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Mr Erkki Liikanen Member of the European Commission, responsible for Enterprise and the Information Society "e-Skills: Crucial to Europe's Competitiveness" European e-Skills Summit Copenhagen, 18 October 2002

European Commission - SPEECH/02/501   21/10/2002

Other available languages: none

SPEECH/02/501

Mr Erkki Liikanen

Member of the European Commission, responsible for Enterprise and the Information Society

"e-Skills: Crucial to Europe's Competitiveness"

European e-Skills Summit

Copenhagen, 18 October 2002

Ladies and Gentlemen,

I am very pleased to speak here in this e-Skills conference. Skills remain to be one of the crucial issues in information society. It is essential for the effective use of technologies but even more: it is one of the most relevant drivers towards an inclusive e-society. Education and training is about levelling entry point.

I am pleased to see that so many of you are attending and contributing actively, although more or less everywhere belts are being tightened. That is why the obligation for all of us is clear: to try and do more with the same or even less resources.

First of all, I would like to express my thanks to the Danish presidency for hosting this event and for the willingness to follow it up at the Council of Ministers. This ensures that the results of this conference will be taken into account by the Member States and the Commission.

Secondly, I would like to extend my thanks to the Organisation Committee of the e-Skills Summit. In particular, the contribution and active participation of representatives of industry and social partners has been crucial for this event.

Let me also thank my fellow Commissioners, Commissioner Diamantopoulou and Commissioner Reding as well as the Commission services who worked closely together to make this event happen. The topic of e-skills cuts across traditional divisions of responsibilities.

General Context

I would like

  • First, to address this theme from the general point of view of the competitiveness of our economy

  • Secondly, to put skills in a broader context and then

  • Thirdly to go more specifically to the issue of skills and talent in the information technologies.

Putting Europe at the forefront in international competitiveness is one of the biggest and most urgent challenges for the European Union.

A competitive economy is capable of providing increasing productivity, generating wealth for citizens and increasing the GDP per capita. A nation's wealth derives firstly from high employment and secondly from productivity growth. Once the employment rate has reached its limit, productivity growth remains the source for catching up with global competitors. That makes productivity growth so essential.

Increasing productivity is indeed beneficial to society as a whole. For wage earners, this creates opportunities to increase real wages. For enterprises, it implies enhanced competitiveness. And for governments, it creates the possibility to finance public services.

To reach this goal, information and communications technologies (ICTs) and their productive usage will have to play an important role, as an enabler of innovation and to streamline business processes. This calls for well-trained people.

But to fully reap the benefits of the ICTs in productivity growth three pillars must be in place:

Firstly, the investment in ICTs itself but followed secondly by re-engineering of activities and organisations and thirdly by investment in human capital.

If back-offices and relations between firms are not re-organised accordingly, the ICTs tend only to reinforce the previous ways of functioning, and the opportunity for a more sustainable productivity growth will be missed.

Similarly, if people do not have common ways of working with new technologies, the benefits will be fragmented and go astray.

To illustrate the present intensity of IT in different sectors it might be interesting to look at the size of IT and web departments across business sectors, as an indicator for ICT and e-business usage and diffusion.

Results of a survey from the European Commission show that, on average, in Germany, France, Italy and the UK 69 employees per thousand are occupied with the maintenance of IT and networks, and 26 with the maintenance of a company web site.

The most IT-intensive sectors are real estate, telecommunications and computer services, retailing, business services and health and social services.

It is striking that telecoms and computer services do not come first here and that ICT and e-business are spreading across all sectors.

Over the last few years, concerns about an ICT and e-business skills gap have been intensively discussed. They were subject of an Informal Council Meeting in Luleå under the Swedish presidency and a European High level Task Force on skills and mobility has been established. As a result of the work of this group, the Commission adopted an Action Plan in February.

However, let me frame the issue of skills by presenting them simply in three layers.

First and foremost, everybody needs basic skills. To not to have them signifies marginalisation in the information society. The societal ethos here is the level entry point. But a lack of a basic set of skills means a lack of a qualified work force in the future. The societal and economic aspects are intertwined.

Secondly, there is a need to integrate a certain amount of ICT skills in all professions. This is crucial for productivity gains. If we are to roll out e-health, e-learning or e-government services, it is clear that doctors, nurses, teachers and civil servants all of whom are involved - need to have the necessary skills.

The user industry now seems to be the biggest source of demand also for let's say pure ITC-skill, but I'll come back to that later.

And thirdly, to top the pyramid, there are highly specialised professional niches.

Seen from this angle, a block of ICT skills needs to be integrated across all layers of learning, training and vocational education.

Within this structure there are the ICT specialists, professionals who are needed and sought by the ICT sector itself, but even more so by other branches.

Is the e-Skills gap still a problem?

With the burst of the Internet bubble many dot.coms collapsed, with the result that their expertise became available to other companies and sectors. Also, the ICT sector as a whole has gone through major structural changes, with mergers and strategic re-orientations.

Therefore, one might believe that the problem of e-skills has diminished. Is there still an urgent need to tackle what some may call a non-issue? The answer is that despite growing unemployment among ICT professionals, an ICT skills gap still exists.

Reason 1: Demand mainly comes from user industries

Firstly, the main driver of the demand for e-skills comes from the user industries, and not from the ICT industries themselves.

The spread of e-business has become a major part of the re-engineering of practically all business processes, and this therefore requires investment in new skills in all business sectors.

As a result, the demand for ICT and e-business skilled professionals comes from both the ICT sector and, even more so, from the ICT user industries.

