demands. I call on the Welsh Government to redouble their efforts in this sector. It is important that the Welsh Government revisits the ‘Innovation Wales’ strategy to evaluate the disruption we face. Ultimately, Wales has the potential to increase market dominance upon developing a new economic strategy.

To sum up, Wales, as other countries, will face an ever-increasing demand to keep its people in meaningful employment, but we do have the skills, talent and hard-working ethos of our working population to draw on. We are also a small, manageable economic entity, and so one that should be able to respond to these new demands in an agile and timely fashion, and also one that should be well able to embrace this new technological revolution. Wales missed out on that third industrial revolution. We cannot afford to lose out on the fourth.

I’m glad to rise in this important debate brought by our fellow Assembly Members. All of us here today know how dramatically our lives are changing. Indeed, nobody would bat an eye if I said I’d visited a supermarket this morning and paid for my goods at the self-service counter, and nobody would bat an eye if I said that I’d taken a train to Cardiff, my journey controlled by one signaller sat at a computer terminal at my destination city. Equally, if I said that when I got to my office in the workplace, I did online banking at the click of a button. Yet, these three simple acts, barely believable when the National Assembly for Wales was created in 1999, illustrate both the challenges and the opportunities to Wales’s economy.

Today, life becomes easier for the consumer, but what about the individual who used to be employed at the supermarket, the signaller and their family, and the bank staff who used to work in banks up and down our high streets? Too often, we can read statistics without comprehending the meaning, and I note in this motion under bullet point 2, and I quote, an estimated 700,000 jobs are at risk in Wales over the next two decades as a result of automation.’

A single job lost can devastate an individual, endanger a family and is corrosive to a community and a society. Never have I quoted the former Lib Dem leader, Nick Clegg, but I was struck by a ‘Newsnight’ report that he recently undertook after visiting Ebbw Vale, and its sentiment. He said, ‘So, having spent some time in Ebbw Vale, I’m much clearer in my own mind about why people voted for Brexit in large numbers, particularly older voters, because how much money was spent by the European Union on that shiny building or that project? All of that paled in significance to the feeling, the longing for a return to past certainties, when the steelworks were open, when everyone had jobs, where people had money in their pockets. And when people had an opportunity to rattle the cage and say, “We want that back”, it wasn’t so much that they are left behind; it was their feeling about what they had left behind.’ And that’s an interesting concept.

Now, the fourth industrial revolution will challenge all our certainties and will require Government invention and intervention, and from us as a Welsh Labour Government because we know other parties in this Chamber will allow the market to take its course, irrespective of the human cost. We all saw in Wales last year the difference an activist Welsh Labour Government can make. Whilst the UK Tory Government did not act to block the dumping of state-subsidised Chinese steel when they could have done, the Welsh steel industry was put at risk, it was put at harm and it was put in jeopardy. We need to seize the moment and match or exceed the Organisation for Economic Co-operation and Development levels of investment in research and development to ensure Wales is at the forefront of future growth in industry.

So, I support the proposal that we need to revisit the ‘Innovation Wales’ strategy, and continually challenge ourselves to do all we can to ensure Wales is ready to embrace the fourth industrial revolution. Diolch.

Thank you very much. I now call on the Cabinet Secretary for Economy and Infrastructure, Ken Skates.

Thank you, Deputy Presiding Officer, and I’d like to thank all Members today for their contributions, especially Lee Waters for bringing forward this debate, to Dai Lloyd, Vikki Howells, Jeremy Miles and David Rowlands, and also David Melding and Rhianon Passmore who both offered, I think, a wider political and social context for the challenges and the risks that we face. David Melding’s reference to the central organising force of labour reminded me of studies of Max Weber’s work on the Protestant work ethic, but the specific point that was being made about the nature of a prescriptive working week perhaps offers another subject for an individual Member’s debate, following on from what has been a clear and strong theme of late, which is the nature of work in the twenty-first century—the blue economy, the foundational economy, and today the fourth industrial revolution.

This debate also overlaps with many of the conversations that I’ve been having over the last few months in relation to our current approach to economic development and how that has to change in the years to come.

The motion refers to the Bank of England estimate of the 700,000 jobs that, over the next two decades, could be at risk as a result of automation. Now, the figures quoted are not indicative of job losses, but of employment impacted. In terms of manufacturing, we know that many assembly jobs may be replaced by automation and by robots. However, new jobs will be created in functions such as procurement, such as programming, data analysis, and maintenance, amongst others. But the key for us, as policymakers, is in ensuring that there are sufficient opportunities emerging in the new economy to replace those that could be lost in the old economy and to ensure that people across Wales in all communities are equipped with the skills to exploit them.

But, of course, the impact goes much wider than just manufacturing. The impact is being seen in many sectors, not least the service sector, and, as an example, the recent news of the closure of a number of bank branches, which are being impacted on by the growing number of customers who are now using internet banking. The speed of current technological breakthroughs makes an assessment of the impact on jobs in Wales difficult.

