Strengthening Europe’s digital economy

Gerard de Graaf, Director – ‘Digital Economy and Coordination’ Communications Networks of the European Commission explains the importance of closing the ICT skills gap…

Digital technology, automation, computing and the Internet have revolutionised our daily lives and transformed the way products and services are designed and offered. This 4th industrial revolution is changing even the most traditional economic sectors. Not only is technology changing the nature of the economy, but it is also opening up opportunities for innovation, sometimes of a disruptive nature.

The digital economy has the potential to unleash additional growth, competition, investment and innovation, while expanding markets and fostering better services at better prices, more choice and creating new sources of employment. It has the potential to contribute to taking Europe out of the crisis by creating opportunities for new start-ups and allowing existing companies to grow, profiting from the scale of a market of over 500 million people, and to transform traditional industries.

This is why the Commission has identified the completion of the Digital Single Market (DSM) as one of its top 10 political priorities and will present concrete proposals before the summer.

Already today, the Digital Economy is an important motor for growth and job creation in the EU. The ICT industry’s share of value added is around 4.4% in the EU; increasing to 7% if you include the indirect contribution from ICT in other sectors. Further contributions come from broader “spill over-effects” on the rest of the economy. However, the economic impact of ICT is more than its value in static terms.

Through its impact on productivity, ICT is responsible for around a third of overall GDP growth in the EU. In the US, and some EU countries such as the UK, the gains from ICT for productivity and growth have been higher. Evidence shows those countries that have benefited most from ICT for growth and productivity either have a strong digital industry or the right framework conditions that allows the gains from the use of ICT to spread in the whole economy. An essential element is the availability of skilled human capital. Currently, the EU is suffering from important digital skills gaps and mismatches. Skills gaps exist at all levels from basic user skills to skilled ICT professionals. As ICT innovations spread throughout the economy, the demand for digital skills is rising. Over the past decade, employment of ICT professionals in Europe has risen on average by around 4% per annum, despite the economic crisis and the general downturn in employment. These new jobs, and the multiplier effects (estimated at up to 5 new jobs for each new ICT job created) they have for employment elsewhere in the economy, are sorely needed.

However, the full employment potential related to ICT jobs is not being fully tapped. Companies are having difficulty getting the skilled people they need. Indeed, 40% of firms trying to employ ICT professionals in the EU say they are having difficulty in doing so. And the problem is growing. It is estimated that, by 2020, there may be as many as 825,000 unfilled vacancies for ICT professionals in the EU if current trends persist. In particular, while demand is growing, the supply of new computer science graduates has flat-lined. Not enough young people, especially women, are choosing an ICT education and career, despite good pay and career prospects.

However, the digital skills gap is larger and broader than this. While more and more jobs throughout the economy require digital skills, so that such skills are becoming essential for the job market, a significant proportion of the EU population lacks even the most basic skills: around 40% of the EU labour force, for example, has low or no digital skills, with around 20% having none at all.

We need to exploit the growth and employment potential of digital technologies. In particular, we need to give young people better digital skills, so they can take advantage of these new emerging jobs. As women are largely underrepresented in the ICT field more focus needs to be put on attracting young women to ICT. If we do not make use of this valuable resource we will miss out on an important economic opportunity.

Under the European Commission’s Digital Agenda for Europe, the Grand Coalition for digital jobs brings stakeholders together to jointly ensure the increased availability of ICT training as well as to create awareness about ICT careers among young people. This coalition has been a great success story, receiving a large number of pledges for action by public and private stakeholders and stimulating many local initiatives, including the setting up of national coalitions in a number of countries. The learning of digital skills such as computer programming or “coding”, needs to start at a young age. It is only through radical curricula changes in European education systems, to introduce the learning of digital skills and the integration of digital technologies into teaching and learning that we will be able to close our digital skills gaps and prepare our citizens for the world they will live and work in. Some Member States, such as the UK, have included coding in their school curricula.

The transformation of Europe’s economy for the digital age is not a trivial task. No government or company can do this alone. It requires a long-term vision, decisive action and strong collaboration of all actors: Governments, businesses, educators, social partners, and many more. I hope you join us on this journey towards the digital economy in Europe.

Gerard de Graaf

Director – ‘Digital Economy and Coordination’

Communications Networks, Content & Technology

European Commission

http://ec.europa.eu/dgs/connect/en/content/dg-connect

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