Let ICT fuel the knowledge economy

Europe needs to shape up its IT department and make us all better at applying and using computers as the foundation of a true knowledge economy, says the European Union’s ICT taskforce.

Europe’s ambitions of becoming the leading knowledge economy will turn to dust unless the continent can get to grips with using information and communication technologies to generate, manage, manipulate and share information.

Such improvements in how ICT is deployed will spur development of the ICT sector, create a favourable environment for all businesses and increase productivity overall. These are the major conclusions of Fostering the Competitiveness of Europe’s ICT Industry, an EU ICT Taskforce report, published this week.

The ICT industry is critical to Europe’s future both as a major industrial sector in its own right and as a driver of productivity and improved service quality in all other sectors and across the whole of public services.

The challenge sharpens

The competitive challenge is becoming sharper still in the face of a new wave of technological change and market opportunities, which carry the potential to reshape

the industry and the ways in which its products and services are used.

As a result, “Europe needs to act now to ensure that it provides the right environment for the ICT sector to flourish and to play its full role in driving the European Union’s economic and social goal,” says the taskforce.

Since the mid-nineties, EU has suffered a continuing decline in labour productivity, mainly due to the lack of investment in information technologies. In the same time the US has seen productivity growth - even at a time of falling manufacturing output - that has been mostly driven by astute and strategic use of IT to boost productivity in the services sector.

Europe’s comparative productivity - and hence competitiveness - increasingly depends on how effectively and efficiently technologies are developed and then used by citizens, enterprises and the current - and future – workforce. Europe’s ageing population and shrinking workforce make it even more important to apply ICT to mitigate these constraints.

Look to the low-skilled

As a starting requirement, Europe urgently needs to increase the ICT skills of low-skilled people, both to drive social inclusion and to increase their range of work opportunities. This is especially true for the 6 million early school leavers, 20 million long-term unemployed, and those in low-skilled jobs that international competition is threatening to displace.

ICT is also one of the keys to achieving the Lisbon directives. Around 3 per cent of the workforce in the (then) 15 members of the EU were directly employed by the ICT sector in 2003. The ICT sector has high growth potential with the western European IT market currently growing at an annual average rate of 6.1 per cent and the central and eastern European markets growing by 13.2 per cent a year.

“It is vital that policies concentrate on encouraging the demand for ICT by all segments of the economy and society, while enhancing the skills required to use them effectively,” says the taskforce. This increased demand will in turn drive investment and growth in the ICT sector.

The taskforce blames much of the current underinvestment in ICT on the inertia that needs to be overcome if businesses and the public sector are to make the organisational changes that are needed to properly apply these technologies.  

The lack of awareness and demand among SMEs is also an important factor. There are some 23 million SMEs in the EU, providing around 75 million jobs. They account for up to 80 per cent of employment in some sectors, such as textiles, construction, or furniture, where the uptake of ICT remains low.

But now these sectors have a chance to leapfrog from non-use of ICT, to apply the latest managed ICT services delivered via the Internet. Web services are increasingly available on a metered pay-as-you-go basis and do not require large upfront capital investments.

Regulatory patchwork

And then as ever, the task force turns its attention to the patchwork of regulation, saying,  “In many cases, EU member states have failed to establish a common framework allowing technology companies to benefit from one set of standards and rules as

is the case for example in the USA or Japan.”

This perpetuates the fragmented European market, generating numerous obstacles to competitiveness, as companies cannot implement strategies or computer systems on a European scale.

That other old chestnut, intellectual property protection, also attracts the taskforce’s attention. “Europe must improve the legal certainty and accessibility of its patent system

for all players, including SMEs,” says the report, adding that the EU should continue and even increase its efforts against counterfeiting and piracy and reform the copyright levies system.