Ahead of digital revolution, small Czech firms still struggle with slow internet

A worker neatens a Skoda automobile body part before assembly at Skoda Auto manufacturing plant in Mlada Boleslav, Czech Republic. [EPA-EFE/MARTIN DIVISEK]

The Czech Republic is one of the most industrialised EU states and its big companies do not fear digitalisation. However, SMEs are afraid of job losses and have asked for help with the costly transformation.

According to a Deloitte study, digitalisation, robotisation and automatisation will affect mainly transport and heavy, manufacturing and automotive industry. This is important for the Czech Republic where industry accounts for almost 50% of the overall business economy.

The Škoda Auto Company generates more than 4% of the Czech GDP. If the country does not make the digital transformation fast and well enough, industry will suffer.

“Digitalisation will have a huge impact on our economy. Industry makes a big part of our GDP. We have to pay attention to this fact,” warned Kryštof Kruliš from the Association for International Affairs (AMO).

Czech labour unions understand it but are afraid that automation and robotisation will cause a dramatic loss of jobs. On top of that, the OECD confirms that, as far as Industry 4.0 is concerned, the Czech Republic and Slovakia are the most job-endangered countries.

However, Michal Kadera from the Škoda Auto Company is more optimistic. “We do not have to be afraid of robots. Robotisation and Society 4.0 is a continual process. It is more an evolution than a revolution. There does not have to be a negative impact on jobs,” he stressed.

In his view, big companies will not have any problems with the transformation. “Most of them are already getting closer and closer to the Industry 4.0 concept. On the other hand, SMEs need help. We also must focus on e-government and well-equipped schools,” he said.

He also recalled that the success of transformation in the Visegrad 4 countries (Czech Republic, Hungary, Slovakia, and Poland) depends primarily on the automotive industry. “In V4 countries, half a million people work in the automotive industry. Another two million are involved in it indirectly.”

Work 4.0 – opportunities and risks

Digitization is on everyone’s lips and will change the working world in the next couple of years. For employers this poses a range of risks – but could also open some chances, as a recent analysis shows. EURACTIV Germany reports.

V4 needs a Digital New Deal

The Czech Republic does not ignore these facts. The previous government created a national Industry 4.0 Initiative, a national strategy for cybersecurity or Society 4.0 Action Plan. “These documents are important because they press the governments,” Kruliš believes.

On the other hand, those plans are quite long-term and, according to AMO’s Kruliš, Czechs need more specific aims and goals. “We feel that there has been a move from these long-term strategies to solving more concrete problems, recently. That is good.”

He also pointed to a new initiative by his think tank, called Digital New Deal, which aims to start a broad expert discussion on “what are the best ways forward for V4 countries with the ongoing digital revolution”.

Ondřej Malý from the ministry of industry and trade agrees. “The government is going to focus mainly on free movement of data, connectivity, mobility and business development. However, we cannot forget education either.”

In his opinion, the most important thing is to support the expansion of high-speed internet expansion, removal of administrative barriers and cheaper mobile data.

“However, we should not forget that we still know very little about the artificial intelligence and its impact on jobs,” he stressed.

Czech ALDE MEP Dita Charanzová (ANO) shared this view. “Robots are a very sensitive political topic in Europe. The unions are afraid of losing jobs and businesses say there is nothing to worry about. We need to grasp the topic very carefully,” she thinks.

SMEs are in a very difficult situation because the transformation to the Society 4.0 is too expensive for them.

“Final investments are very often in hundreds of thousands of euros. Paradoxically, the availability of high-speed internet is still a huge problem in the Czech Republic, too,” stressed Evžen Reitschläger from the Association of SMEs.

“There should be a measure to support SMEs. It is getting harder for them to keep pace with big companies within their subcontracting network. I know a case when an automotive company had to buy one of its sub-contractors because it just could not keep up with fast technological changes,” Reitschläger added.

Subscribe to our newsletters