And there are other factors to consider as well, such as the impact that the fourth industrial revolution, with automation, robotics, and digitalisation, will have on productivity and how that will subsequently impact on employment. Now, Lee Waters talked of the potential increase in productivity that could result in companies being more competitive and therefore winning more business and growing market share. As competitiveness rises and costs fall, this has the impact of a long-term employment rise, although there may be jobs lost in the short term, but it does depend entirely on our determination to fully embrace and exploit new and emerging digital technologies and to arm people with the skills to do so, such as Vikki Howells and Rhianon Passmore outlined.

Now, I’ve been receiving reports on the impact of industry 4.0 from Industry Wales, an overarching organisation for the aerospace, automotive and technology industries in Wales. Industry Wales commissioned an independent report on the impact and the possible opportunities of the next generation manufacturing sector and how the Welsh manufacturing industry community needs to prepare. It’s produced the 2016 next generation manufacturing report, which addresses these issues with an in-Wales focus, and the risks and opportunities are very real indeed.

We’re addressing these with the help of expertise provided by Industry Wales, academia and industry bodies to establish a manufacturing vision for Wales. The economic benefits arising from digital technology are increasingly being recognised by industry, with a recent Confederation of British Industry report stating that 94 per cent of businesses agree that digital technologies are a critical driver of increased productivity, economic growth, and job creation. Jobs are becoming centred on digital technology, and embracing this will ensure a prosperous Wales for future generations.

Digital fabrication technologies are already interacting with the biological world. Colleagues, it’s not going to be long before we have 3D printer-produced jelly sweets, and it’s not unreasonable to believe that, during our lifetimes, we could see 3D-printed body organs. So, the need for highly competent and innovative Welsh businesses is higher than ever before. Our innovation strategy, ‘Innovation Wales’, is helping Wales to explore cutting-edge business opportunities in terms of product development, diversification, and new paths to market, and it’s helping to ensure that innovation is a major enabler for Wales. But, given the nature of innovation, as has been outlined by many Members today, inevitably, the strategy needs to evolve rapidly and has been designed to be as flexible as possible, as we move forward.

I’d agree with David Rowlands and Dai Lloyd, who said that, essentially, the innovators must overcome the luddites and that those who are looking to the future must overcome those who cling to the past. But I would also say that we need those who are suspicious about new and emerging digital technologies to be given comfort that they are there to be embraced and to utilise, rather than to fear.

Now, the final point of the motion refers to developing the economic strategy, and, in our economy, we still face major challenges. With lower productivity than the rest of the UK and higher economic inactivity, we face important structural questions of how to get more people into work, as well as the skills to progress into better paid jobs, which will, of course, be essential in avoiding net job losses during industry 4.0. One of the biggest challenges that we face is addressing the regional differences of our economy and ensuring that the benefits of growth fall more fairly across Wales. Another is in futureproofing our economy and our workforce; both will be needed to reduce wealth and well-being inequalities across Wales, whilst also improving both in the aggregate. I do think that achieving both of these objectives will require difficult decisions by Government, and a concerted effort, which will challenge, in many respects, the way that people are used to doing and seeing things. But, as I said yesterday, Governments do have a duty to challenge convention where convention risks undermining the wealth and the well-being of people, and I think Jeremy Miles outlined in his contribution how we need to begin considering different ways of working, different working practices, not only for economic benefits, but also to deliver improvements in our well-being.

I’m keen, as part of the emerging economic strategy, to look at a smaller number of national foundational economic sectors, such as health, care and energy, which the Welsh Government can take the lead on in supporting. And, below them, I’d like to look at our regional economies by empowering each to develop specialised sectors and more distinct economic identities, but, at both levels, there will need to be demonstrable proof that our interventions and our investment are focused on areas of activity in the economy that are or can be futureproofed. We face major economic challenges, which will only be intensified when we exit the EU, with increased global instability, welfare cuts and UK Government austerity, and, of course, the main topic of today’s debate, the fourth revolution. In solving future challenges and adapting to an ever-changing world, it’s essential that we build bridges between people so that we can develop knowledge and solutions for the future. So, yes, there are challenges, but let’s be in no doubt whatsoever that we want to harness the opportunities presented by the fourth revolution. So, I very much welcome the contributions of all Members to that discussion today.

Thank you very much, and I call on Hefin David to reply to the debate.

Diolch, Dirprwy Lywydd. I’ve listened to the huge range of challenges that Members have presented in the debate today, but I’m pleased to say they’ve been presented with a feeling of optimism, and none so encapsulated by the response of Dai Lloyd, who recognised that these challenges can not only be overcome, but can actually benefit our Welsh polity. Indeed, if we can’t deliver an optimistic vision of the future, then we shouldn’t be sitting in this Chamber in the first place.

