Industry 4.0 and Labor Market in Iran as a Developing Country

Industry 4.0 is the description for the 4th industrial revolution that is based on the use of Cyber-Physical Systems (CPS) and originated in Germany. Industry 4.0 is especially beneficial in highly developed countries in terms of competitive advantage as wages are high. The aim of this paper is to find out the difference between the impacts that adoption of Industry 4.0 has on the labor markets in developing countries and advanced countries, and for this purpose Iran and Japan were selected for comparison. For a country like Iran that struggles with heavy unemployment, adopting Industry 4.0 is not wise, because the essence of industrial revolutions and specially the 4th one, is to reduce costs of production by eliminating or reducing the human interaction, in other words, automation; which would significantly affect the labor force, especially those occupied in the manufacturing and agricultural sectors. Iran has lots of problems with basic infrastructure, education, research and technologies that are needed for Industry 4.0. Adopting Industry 4.0 would have devastating effects on the Iranian labor market and specifically on the unemployment rate. It will be years before Iran could implement Industry 4.0. Japan has a much lower unemployment rate comparing to Iran, and unlike Iran has the needed infrastructure and science and technology for implementing Industry 4.0. Therefore, adopting Industry 4.0 by Japan would have some effects on the Japanese labor market but those effects wouldn't be as challenging as they are for Iran.