Going Digital – Making the Transformation Work for Growth and Wellbeing

31st Digital Economy and Telecommunications SummitSantander, 4 September 2017

Dirk PilatDirectorate for Science, Technology and Innovationdirk.pilat@oecd.org

Outline

1. The Context2. The Going Digital project3. Understanding the Digital Transformation4. Next Steps

1. CONTEXT

A wide range of new digital technologieshave emerged …

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Cloud computing

Blockchain

Artificialintelligence 3D printing

Big data

Internet of Things

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…., that are affecting all parts of the economy

HealthPublic Admin. Retail

TransportationAgriculture

Science & Education Manufacturing

Multi-factor productivity growthTotal economy, percentage change at annual rate

Note: Data for Ireland, Spain and Portugal correspond to the periods 1995-2014 and 2009-2014.Source: OECD Productivity Database, April 2017. Statlink: http://dx.doi.org/10.1787/888933477326

The potential productivity benefits of these new technologies are urgently needed ...

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ITA ESP PRT BEL DNK NZL CHE NLD CAN JPN FRA AUT AUS DEU GBR SWE USA FIN IRL KOR

1995-2015 2001-2007 2009-2015

… although today, many firms find it difficultto turn new technology into productivity growth

The productivity gap between the globally most productive firms and other firms has widened

Note: “Frontier firms” is the average labour productivity (value added per worker) of the 100 or 5% globally most productive firms in each two-digit industry. “Non-frontier firms” is the average of all firms, except the 5% globally most productive firms.Source: OECD preliminary results based on Andrews, D., C. Criscuolo and P. Gal (2016), “Mind the Gap: Productivity Divergence between the Global Frontier and Laggard Firms”, OECD Productivity Working Papers, forthcoming; Orbis database of Bureau van Dijk.

OECD Mobile broadband subscriptions per 100 inhabitants, by technology, December 2016

Source: OECD, Broadband Portal, www.oecd.org/sti/broadband/oecdbroadbandportal.htm

Spain has made good progress on broadband access, especially mobile …

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20

40

60

80

100

120

140

160

1.2.2.OECDMobilebroadbandsubscriptionsper100inhabitants,bytechnology,December2016

Data and voice subscriptions

Data-only subscriptions

Total (where breakdown not available)

Source: OECD, Broadband Portal, www.oecd.org/sti/broadband/oecdbroadbandportal.htm, July 2017

… and is among the top of the OECD on fibre connections, …

0%

10%

20%

30%

40%

50%

60%

70%

80%Percentage of fibre connections in total broadband subscriptions, December 2016

The growth of fibre connections, December 2015- 2016

Source: OECD, Broadband Portal, www.oecd.org/sti/broadband/oecdbroadbandportal.htm, July 2017

.. and among the top in the OECD in the growth of fibre connections

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20

40

60

80

100

120

140Annual Growth of fibre subscriptions among countries reporting fibre subscriptions, December 2015-2016%

The diffusion of selected ICT tools and activities in enterprises, 2015Percentage of enterprises with ten or more persons employed

11Source: OECD, ICT Database; Eurostat, Information Society Statistics Database and national sources, April 2016.

But the intensity of ICT use in Spanish business still lags in many areas …

Enterprises using cloud computing services, by size, 2016As a percentage of enterprises in each employment size class

Source: OECD, ICT Database; Eurostat, Information Society Statistics Database and national sources, January 2017.

… with small firms lagging, even in technologies well suited to them

Many jobs in Spain will be affected by the digital transformation …

Jobs with high and medium potential for automationPercentage of jobs with 70 % and between 50 % et 70 % of substitutable tasks

Source: Survey of Adult Skills (PIAAC); Arntz et al (2016)

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101520253035404550

SVK

CZE ITA DEU

AUT

POL

NLD

ENG

/ NIR

Aver

age

USA

ESP

NOR

DNK

CAN IRL

SWE

FRA

JPN

BEL (

Fl) FIN

EST

KOR

Significant change in tasks Automatable

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0

50.000

100.000

150.000

200.000

250.000

300.000

350.000

400.000

450.000

Typesetter and compositor jobs

Graphic design jobs

… but history suggests new jobs will also emerge, complementary to new technology

Source: Presentation by Professor James Bessen at OECD workshop, 24 April.

Individuals who judge their computer skills to be sufficient if they were to apply for a new job within a year, 2013 (as a percentage of all individuals)

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10

20

30

40

50

60

70

80

90%

All Individuals Individuals with high formal education Individuals with no or low formal education

Source: OECD Measuring the Digital Economy: A New Perspective, 2014, http://dx.doi.org/10.1787/888933148354.

New skills will be needed, …

… which may not be easy for many workers

Source: OECD calculations based on the Survey of Adult Skills (PIAAC) (2012 and 2015), www.oecd.org/skills/piaac/publicdataandanalysis .

The proportion of low performers in literacy and/or numeracy, workers

Few high-skilled workers

Many workers lacking ICT skills

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0

10

20

30

40

50

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70% In both literacy and numeracy In literacy only In numeracy only

Individuals using the Internet for sending filled forms via public authorities websites in the past 12 months, by education level, 2015

Source: OECD, ICT Database; Eurostat, Information Society Statistics Database and ITU, World Telecommunication/ICT indicators Database, July 2015; Government at a Glance (2017 forthcoming).

Government itself will also need to be transformed

2. THE OECD’S GOING DIGITAL PROJECT

Digitalisation has been on the OECD’s agenda for some time – e.g. Ministerial Conference in Cancun, June 2016 …

… and is now also firmly on the G20 agenda, with support from the OECD

The OECD launched its Going Digital project at the joint OECD-G20 conference on Key Issues for Digital Transformation in the G20, on 12 January in Berlin.

