The central importance of digitalisation in the national economy, its significance for competitiveness, its positive impact on the functioning of public administration and the quality of life of citizens are now beyond debate. In the last decade, a number of studies and expert calculations have been published on this topic by international professional organizations (e.g., ITU), the European Union (e.g., McKinsey study) and individual Member States (e.g., IVSZ or McKinsey study in Hungary). The studies, without exception, conclude that countries with a more focused attention on digitalisation are at an economic and social advantage over their competitors.
The DESI 2020 Report published by DG CNECT in June 2020, clearly demonstrates that there is a significant difference in the digitalisation performance of individual Member States. A similar conclusion was reached by the Court of Auditors in its recent report, presented in the European Parliament's ITRE Committee on 26.05.2021.
|1 Connectivity||2 Human Capital||3 Use of Internet||4 Integration of Digital Technology||5 Digital Public Services|
The data also indicate that in each Member States different elements of the digital ecosystem require extra governmental attention. Nevertheless, we believe that for economic and social considerations (i.e. competitiveness and social inclusion ),
all member states should give priority to developing the digital preparedness of its citizens
(including people with some form of disability), as well as the micro-enterprises.
It is important to notice that people using basic digital services (most likely social media and videochat applications) are often considered as digitally well prepared – but it is usually not the case: they often lack even the most basic digital skills, hence are not prepared to work in a digital working environment. Such situation does not respond or correspond to the needs of the labour markets; in the long term, it threatens the employees with losing their jobs and employers with the risk of not being able to find well-trained professionals. This could eventually lead to the emergence of "lost generations". The EU-wide effect of this is unclear but certainly gloomy, with one potential outcome being a brain-drain from Member States with higher level of digital skills.
Digitalisation also accelerates the automation of repetitive and low value-added jobs, replacing humans with robots,
hence increasing the number of employees who are unable to find a job due to a lack of digital and other competences. Simultaneously this would also increase the labour market demand for workers with a high level of digital and IT skills (able to operate modern-day machineries).
In our opinion,
digital development of individual enterpreneurs and micro-enterprises deserves special attention
because they are typically not at the forefront of interest in development policy (and statistical enumeration) at Member State level (including the DESI index, which only measures integration of digital technologies by small and medium sized companies with 10 employees or more). Micro-entreprises account for 85-95% of all enterprises in the EU, playing a significant role in the competitiveness of the union. Their digital development requires unique solutions, mixing the elements of training programs for private individuals and development programs for SMEs.
Although closing the digital divide, avoiding the proliferation of labour market mismatch and the digital development of micro-enterprises are the primary tools for Member States, we think governments should also put emphasis on these two target groups when calibrating other elements of their digital development policy.
What does this mean in the case of the key elements of the digital ecosystem?
· during the development of superfast and gigabit networks, special attention should be paid to covering settlements located in smaller, less developed regions;
· during the construction of the 4G and 5G mobile networks, the greatest possible coverage must be sought in order to cover small and sporadic settlements and farms.
· The role of National Regulatory Authorities (NRAs) in this area is also well identifiable (e.g., efficient spectrum management, flexible spectrum policy, involvement in 3G decommissioning, etc.).
· free outdoor and indoor Wi-Fi access should be provided at the local municipality, library or public internet access point (PIAP) 7/24 hours.
· Motivational, direct-to-individual behavioural changes can be used to raise awareness of the benefits of digitalisation among stakeholders, at least by trying out digital tools.
· it is worth launching local competency development programs that are also suitable for involving disadvantaged social groups - such as local mentors who help with taking the first steps on community internet access points (PIAPs).
· special attention should be paid to supporting the digital development of micro-, small- and medium-sized enterprises operating in underdeveloped regions;
· the support for digital training of employees should be made available for these enterprises.
Digital public services
· the public services most frequently used by the concerned social groups (disadvantaged, elderly, people living in small settlements and / or deep poverty, etc.) should also be made available on easily manageable platforms (e.g., in the form of mobile applications);
· help those in need to take the first steps with the involvement of local mentors working on PIAPs.
Raising the population’s digital awareness and developing the competences of the digitally illiterate, as well as improving the digital skills of those with very limited basic skills – central and local governments should play a massive role in these tasks, as in the short run there is no clear market interest (not to mention financing) for them. Besides, a significant proportion of those affected do not even realize that they are becoming increasingly disadvantaged in the labour market. It would also be worthwhile to pay special attention to understanding the behavioural bias of the group concerned in order to deal effectively with the problematic area.
On the other hand, it is in the
common interest of employees, employers, trainers and the state
to train and fund the training of those with average and above average digital skills - it is therefore advisable to design programmes based on proportionate sharing of costs and risks.
In the case of individuals and companies as well, the need for training often arises only under the influence of clear external pressure: in the case of individuals, the loss of a job, in the case of companies, the direct loss of competitiveness can trigger the need for training. The state should play a role in recognizing the need for training, in raising the awareness for life-long learning, as demand for adult education decreased due to fact that low unemployment rates and high fluctuation do not encourage employers to support the development of the competences of their employees.
According to international experience,
full and direct state support for employee training is not effective,
because if the selection is not made by the trainer and the risk is borne entirely by the state, the risk-bearing and thus motivation of both trainers and trainees is reduced; therefore, the interest of the employee and the employer, sustainable in the long-term must be created, in addition to the selection of appropriate training based on economic indicators and employment data that can provide feedback on the actual effectiveness of the trainings.
Therefore, in the case of training for the acquisition of higher-level digital competences and IT skills, which are of particular relevance to the labour market, a more effective form of training funding would be the use of financial instruments
that allow costs and risks to be shared between actors – of which a good example is shown by the recent extension of the Hungarian Diákhitel (student loan) programme to adult education.
 The International Telecommunication Union last published a report with this content in 2018, entitled „The economic contribution of broadband, digitization and ICT regulation”. Source: https://www.itu.int/en/ITU-D/Regulatory-Market/Documents/FINAL_1d_18-00513_Broadband-and-Digital-Transformation-E.pdf
 Shaping the digital transformation in Europe Working paper: Economic potential, February 2020
 IVSZ (Association of Information Technology, Telecommunications and Electronics Enterprises): The weight of the digital economy in the Hungarian national economy, 2019
 McKinsey: The rise of Digital Challengers Perspective on Hungary, How digitization can become the next growth engine for Central and Eastern Europe, Perspective on Hungary, 2021