SMEs largely wary of digitalisation in Germany

8164424558_f35b5d1129_o.jpg [QSC AG/Flickr]

The EU’s strategy for the digital single market includes ambitious targets, including copyright reform, improving the digital infrastructure and eliminating national borders in online trade. But experts argue that SMEs should receive more support. EURACTIV Germany reports.

The digital revolution is increasingly entering all aspects of daily life, a move illustrated at political level by campaigns like Industry 4.0, and Smart Cities.

And Europe has set itself an ambitious goal. By the end of 2016, the European Commission intends to present detailed proposals for creating a digital single market.

The project, presented as Europe’s “race to catch up” with US companies, is ultimately expected to contribute an annual €415 billion to Europe’s economic performance, create hundreds of thousands of jobs and save citizens €11.7 billion each year, according to the Commission, which outlined its plan in May this year.

>>Read: EU ‘racing to catch up’ with Digital Single Market plan

“The plans are good”, said John Higgins, Director-General of the trade association DigitalEurope at an event in Munich on Monday (15 June) where the Commission’s strategy was presented.

But Higgins argued that politicians and regulators must do more to support digital businesses and start-up firms. Almost all companies in the sector expect a strong digital infrastructure, a digital single market to compete with the US and other parts of the world, more financial start-up support and a larger pool of technology specialists.

Lacking digital skills

But digital know-how is still in short supply. Commission estimates indicate that by 2020, Europe could lack more than 800,000 such specialists. Without them, an efficient and rapid digitalisation, as well as successful adaptation of the labour market, could remain wishful thinking, experts warned.

Soon, the digital revolution will affect all economic areas, they predicted, saying EU competences are urgently needed.

“With the exception of a few applied elements”, an Industry 4.0, in which products and value chains are digitalised, “has remained a pipe dream” so far, said Dieter Wegener from the advisory group on technology at the German Commission of Electrical, Electronic and Information Technologies (DKE). Among other activities, the DKE develops standards and safety regulations in the electronic and information technology sector.

Many small and medium-sized companies are still afraid of the digital transition, he explained. “They cannot assess how the transition will affect their value chains,” Wegener said in Munich.

>>Read: MEP Reda: Commission is too cautious on geo-blocking and copyright law

“Smaller companies are looking more for precast solutions and proven standards,” said SAP’s Christoph Behrendt. Many such firms “still do not have a plan for the transition”, he said.

Smaller companies are dreading the change

This is a challenge for Europe. In the EU, an estimated 23 million SMEs form the backbone of the economy. They make up 99% of all businesses and provide two-thirds of all jobs.

Current estimates indicate that more than 40% of them still do not make use of the opportunities related to digitalisation, though the benefits of such a transition are proven, Higgins emphasised. “Companies that use digital technology grow two to three times as fast, are more productive and employ more employees,” he said.

To achieve this, governments, industries, NGOs and other decision-makers from 22 EU member states started the campaign “e-Skills for Jobs in 2015” by signing the Riga Declaration. It includes ten principles including more and better investment in digital technologies and e-skills, combatting youth unemployment in Europe with the help of digital capabilities as well as promotion of e-leadership at the management level in European businesses.

But the digital industry goes even further in its recommendations for action. Digital Europe proposes that representatives from regulatory agencies receive training in boot camps, in order to efficiently promote the digital infrastructure.

At the beginning of May, the European Commission announced its plans for developing a digital single market.

The 16 priority areas listed in the plan will be followed up by the end of 2016 with specific legislative proposals, the Commission said.

>> Read: EU 'racing to catch up' with Digital Single Market plan

The plan is supposed to save citizens €11.7 billion every year, contribute an annual €415 billion to economic performance and create hundreds of thousands of new jobs.

The transition is meant to ensure Europe remains internationally competitive in the internet age.

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