This is the fourth article of our series "Alternative Solutions to
the Eurocrisis" in partnership with treffpunkteuropa.de. Read the German
At first sight, one might be puzzled to find that the annual Las Vegas Consumer Electronics Show (CES), the world’s largest event of its kind, is not only about shiny screens and gadgets. Although, the cars and the refrigerators on display clearly tell us that we are in the middle of a revolution comparable to the one brought about by electrification. The appliances we use every day are becoming smarter and will eventually encompass all areas of our lives: as they become more and more connected with each other in the ‘Internet of things’, they collect an increasing amount of so-called ‘Big Data’ in order to create solutions that improve the quality of our lives. Self-driving cars and refrigerators that take care of the shopping seem to be only the first of many an innovation yet to come.
It is not only our private sphere that is affected by the merging of the real and virtual world. Our professional lives are undergoing the same process: indeed, the economy is said to be on the verge of a Fourth Industrial Revolution. Plainly speaking, Industry 4.0 means that the automatisation of production processes is now being followed by its digitalisation. Robots and machinery are connected to the Internet, they communicate with one another and make their own decisions. The ensuing increase in productivity could lead to the EU achieving its goal of a 20-percent industry share in total value-added by 2020, up from the current 15 percent.
“We must catch up rather than being at the top”
It should come as no surprise then that Jean-Claude Juncker has made the digital agenda one of the key points of his policy. By digitalising the single market, the President of the EU Commission hopes to generate up to 250 billion euros in additional economic growth and hundreds of thousands of new jobs. To this end, the Commission’s working plan for 2015 provides for strengthening the regulatory framework in the telecommunications sector, adapting copyright law to current requirements, increasing cyber security and boosting digitalisation in several other policy areas. A detailed plan for the European digital economy is to be drafted by May 2015 by the EU’s Commissioner for “Digital Economy and Society”, Günther Oettinger, who believes that “Europe’s IT sector is in no good shape”.
Arguably, he is right. US-based companies such as Google, Amazon and Facebook have shown that the EU has missed the boat of digitalisation, with the Commission having focused for many years on lowering roaming tariffs or prices for telecommunications, rather than on market harmonisation. As a result, former market leaders such as Siemens, Nokia or Alcatel now play at best a secondary role in the international digital market. It is now feared that leading companies in the digital sector could take on the industrial sector, too: Google, for instance, is currently developing a self-driving car. Speaking at the World Economic Forum in Davos in January, Chancellor Angela Merkel summed up the situation by saying that “we must catch up rather than being at the top”.
Every second job is at risk
Market harmonisation, however, is not the sole obstacle in the race to catch up: there is also a massive backlog of capital expenditure. The EU estimates that building an extensive high-speed, fiber-glass network could cost between 180 and 270 billion euros. Fast, reliable transmission routes are a prerequisite for digitalising the European economy and, therefore, for Industry 4.0. The expansion of the broadband network is to be financed, among others, through the 315-billion investment programme announced by Juncker. At least, this is what the German government expects in its letter to the Commission, in which it calls for a strong focus to be put on the expansion of digital infrastructure.
Efforts also need to be made in order to increase public acceptance. Over the next two decades, every second job may potentially be at risk due to the increased automatisation of the industry. This, in turn, shifts responsibilities on employees, who are now asked to thoroughly plan processes, correct possible sources of errors and translate their analyses into pieces of software. In light of this, German employers’ associations have already pointed out that “digital literacy should be pursued as a key qualification across society”. At the same time, demographic change is playing into the hands of the economy: it is already clear that immigration alone will not be able to compensate. This makes it all the more important to invest into preparing young people for tomorrow’s professional world. For this reason, boosting digital literacy and e-learning is a further cornerstone of the EU Commission’s plans for digital single market.
Since its start in 2008, the European Union has been chiefly preoccupied with managing the economic and financial crisis. So far, the problems involved have not been solved. In its new series, treffpunkteuropa.de presents five alternative ways to overcome the crisis.
Author: Julius Leichsenring
Translated from German by Federico Permutti