The Role of Digital Infrastructure and Skills in Enhancing Labor Productivity: Insights from Industry 4.0 in the European Union

The adoption of Industry 4.0 technologies supports the digital transformation of production processes, making them more efficient. This study examines how digital infrastructure, digital skills, and the use of cloud technologies influence labor productivity in European Union countries. Using econometric methods, including linear regressions and fixed-effects panel regressions, the analysis highlights the important role digital skills play in boosting productivity. It also identifies the adoption of cloud solutions as a catalyst for process efficiency, while widespread high-speed internet coverage supports the connectivity of smart systems. However, variations in the development of digital infrastructure and workforce readiness across EU member states present challenges to overall labor productivity. The study concludes that strategic investments in automation and digital infrastructure, along with improving the workforce’s digital skills, are essential to making Industry 4.0 a key pillar of economic competitiveness. By examining how workforce digital skills and certain Industry 4.0 technologies affect labor productivity, this research adds valuable insights to the specialized literature.