Skills and Competencies for the Fourth Industrial Revolution in the Post-Pandemic Context (IDB)
October 2023
Authors: Paula Garnero, Laura Ripani, María Florencia Merino
Executive Summary
The Fourth Industrial Revolution presents a new opportunity to address the challenges facing Latin America and the Caribbean and to build a more inclusive and equitable region. In particular, the adoption of Industry 4.0 technologies and the development of digital talent can contribute to increasing productivity, strengthening regional integration, creating quality jobs, and reducing social and gender gaps.
This report seeks to understand the process of technological adoption and the workforce skills demanded by firms in Argentina, Brazil, Chile, Colombia, and Mexico during the post-pandemic period, while also examining how these trends differ from those observed during the pandemic and pre-pandemic stages.
Key Findings
1. Companies continue advancing in their digital transformation during the post-pandemic period.
The adoption of new technologies continues to grow, although at a slower and more selective pace than in 2020. Of the 11 technologies analyzed, only five showed accelerated adoption, with an average increase of 3 percentage points (compared to 15 percentage points during the pandemic), although adoption rates vary significantly across technologies. Firm size and sector matter: large companies and service providers are more advanced in technology adoption than SMEs and goods-producing firms.
2. Cloud computing and digital platforms emerge as the most widespread technologies.
Cloud computing (78%) and digital platforms and mobile services (76%) are now used by nearly eight out of ten surveyed firms. The top five technologies are completed by cybersecurity (45%), the Internet of Things (44%), and cyber-physical integration systems enabling machine-to-machine communication (37%).
Contrary to expectations, big data analytics and Artificial Intelligence adoption slowed compared to the pandemic period. However, interest remains strong: three out of ten firms not currently using these technologies plan to adopt them in the near future.
3. Financial barriers remain the main obstacle to technological adoption.
In the post-pandemic period, 73% of firms report difficulties in adopting new technologies, an increase of 12 percentage points compared to 2020. Access to financing is identified as the main challenge, followed by implementation costs.
Compared to the pandemic period, two major changes stand out: an increase in difficulties related to finding qualified human resources (+8 percentage points) and a decline in implementation delays (-10 percentage points), which had been the second most important obstacle in 2020.
4. Innovation efforts have weakened, affecting STEM talent participation.
The share of firms investing in R&D and innovation (41%) declined by 7 percentage points compared to 2020, although it remains above pre-pandemic levels (32%). Brazil and Argentina lead the region, with 47% and 46% of firms investing in R&D&I, respectively.
Companies investing in R&D&I have a workforce composed of 35% STEM graduates, compared to only 18% among firms that neither invest nor plan to invest in innovation. Across all firms, STEM workers represent 28% of employment on average, down from 32% during the pandemic but still above the 24% recorded in 2018–2019.
5. Women experienced the greatest setbacks in the post-pandemic labor market.
Women’s participation in the workforce declined by 2 percentage points compared to 2020, representing 39% of total employment.
The decline was even sharper among women with STEM qualifications, whose share among STEM workers fell from 45% in 2020 to 38% in 2022–2023. This suggests that reductions in firms’ innovation efforts disproportionately affected women.
6. Full-time in-person work has re-emerged as the dominant work arrangement.
Across the five countries analyzed, full-time on-site work has returned as the predominant organizational model, adopted by 83% of firms. This exceeds the prevalence of full-time remote work (44%) and hybrid arrangements (59%).
Brazil records the highest share of firms returning to full-time in-person work (91%), Chile leads in full-time telework adoption (70%), and Argentina shows the highest implementation of hybrid work models (68%).
7. The main post-pandemic challenge is hiring workers with the right skills.
A total of 68% of firms report difficulties recruiting workers with the skills they need—41 percentage points more than during the pandemic, when only 27% identified this as a problem.
The issue is particularly acute in Argentina (83% of firms) and Brazil (74%). Companies identify the low quality of education systems as the main barrier, followed by shortages of workers trained in new technologies and labor-related tax costs.
To address these challenges, firms increasingly rely on salary incentives (22%) and in-house training programs (21%), replacing the pandemic-era strategy of redesigning job positions.
8. Socio-emotional skills remain critical, while technical skills are the scarcest.
The pandemic marked a turning point by elevating socio-emotional skills above other competencies, a trend that persists in the post-pandemic era.
Today, 57% of firms consider socio-emotional skills “essential,” closely followed by cognitive skills (56%). Physical skills are considered essential by 50% of firms, while technical skills are prioritized by 34%.
Among cognitive skills, creative and analytical thinking stands out (61%); among socio-emotional skills, systems thinking (60%); and among technical skills, resource management (56%).
At the same time, around one-third of firms report shortages of socio-emotional and technical skills (35% each). Technical capabilities—particularly STEM-related skills—remain among the most difficult to find, with 36% of firms identifying them as lacking.
9. Service-sector firms lead the transition toward the Industry 4.0 paradigm.
Service-sector companies are ahead of goods-producing firms in adopting most Industry 4.0 technologies, except in areas such as robotics, the Internet of Things, and 3D printing, where manufacturing firms show stronger adoption.
Service firms also place greater value on socio-emotional, cognitive, and technical skills, exhibit greater gender diversity, and employ a higher share of both male and female STEM-qualified workers.
10. Public training programs are not reaching firms effectively.
Although seven out of ten companies struggle to hire workers with the desired skills, only two out of ten make use of public training and workforce development programs.
This represents a decline of 9 percentage points compared to the pandemic period and 6 percentage points compared to 2018–2019. Moreover, four out of ten firms do not use such programs because they are unaware of them, while three out of ten report that existing programs do not meet their needs.