In preparation for this debate, I spoke to another optimist I know, Professor Tom Crick, professor of computer science and public policy at Cardiff Metropolitan University—and I should declare an interest as an associate lecturer at Cardiff Met. He told me, and indeed said on Radio Wales this morning, that we need high-value jobs for people to go into rather than move elsewhere. Now more than ever, we need a coherent and long-term commitment from the Welsh Government for digital Wales, from skills to infrastructure and the wider digital ecosystem. He went on to say that there’s a significant opportunity for Wales here: what will be our unique selling point in Wales so we can compete in, and ultimately lead, these high-value digital industries? Tom, Professor Crick, is a welcome voice, and has been welcomed by the Welsh Government, and it’s pleasing to hear that the Cabinet Secretary makes note that he listens to panels of experts from academia and industry to develop his industrial strategy, and we look forward to hearing what that will be.

The unique selling point mentioned by Professor Crick should be key to a refreshed innovation strategy, and, in fact, we should even think about what we do mean by ‘strategic’ and ‘strategy’. Is it going to be something that we print and put on a shelf and put on the website, or is it something that’s going to be constantly changing and innovating? This is something that Lee Waters did when he presented his challenge, as he always does, to the Welsh Government and said we need to change the ‘Innovation Wales’ strategy in the context of the transformation we are living through. That challenge, I’m pleased to see, is being welcomed by the Cabinet Secretary.

We move into the future with beguiling speed. We don’t recognise transformational change in our daily lives, but then we look back, we see the world has changed while we’ve been doing other things. I’m thinking of when I was teaching. I’d ask my students how many of them owned a Nokia mobile phone: ‘Hands up. Who owned a Nokia mobile phone?’ None of them. In fact, one person put their hand up, and we laughed at that person. [Laughter.] But then you say, ‘Okay. Well, how many of you have owned a Nokia mobile phone in the past?’ And everybody put their hands up; they owned a Nokia mobile phone. Could it be that soon we’ll be looking back and laughing at ourselves because we owned smartphones and we couldn’t put down our smartphones? What will be the future instead?

Well, the trick is to work out what that’s going to be. I’m not particularly good at futurology, particularly when it comes to technology, so, it’s good, therefore, that Dai Lloyd, Rhianon Passmore, and Vikki Howells identified the potential that we have in Wales. Vikki Howells said about our natural resources to provide opportunities for energy generation. She recognised the need for short, agile supply chains in our northern Valleys—I like that concept; I’ll use it—and the need to grow and develop appropriate skills that match the needs and the changes that are ahead, and, again, that was echoed by other Members in the Chamber.

Let’s not forget that it’s not just the fourth industrial revolution, it’s not just about reinvention as invention. A lot of it is about working with and building on what we already have. Technological advances in manufacturing processes, as David Rowlands said, will mean machines being able to manufacture and remanufacture, removing the need for expensive renovation and reassembly.

But those benefits can lead, as others have said, to changes such as fewer checkout staff at our local supermarkets, and bank branches closing because people do their banking online. We’re very proud of Admiral Insurance in Cardiff, Newport and Swansea, but could that be hit hard by artificial intelligence? I raised my concerns about the bank closures in First Minister’s questions yesterday, and I was really pleased that the Cabinet Secretary acknowledged those difficulties. However, you sometimes feel—not because of the Government, but you feel that you’re howling at the moon when these changes are coming along, and what we must do is instead manage them, and manage our way through them, and embrace them optimistically. Jeremy Miles’s contribution covered that. He talked about the whole nature of the world of work, how we work and what we even consider work to be. David Melding, though he’s been a bit naughty and gone, agreed with—[Assembly Members: ‘Oh.’]

No, no, no. Never say anything that you don’t know what the answer is.

I apologise.

Yes. I would withdraw that, thank you.

I withdraw that, Deputy Presiding Officer. But I acknowledge David Melding’s contribution. The fact that Jeremy Miles made the point that we may be changing our working week—well, David Melding recognised it too. When Jeremy Miles made the point, I thought that it was quite a nice left-wing, social democratic idea, and then David Melding made a similar point, too, and I don’t think David Rowlands was very far away. So, maybe the fourth industrial revolution is also changing the nature of our politics, as well. Can we be—[Interruption.] Can we be that optimistic that such a thing will happen?

I think education is at the heart of this, and I would like to return to the argument that was advanced by Professor Tom Crick on Radio Wales this morning. He welcomes the development of the digital competency framework, as the result of some of the work that he has done with the Welsh Government. So, while we will need education and we will need to look at those things that are in the immediate gift of the Assembly, I think we also need to look at the long term. What further can we do? Let’s return to the wording of the motion, which says that the ‘Innovation Wales’ strategy and the Cabinet Secretary’s economic strategy need to be refreshed, looked at, and thinking about the potential market dominance and uniqueness that we can have in Wales. I was really pleased to see that I think we have got unanimous support for that in this Chamber, and I recommend the motion to the Senedd.

Thank you very much. The proposal is to agree the motion. Does any Member object? No. Therefore, the motion is agreed in accordance with Standing Order 12.36.

Motion agreed in accordance with Standing Order 12.36.