Merkel rallies EU member states to drive Europe’s Industry 4.0

German Chancellor Angela Merkel [World Economic Forum]

German Chancellor Angela Merkel is pushing EU member states to do more to digitise the European economy, saying governments cannot take care of the transition on their own and must agree on tax benefits to support IT firms as quickly as possible. EURACTIV Germany reports.

German Chancellor Angela Merkel on Thursday (4 December) called for more support for the digitisation of Europe’s economy.

Digitisation is an opportunity to combat youth unemployment and slowing growth in Europe, Merkel emphasised at an event in Berlin. ““Far more jobs will be created than will be lost as classical economies digitise.”

Despite her clear optimism, Merkel’s message also contained a clear warning that Europe has fallen much too far behind in certain areas – “for example in its ability to produce chips and establish large internet search-engines”.

Tax benefits for start-ups

As a result, the Chancellor’s goal is to facilitate the foundation of startup ventures in the IT sector. “State support programmes can only bridge the gap to long-term jobs,” Merkel pointed out. European countries must agree on which tax benefits are possible without leading to a case of state aid.

At the same time, Merkel said it is not enough “to simply have money”. The appropriate regulatory framework must also be in place, she indicated. Prompt consultations over the basic Data Protection Regulation are also very important, the centre-right politician stated.

EU growth package must promote digitisation

It is not the first time Merkel has called on the EU for more support of digitisation. Not long ago, after Jean-Claude Juncker announced plans for a €315 billion growth package, the Chancellor explained that digitisation should be at the top of the agenda.

Neelie Kroes, Günther Oettinger’s predecessor as Digital Commissioner, dragged her feet too often on issues like net neutrality and roaming fees, Merkel emphasised. But member states also shared the blame, the Chancellor said.

Germany and Europe both have high hopes for Industry 4.0 – the fourth industrial revolution, driven by the Internet – to help boost the struggling economy.

German Economic Affairs Minister Sigmar Gabriel recently committed the industry and economy to preparing Germany, as a location for industry, for the digital future.

>>Read: Germany’s Industry 4.0 in full-swing, despite dissent from unions

Europe’s youth fear job losses

The latest statistics on EU growth show weak rates, with 90% of economic growth taking place outside the bloc.

Europe is particularly hard hit by unemployment among young people. Unemployment rates among 15-24 year-olds is currently around 22%. Overall, around five million people under 25 are out of work.

This trend could have devastating effects for future productivity of national economies, warn economists like former Nobel Prize Winner for Economics Joseph Stiglitz. But even these young people, for whom the internet is a fact of life – so-called Digital Natives – do not only see the benefits of digitisation.

Recent surveys suggest that only 15% of Europe’s younger generation believe new technology could bring new jobs. Many even fear the technology will eliminate jobs. One survey showed that 33% of Germans between the ages of 18 and 30 reject a career in the digital economy.

A number of experts in the field also see digitisation as a threat to a large number of jobs. “Jobs requiring creativity might be difficult to automate,” said Michael Osborne, professor for machine learning at the University of Oxford, at the Berlin event on Thursday. “But low-paid, low-qualified jobs will be the most threatened by digitisation. And that is a lot of jobs.”

According to Osborne, more education and new competences are urgently needed to prevent a large number of jobs from being lost in the development toward Industry 4.0. “But,” he emphasised, “digitisation itself helps to make education more accessible. Online courses are an example of this – so-called ‘MOOCs” (massive online courses) – but also the broad scope of good educational software.”

The Digital Agenda for Europe was adopted in 2010, as part of the Europe 2020 strategy, to stimulate the digital economy and address societal challenges through ICT.

EU heads of states have since called for further strengthening of the European digital leadership and completion of the Digital Single Market by 2015 (read EU summit conclusions of June 2012 and March 2012).

Below is a summary of the key policy areas of the ambitious five-year plan:

  • Create a new single market to remove all barriers to cross-border trade and licensing, simplify copyright clearance, complete the Single European Payment Area and boost the allocation of spectrum to new services such as mobile applications;
  • Improve ICT standard-setting and interoperability by reviewing the European Interoperability Framework;
  • Improve trust and security to tackle cybercrime, sexual exploitation and review of the data protection framework to protect consumer rights;
  • Increase access to fast Internet and aid the roll-out of fixed and wireless networks;
  • Boost research and innovation by upping the ICT R&D budget by 20% annually;
  • Raise the level of digital literacy by promoting e-skills initiatives, and;
  • Invest in smart technology to reduce energy consumption and help ageing citizens, among others.

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