Digital economy far from full potential, OECD warns

Pushing symbols on a touch screen interface. [Shutterstock]

This article is part of our special report EU Code Week 2015.

SPECIAL REPORT / The potential for information technologies to boost growth across all industrial sectors is still huge, according to the Organisation for Economic Co-operation and Development (OECD) – but it calls on governments to think “strategically” in terms of education and employability.

The OECD Digital Economy Outlook 2015, published in July, forecasts that global trade for ICT (Information and Communication Technology) manufacturing and especially services will continue to grow in the coming years. The OECD is particularly highlighting the broadband market, which is still expanding, cloud computing services as well as different kinds of software for enterprises.

“The digital economy now permeates countless aspects of the world economy, impacting sectors as varied as banking, retail, energy, transportation, education, publishing, media or health,” the report says.

As always when it comes to technology, Europe tends to look across the pond to the United States. There, ICT industries have become a vital part of the country’s economy, employing 4.2 million workers.

In 2012, the industries contributed nearly €880 billion ($1 trillion) to the United States’ GDP and every sector is now relying on hardware and software to some degree.

At the same time, the US Bureau of Labor Statistics estimates that employment in computer systems design will grow annually 3.9% from 2010 to 2020. This figure is compared with 2.6% for professional, scientific and technical services and 1.3% for all industries. 

If Europe saw the same kind of employment growth, it could benefit some of the 4.6 million young people in the EU who are currently unemployed, according to Eurostat’s data from August 2015. In Greece and Spain, for example, more than 25% of young adults are neither employed, in education or any kind of training.

Skills for the digital economy’s labour market

But the OECD says in another report, OECD Skills Outlook 2015, that governments are increasingly aware of the need for thinking ‘strategically’ in order to respond to the challenges of unemployment and inequality. 

One strategy includes analysing the skills needed for the digital economy and help young people develop those.

Almost all jobs require cognitive skills such as the ability to understand, interpretate, analyse and communicate complex information as well as social and emotional skills. Creativity and critical thinking, which are often called “21st century” skills, come from the interaction of all these. 

Job and occupation-specific skills, which are sometimes called technical skills, are now also in demand for employers.

“Today’s economy increasingly requires youth to have digital skills as students, job-seekers or workers, consumers, or responsible citizens. Youth with no ICT access and experience will be at a disadvantage, especially in the labour market where today’s youth are considered ‘digital natives’. However, basic ICT skills may not add value unless they are well paired with cognitive skills and other skills, such as creativity, communication skills, team work and perseverance,” says the OECD in the skills report.

Lack of digital skills is “real cause for concern”

Andrus Ansip, the Commission Vice-President in charge of the Digital Single Market, says Europe has made progress in areas like coding, with a majority of countries now introducing programming classes at school.

>> Read: Coding classes trending across EU schools

But overall, he warned there was “still quite a way to go” before Europeans are fully equipped with the digital skills needed for 21st century jobs.

“While we know that most jobs, in whatever sector, already require some digital skills, in Europe we still have as much as 40% of the population and 32% of the workforce with insufficient digital skills,” Ansip told EURACTIV in an interview. “This is a real cause for concern, and things could get worse, as we see that education systems are currently slow to react to increased market demand for people with digital skills.”

Ansip cited areas like engineering, accountancy, architecture, but also nursing, medicine, art, and many more which require digital skills.

“This cannot go on. For a career in any of these fields, basic coding skills will soon be essential,” he said. 

>> Read the interview: Ansip: Europe ‘still has some way to go’ on digital skills

What is important to emphasise, according to the OECD, is that the development of skills is a dynamic process which means that young people with low cognitive, social and emotional skills will also find it harder to further develop and upgrade their skills over their entire lives. This will make them more vulnerable when technological progress leads to changes in job requirements.

Not all youth possess basic ICT skills despite their universal or at least increasing access to ICT infrastructure.

For example, the OECD report shows that almost 10% of youth on average are not equipped with basic ICT skills.

According to the report, Spain, Italy, Ireland, Slovakia, and Poland fare worse than the OECD average, with the latter having almost 25% of its young people not knowing basic ICT skills. Meanwhile, for the region of Flanders in Belgium, Germany, Sweden, the Netherlands and Finland the figure is less than 5%.

EU Code Week raises awareness about a skill that will only become more influential as time passes. 

Coding is the language of computers – with it comes the ability to create software, websites, and apps.

The European Commission believes teaching coding can help to reduce the EU’s stubbornly high unemployment figures, not least the youth unemployment rates, and get it back on the growth track.

  • 10-18 October: EU Code Week.

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