Balancing Tradition and Innovation Amidst Industry 5.0: The Evolving Skills and Work Practices in European Manufacturing Industry

Introduction When adopted judiciously, digital technologies have the potential to augment manual labor, foster creative human-machine collaboration, and revitalize traditional industries by improving efficiency and driving innovation (Luckman & Andrew, 2020; Pedota et al., 2022; Roberts, 2022). In that respect, in 2021, ten years after the term “Industry 4.0” was first coined, the European Commission introduced “Industry 5.0”, emphasizing human well-being, environmental sustainability, and resilience as core priorities in the digitalization of European industry. While this paradigm shift – from a technology- and efficiency-driven approach to a value-driven one –promises responsible human-technology collaboration by prioritizing ethical use and social and environmental impacts, it also presents challenges. One of these challenges involves European firms in traditional manufacturing sectors, which must balance technological adoption with preserving craftsmanship and cultural heritage (Dacin et al., 2019; Toraldo et al., 2019), all while integrating digital tools into long-established production methods (Berner, 2008). Furthermore, for workers, this shift represents a transition from operating traditional machinery to engaging with advanced digital tools, reshaping both skill requirements and work practices (Barley, 2020). Given that manufacturing SMEs form a vital pillar of the European economy (Katsinis et al., 2024), it is crucial to examine how these changes impact skill development and work organization in such firms. Despite growing interest in technological innovation and its impact on manual labor practices (Luckman, 2015; Gibson, 2016), there remains a significant gap in understanding whether and how digital tools, in fact, transform skills, evolve within shop floors involving both old and new technologies and how management navigates these transitions. Furthermore, it is particularly important to explore whether and how traditional expertise remains valuable while digital innovation paves the path for new forms of expertise and hierarchy on the shop floor, how different levels of technological engagement interact among the workers, and how firms can bridge emerging skill gaps to ensure a cohesive and competitive workforce (Samek, 2021). Previous research held different approaches on analyzing new technologies’ effects on workforce and future skills. While some scholars aimed at categorization and assessment of jobs in relation to computerization and automation (Frey & Osborne, 2013), others focused on how and to what extent work tasks are routine/non-routine and therefore are vulnerable to automation (Arntz et al., 2016; Autor, 2013; Acemoglu & Autor, 2011). Even though such classifications of skills in relation to jobs, tasks and routines can be useful to foresee the outcomes of technological innovation to a considerable extent, new technologies’ incorporation into a workplace is co-constructed by both the capabilities of the technologies itself and the attitude of workers and managers towards them along with the way they decide to involve them in their work practices. This research aims at fathoming whether and how new digital technologies, which are incorporated in diverse European manufacturing firms, replace and/or augment both manual skills (Zirar et al., 2023) and human judgment skills (Jarrahi et al., 2022) of the blue-collar workers, as well as managerial skills of the white-collar workers holding executive positions in these organizations. Methodology This study examines nine manufacturing firms across four European countries: five in Italy, one in Germany, two in Sweden, and one in the UK. These firms, which vary in industry and production processes, are part of the European Horizon Project Up-Skill (Up-Skilling for Industry 5.0 Roll-Out). They operate in sectors ranging from bespoke tailoring, pen manufacturing, furniture design, pipe crafting, and accordion production to industrial manufacturing of surface mix burners, locks, heat transfer systems, and automotive components. While some firms rely heavily on artisanal work, others integrate advanced automation to different degrees. This variation allows for an exploration of how companies balance tradition and innovation, as well as how skills and work practices shift in different manufacturing environments. Despite these differences, all firms share one characteristic: they are embedded within regional manufacturing ecosystems. Within these firms, technology serves multiple functions. It enhances production efficiency and worker practices, preserves and codifies tacit knowledge by shifting expertise from individual workers to company-wide systems, supports managerial decision-making, and attracts younger workers who are more comfortable interacting with digital tools and automated machinery. To analyze these dynamics, the study employs a qualitative, ethnographic-informed approach, including interviews with workers and management, as well as shop-floor observations. Through this methodology, the research explores how employees and management perceive and adapt to technological advancements, particularly in relation to changing skills and work practices. Major Findings Preliminary findings reveal a complex and evolving relationship between traditional skills and digital transformation. On one hand, long-standing expertise remains highly valued, as it is essential for executing intricate production techniques. Management often seeks the input of experienced workers, recognizing their role in maintaining craftsmanship standards. On the other hand, the introduction of digital technologies has begun to shift certain judgmental and evaluative processes from human workers to machines, altering the nature of decision-making on the shop floor. In this evolving context, the ability to operate software and program machinery has become increasingly crucial. Yet, rather than rendering artisanal skills obsolete, these technologies create a new category of “bridging skills” that enable workers to integrate traditional expertise with modern digital tools. A key finding of the study is the emergence of a cyclical relationship between old skills heritage and technological advancement. On the one hand, machines rely on the expertise of artisans, who input their technical knowledge into software programs that, in turn, facilitate production. However, such software remains ineffective without the foundational knowledge that only experienced workers can provide. On the other hand, augmented reality (AR) technologies can enhance the skill transmission experiences among the new and skilled workers. This interplay highlights the interdependence between manual skills and digital systems, demonstrating that while technology does not necessarily replace craftsmanship, it transforms and redefines its role within production. As human judgment skills are transferred from experienced workers to digital technologies, the impact on newly recruited workers depends on how and for what purpose management incorporates these technologies into production, ultimately leading to either up-skilling or de-skilling in the long run. Implications Our research insights have important implications for industry stakeholders, policymakers, and workforce development initiatives at both national and European levels. Our preliminary findings suggest that rather than viewing digital innovation as a substitute for traditional skills, companies should leverage technology as a complementary tool that enhances, rather than diminishes, craftsmanship. Furthermore, as technological change reshapes skill demands, management strategies must adapt to maintain workforce cohesion and minimize skill mismatches. Addressing these challenges is crucial for ensuring the long-term sustainability and competitiveness of European manufacturing industry in a globalized market. By understanding how skills and work practices evolve in manufacturing firms that straddle both tradition and innovation, this study provides valuable insights into the socio-material dynamics of work in an era of digital transformation.   References Acemoglu, D., & Autor, D. (2011). Skills, Tasks and Technologies: Implications for Employment and Earnings. In O. Ashenfelter & D. Card (Eds.), Handbook of Labor Economics. Handbook of Labor Economics: Volume 4, Part B (Vol. 4, pp. 1043–1171). Elsevier. https://doi.org/10.1016/S0169-7218(11)02410-5 Arntz, M., Gregory, T., & Zierahn, U. (2016). The Risk of Automation for Jobs in OECD Countries: A Comparative Analysis. Autor, D. H. (2013). The “task approach” to labor markets: an overview. 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