A background report was prepared by the OECD. It laid the path for the first ever G20 Digital Ministers meeting, that took place in Dusseldorf on 6-7 April.

But we need a more strategic and pro-active approach to digitalisation

• Critical thresholds have been crossed• Shift from an economic focus to socio-economic; all

sectors of the economy are affected• Huge potential• But realisation that digitally induced change will be

disruptive for many workers, firms and sectors.• In many countries, a gap between Technology 4.0, and

Policy 1.0

Background

• The 2016 OECD Ministerial Council Meeting encouraged the development of a horizontal policy strategy on digitalisation.

• The Going Digital project involves 14 core OECD Committees, i.e. the Digital Economy Policy Committee (lead), the Competition Committee, the Committee on Consumer Policy, the Committee on Industry, Innovation and Entrepreneurship, the Insurance and Private Pensions Committee, the Committee on Financial Markets, the Committee on Fiscal Affairs, the Committee on Scientific and Technological Policy, the Committee on Statistics and Statistics Policy, the Economic Policy Committee, the Education Policy Committee, the Employment, Labour and Social Affairs Committee, the Public Governance Committee, and the Trade Committee.

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1. Improve our understanding of the digitaltransformation and its impacts on economy and society

2. Provide policymakers with the tools needed to developa pro-active, whole-of-government policy response tohelp their economies prosper in an increasingly digitaland data-driven world.

3. Help overcome the large gap between technologyand policy development, Technology 4.0 – Policy 1.0.

Objectives

Three Areas of Work: 1. Development of an Integrated Policy Framework

Building the Foundations for the Digital Transformation

Making the Digital Transformation Work for the Economy & Society

Effective Use

(Firms)

Policy Coherence and Strategy Development

Digital Government(Governments)

Trust & Acceptance(Firms, People)

Labour Market

Adaptation(People)

Framework Conditions (including MarketOpenness)

Accessible Digital Infrastructures and Services

Innovation & Effects

(Sectors)

Well-being(People)

• Enrich understanding of the digital transformation in specific policy areas, e.g. financial markets, insurance, taxation, etc.

2: In-depth work on the digital transformation in specific areas

3: Cross-cutting work on some of the big policy questions

1. Jobs & Skills:• Characterise skills needs and

demands;• Assess the implication of

automation for jobs and skills;• Identify and (re)think policies

addressing challenges of Going Digital for jobs and skills.

2. Productivity, competition & market openness:

• implications for firms, business dynamics and productivity

• implications for competition, financing, market openness & taxation

• role of framework policies, especially for adoption

3. Well-being: Impacts on • Material conditions, e.g. job

displacement; scalable jobs; choice, consumer surplus, etc.

• Quality of life: health; skills; work-life balance; social connections; environment ; civic engagement; etc.

4. Measurement:• Review current indicators and

frameworks, identify gaps, explore digital sources; develop a measurement roadmap.

• Scope: Data value and international flows; Skills in the digital era; Trust in online environments.

3. ENHANCING OUR UNDERSTANDING OF THE

DIGITAL TRANSFORMATION

Digitalisation also changes the functioning of the economy, challenging policy …

Policy has difficulty in adjusting to a digital era, for example:• The high speed of change• The changing nature of capital• The growing mobility of value creation• The empowerment of individuals, crowds, SMEs and

regions• And others ….

The high speed of digital transformation, …

Graph showing the time it took different technologies to reacch X amount of users

Challenges legacy policies and slow policy making -speed may promote policy “arbitrage“ strategies

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Smartphones

Internet

Mobilephone

Personalcomputer

Television

Radio

Telephone

Electricity

Source: US Census, Wall Street Journal

Years until used by 25% of US population

… the changing nature of capital, …

Intangibleassets

Servicification

Challenges policies directed at capital, e.g. tax incentives or accounting rules, trade policy (goods vs services)

… the growing mobility of valuecreation, …

Challenges policies that rely on geographical location, e.g. education, corporate and labour tax, trade rules of

origin

… or the empowerment of individuals, crowds, SMEs and regions

Enables entrepreneurship and engagement with crowds, challenges policies that rely on a central point of control

(e.g. media)

4. CONCLUSIONS

• The World (and Spain) is facing a massive economicand social transformation, driven by a wide range ofnew technologies and business models

• This offers many new opportunities for strongerproductivity growth, new jobs, and new solutions to helpaddress global and social challenges.

• But these potential benefits are not automatic and willrequire a comprehensive and pro-active policy response;leadership and vision will be key.

• There is a growing gap between technology (4.0) andpolicy (1.5) - policy will need to move to a digital era –better understanding the changes will help.

• There is much scope for learning across countries.

Key points

1. Ensure the rolling out fibre networks to every citizen and firm2. Foster the scaling of new digital business models and start-up

firms; and ensure sound competition3. Facilitate the diffusion of technology and knowledge across the

economy, notably to SMEs4. Adapt regulatory frameworks to the digital age5. Facilitate digital trade6. Support skills development to ensure nobody is left behind7. Foster digital innovation by investing in the future8. Protect privacy, security and consumers rights9. Leverage digital technologies within government10. Support workers displaced by the digital transformation

Ten policies to benefit from the digital transformation

Thank you

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Contact: dirk.pilat@oecd.org

Twitter: @OECDinnovationand @PilatSTI

Going Digital website:http://oe.cd/goingdigital