In 2000, UNI-Europa estimated that up to 80 per cent of ICT staff were working in user industries. This trend, in itself and independently of the actual figure, is a positive indicator of the spread of ICT.

In Germany, France, Italy, and UK the demand for IT specialists is strongest in telecommunications and computer services, followed by insurance and pension funding services.

Other sectors with a strong demand are the financial sector, electrical engineering and electronics, and transport equipment manufacturing.

This, once again, gives evidence that the demand for ICT and e-business skills is spread across the whole industry manufacturing as well as services - and not only dominant in the ICT sector.

The widely quoted figures about the e-skills gaps and mismatches unfortunately provide us with only a partial understanding of this phenomenon as they do not explicitly differentiate between the situation in the ICT sector and the situation in the user industries.

However, it has to be noted that traditional industries have the greatest difficulties in recruiting IT specialists.

As an example, in the machinery and equipment sector more than 65 per cent of the companies experienced great or some difficulties in recruiting IT specialists.

Another example of this phenomenon is the metal products industry.

In this sector, difficulties in recruiting ICT and e-business specialists occurred more often in small and large companies than in the medium-sized ones.

Reason 2: Long-term policies should not be based on short-term considerations

Building up the necessary professional e-skills takes time, and not only because of the time it takes for new university graduates to complete their studies. Better workforce training also requires long-term investment so that people can acquire and maintain appropriate e-skills.

If less effort is made in investing in the definition and development of new e-skills now, there is risk of an even higher ICT skills gap in the coming years or the risk of an erosion of the knowledge base.

It is therefore of great importance to raise awareness about Europe's future needs in terms of e-skills. The challenge is to attract right now the talents that will be needed in the coming years as well as those which are already missing in many European enterprises today.

People looking to choose or change their career path should be aware not only of the growing need for ICT professionals but also the need for a range of different skills sets encompassing ICT, e-business user skills and "soft" skills. People need to be able to use new technologies efficiently, and to understand business, and take risks and initiatives.

Reason 3: e-Skills are not only professional IT skills

E-skills are not just IT professional skills. E-Skills include user skills and digital literacy.

In nearly all sectors, employees have access to e-mail and the Internet.

Among the strongest IT users are, as one would expect, the telecommunications and computer services, followed by a traditional sector in manufacturing (electrical engineering) and a service sector, the insurance and pension funding services.

However, in retailing and the health and social services, less than 60% of the employees use e-mail for external communications.

These figures apply to the four biggest economies in Europe. Altogether, it is estimated that half of the workforce uses a computer for work. But despite this high level of usage, employers are not training their workforce and less than one-fifth of workers have received training in ICT at work.

Digital literacy is now something that is required more regularly in the workforce setting. There are various definitions but, in general, related to the ability to grasp and use information as presented on a computer screen (audio, video, text, etc.)

User skills must however not be locked by one technology, for Internet platforms converge and complete each other. Interoperability of Digi-TV, PC and mobile phone will increase choice and possibilities for users and businesses alike.

Reason 4: e-Skills are subject to international competition and mobility

The competition for the best brains is world-wide, in particular in the fields of information and communication technologies and e-business, where skills are particularly subject to international competition and mobility.

According to ITAA the Information Technology Association of America - the US also suffers from an e-skills shortage of 50% of total demand for IT workers. To close this gap, the US is attracting skilled people from other countries. Foreign-born workers now account for 20% of all employees in the US information technology sector, according to a McKinsey study.

Besides, ethnic minorities have been a remarkable booster in entrepreneurial activities.

It is clear that Europeans should be encouraged to go abroad in order to learn and to get international experience. But this should be a free choice, not driven by the lack of opportunities in Europe. People should be willing to come back to Europe so that this experience is not only beneficial to the individuals but also to Europe as a whole.

In order to become the most competitive and dynamic knowledge-based economy in the world, Europe must therefore become the most attractive place for talented people to live and to work.

This effort needs to start with the attractiveness of the European educational and research systems. According to studies, in the US 80 percent of foreign doctoral students in high-tech professions plan to stay in the country after graduation. (Erasmus!!)

Attracting and retaining the best talents therefore has to follow a consistent approach, ranging from the educational system to the business environment. Only this will create the conditions for highly skilled individuals, wherever they come from, to find the right opportunities to express their talents in Europe.

This would also give the whole European society the opportunity to nurture fruitful exchanges with immigrants and ethnic minorities.

Conclusions

Ladies and Gentlemen,

This e-Skills Summit is an important milestone in raising awareness of the need to further promote e-skills in Europe.

Let me summarise the main conclusions to be drawn:

First, in order to use IT effectively to enhance productivity and thus stimulate growth and employment, IT literacy needs to be strengthened across all sectors and professional qualifications. At least half of all employees are using, in one way or another, IT applications, often still without any special training.

Secondly, despite the current economic downturn in the ICT sector, the demand for specialised ICT skills is still growing faster than the supply. The ICT skills gap may be less than expected two years ago, but it still exists. Therefore, continuous efforts are needed to attract more talented people to study mathematics and computer sciences and to better train people to acquire digital literacy.

Thirdly, the problem of the ICT skills gap calls for new forms of co-operation between the stakeholders. Schools and universities will have to adapt their curricula but at the same time more efforts have to be undertaken to train people better and to upgrade their skills on a continuous basis.

Finally, it has to be recognised that the problem of the ICT skills gap can not be solved in isolation. There is not only competition for the most talented people between different sectors but also between different regions and countries. Europe must be an attractive place to work and live, in order to attract the right people who can drive our economies.

I wish to thank all the participants at this conference for their contributions to this debate.


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