The relevance of the issue of the competence potential of living labour is due to the need for evolutionary changes in the labour potential of the workforce as a response to the transformation of embodied labour in the context of the digitalisation of the economy. The aim of the research is to substantiate the conceptual foundations for the formation of the competence potential of living labour in the new conditions of digital transformation. In order to achieve this goal, the conceptual and categorical apparatus of labour theory has been improved, the types and structure of competences, functions and tools for building competence potential have been defined. Methodology. General scientific research methods were used in the study. In particular, using the methods of induction and deduction, the genesis of the concept of "competence" is studied to determine the substantive transformations in time, using the method of comparison, the common and distinctive features of the concepts of "competence" and "competency" are identified, using the systematic method, the structural elements of the concept of "competence" are identified and the introduction of the concept of "competence potential" of living labour into the scientific apparatus of labour theory is substantiated. The obtained results of the study created the basis for substantiation of the conceptual scheme of formation of the competence potential of living labour, which consists in allocation and coordination of the structural elements of the categories "potential", "competence", "labour potential". It is concluded that the expansion of the competence potential of living labour should be carried out in areas in accordance with the types of competences, in particular, individual and academic competences, workplace competences and industry competences. It is established that: a) individual competences depend on genetic characteristics of a person and are formed in non-formal and informal education; b) the institute of micro-qualifications should become an effective tool for the development of academic and workplace competences; c) individual, academic and workplace competences are crystallised into sectoral competences, which are reflected in the sectoral qualification frameworks and determine the vector of movement of a modern specialist in professional activity. The practical value of the research results is associated with the possibility of forming and implementing a labour management policy adequate to the new economic conditions.