The Fish Rots from the Head: Europe’s Digital Divide.

Understanding the Divide

Europe has been in the throes of a digital divide since the turn of the century. Current policies related to entrepreneurship and organizational structures were written at a time when large companies were regarded as permanent fixtures in the economy, and where workers tended to stay with one employer for many years. This sense of security came at the price of complacency from a technological front, as employees with one full-time job could depend on heavily unionized industries to ensure that progress was more of a question of job continuity rather than adaptation to the changing digital economy. Those conditions no longer exist and no where is this more apparent than in developed countries of the EU.

In early 2003, researchers and economists at MIT began looking at the changing diaspora of the employment market in the US. Their results showed 2 interesting dichotomies.

  1. That the labour market was getting polarized in terms of skills demanded.
  2. That technology, especially ICT (Information & Communication Technology), was the catalyst.

Although this stream of research research began in the US, the same trends have been seen in the EU as well. Using data from a plethora of sources and by performing a few statistical clustering routines, we were able to gauge and compare EU member states based on their ICT prowess. The detailed results can be seen in the post Fighting Technological Unemployment with Technology.

The term polarized is an apt term as it underlines the contrast that is reshaping the meaning of skills and education today. What researchers found was that since the past 30 years, there has been a steady growth in the jobs that require high skills and in jobs that require low skills, whilst there has been a growing reduction in jobs that require middle skills. As a result, the data when interpreted graphically creates a rather harmonic U-shaped curve.  David Autor, an economist at MIT, divides this skill-polarized work environment into 4 task groups:

  1. Cognitive non-routine tasks
  2. Cognitive routine tasks
  3. Manual routine tasks
  4. Manual non-routine tasks

While there is increased demand in the jobs that require the 1st & the 4th task groups, the jobs that involve routine tasks are increasingly being eliminated by advances in technology, notably by automation in routine manual task jobs and Robotic Process Automation (RPA) in routine cognitive task jobs.

It is important to underline this last phrase, as the jobs that are encompassed under the title of routine cognitive tasks, are what we are educating a large part of our young population to do in the future. These are jobs primarily in the service sector which require some amount of cognitive flexibility coupled with a bachelor’s or a first year Master’s degree (mostly not STEM related). Is it thus any surprise that we find a bigger and growing number of educated and unemployed young people in the world today? How can they enter the labour market, let alone compete with others, when their qualifications were already outdated even before the day they began their studies? 

digital_divide_logo

In light of all this turmoil, some EU states have begun to make a few changes not only in their perception of the situation, but more importantly, in their policies. One laudable mention is definitely the launch of Estonia’s Digital Society, which serves as a template of innovation to be emulated by others without shame. Another, albeit more grandiose, project launched at the EU level was the Digital Single Market (DSM)

Under the DSM plan, the European Commision intends to forge a cohesive marketplace for digital products & services by streamlining the continent’s entwined mesh of consumer protection laws, contractual agreements, copyright policies, telecommunications rules, and cross-border taxes. Although constructive and undeniably necessary,  one of the underlying motivations of this project is the desire to close a purported digital trade deficit with the United States, which the Commission says “stems in part from unfair competitive practices on the part of America’s digital giants”. (Stephen Ezell; http://www.euractiv.com)

This misconceived sense of rectitude could steer the DSM off-course whilst failing to address the issue of the digital divide that is currently shearing Europe. While is it important that European entrepreneurs are given a better chance to create new technology companies that can leverage the accelerating technological change, the mindless production of ICT and tech related companies will not provide Europe with a universal solution.

What is more important is to encourage companies’ use of them, because that is what generates the lion’s share of new value in digital economies, where innovation is the mantra. More importantly it is this kind of a work and labour environment where employees continuously learn and realize their limitations. This is turn influences academic institutions to update their research & curricula more often, provides current employees a continuous learning pedestal that acts as a compliment to their formal education, and simultaneously ensures that the youth are receiving an education that is more attuned to the current necessities of the labour market. More importantly, this kind of an ambiance also allows for greater collaboration and exchange of information and ideas within and beyond EU economies.

рыба гниет с головы

In russian folklore, there is a famous saying that says ” the fish rots from the head”. While the objectives cited above, ought to be the priority of the DSM, the reality is that the objectives currently laid out seem to go contrary to this sense of digital inclusion and more towards a twisted sense of European exclusivity that encourages traditionalism. This was highlighted by Commissioner Oettinger’s recent proclamation of the necessity “to replace today’s Web search engines, operating systems, and social networks” with European ones. This is perhaps the most disconcerting facet of the Commission’s focus on the digital deficit,  as it implies that the solution lies in the EU running a trade surplus in ICT industries (amongst others) with the US.

Policies aimed at giving Europe a fighting chance to become part of the digital economy of the world need to be based on interconnectedness rather than territoriality. Although the DSM’s intentions seem patriotic to the union, the lack of flexibility and vision portrayed by their stalwarts risks jeapordising this goal without a  more open-minded and malleable outlook. Without an acceptance of this fundamental tenet of global trade, the prospects for true transnational economic integration through the proposed agreements certainly appears problematic, not just for the EU, but more importantly for the youth of the EU.

Only greater inclusion and increased flow of ideas will help in bridging this divide. Without the acceptance of these realities, the Commission risks creating a chasm rather than a path to prosperity and equality.

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