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The role of digital transformation in labour markets and business ecosystem

Information and communications technologies (ICT) play an increasingly important role in our professional and private lives, and digital competence is of growing importance for every individual

By: EBR - Posted: Tuesday, January 8, 2019

The 2016 New Skills Agenda aimed to improve the quality of skills on (the supply side _labour force) training and to make the skills acquired more visible and comparable from one country to another. Data on ICT skills should also be improved in order to better anticipate developments and help people make better career choices. Skills acquired in non-formal ways should also be assessed and validated
The 2016 New Skills Agenda aimed to improve the quality of skills on (the supply side _labour force) training and to make the skills acquired more visible and comparable from one country to another. Data on ICT skills should also be improved in order to better anticipate developments and help people make better career choices. Skills acquired in non-formal ways should also be assessed and validated

By Dimitris Panopoulos*

In the future, nearly all jobs will require digital skills. However, European Commission figures show that two fifths of the EU workforce have little or no digital skills. In addition, despite continued high levels of unemployment, there could be 756 000 unfilled jobs in the European ICT sector by 2020. 

This situation is even more challenging in certain geographical areas (such as south-eastern Europe), among socially vulnerable groups (in particular, the unemployed and the disabled) and the elderly. Despite favourable developments in the digital literacy of citizens, the digital gap needs to be narrowed further. Digitalisation has several impacts on the labour market. 

On the one hand, new business models, products and machines create new jobs, while on the other hand, automation contributes to the elimination of jobs or their relocation to countries with lower labour costs.
To remedy this situation, developing the digital skills of the EU workforce is essential. 

Reducing the mismatch between the skills available and those demanded for the digital transformation of the economy has been a key EU-level priority over the past decade. Forinstance, a 2008 communication entitled 'New skills for new jobs' emphasised the increasing need for digital skills in the shift to a low-carbon economy. 

Furthermore, the 2010 Digital Agenda recognised the need for indicators to measure the extent of digital competence in the EU. This was implemented through the development of the Digital Competence Framework ('Dig Comp'), enabling citizens to evaluate their digital skills, and the Digital Economy and Society Index ('DESI'), summarising relevant indicators on Europe's digital performance and tracking the evolution of EU Member States in the area of digital competitiveness.

 The Grand Coalition for Digital Jobs, a multi-stakeholder partnership created in 2013, aims to facilitate collaboration between business and education providers, and between public and private actors, and has already created 60 functional pledges in 13 countries. 

The 2016 New Skills Agenda aimed to improve the quality of skills on (the supply side _labour force) training and to make the skills acquired more visible and comparable from one country to another. Data on ICT skills should also be improved in order to better anticipate developments and help people make better career choices. Skills acquired in non-formal ways should also be assessed and validated. 

Possible solutions developed in the EU Member States include encouraging and enabling people to acquire the skills needed, enhancing the labour mobility of digitally skilled people and promoting cross-border skills policies so as to diminish labour market matching obstacles. Improving skills supply can be done by encouraging people to offer their skills on the labour market and by retaining skilled people in the labour market.

 Putting skills to effective use by creating better matches between skills offered and demanded, and by increasing the demand for high-level skills can also contribute to improving the situation.

Some up-to date survey’s data regarding the demand side of skills of labour market (enterprises) bring to forth the following general conclusion: Few companies are immune to the forces of creative destruction. Our corporate longevity forecast of S&P 500 companies anticipates average tenure on the list growing shorter and shorter over the next decade. 

Some key insights: i)The 33-year average tenure of companies on the S&P 500 in 1964 narrowed to 24 years by 2016 and is forecast to shrink to just 12 years by 2027 ii) Record private equity activity, a robust M&A market, and the growth of startups with billion-dollar valuations are leading indicators of future turbulence. iii) A gale force warning to leaders: at the current churn rate, about half of S&P 500 companies will be replaced over the next ten years. iv) Retailers were especially hit hard by creative destruction, and there are strong signs of restructuring in financial services, healthcare, energy, travel, and real estate. v) The turbulence points to the need for companies to embrace a dual transformation, to focus on changing customer needs, and other strategic interventions.

Overall conclusions of the relevant surveys and researches on the impact of digital transformation in labour markets and business ecosystem for 2018: 
- The digital disruption in retail heightens the imperative of dual transformation
- The rising dominance of digital technology platforms continues to shift massive market value
- Disruptive change across industries highlights the importance of continual business model innovation
- Cleantech and the downward pressure on energy price has created new winners and losers in one of the world’s biggest industries
- The explosion of private “decacorn” companies signals accelerating turbulence in the years ahead. 

*Executive of Labour Market Needs’ Diagnosis Mechanism, Ministry of Labour, Social Security and Social Solidarity in Greece

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