Jobs, governments playing catch-up to IoT

ISSUES arising from the shift to a fully-digitised world affect all levels of Government and are beyond the jurisdiction of a single Government department, says the OECD’s Anne Carblanc. “We believe the cross-Government approach is absolutely necessary,” she told ATI ...

The digital economy will generate new jobs that will compensate for those lost in the old economy, but countries have to adopt a whole-of-Government approach to policies during the transition.
If done correctly, new jobs will be created, and, in a decade or two, they will compensate for job losses in traditional industries.
Issues arising from the shift to a fully digitalised world affect all levels of Government and are beyond the jurisdiction of a single Government department, says Anne Carblanc, key
author of the 2015 Digital Economy Outlook, published biennially by the Paris-based Organ isation for Economic Co-operation and Development (OECD).
“We believe the cross-Government approach is absolutely necessary. You cannot have Ministers in charge of just the economic aspects because it is across the entire economy. Up to now, it is being dealt with in a segregated, vertical  manner,” she says.
Carblanc told ATI: “If we want to move to the future, Governments have to help in this transition through policies on education, digital skills development and assistance programmes for those who lose their jobs. After that, there should be compensation through the creation of new jobs in new industries.”
She says policies should be aimed at supporting investment in developing entrepreneurial skills and in new spheres of activity to speed up the transition process. And there should be accompanying policies to reduce social costs.  These should look at income support for low skilled and elderly workers, to assist them in making the transition to the digital world.
Youth across the world has embraced
information and communication technologies (ICT), but Carblanc says this does not automatically translate into rising youth employment in the digital world.
“The Outlook report shows Internet uptake is linked to age and education, and often intertwined with income levels.” she says, adding that education plays a role in usage and this, in turn, influences skills development for employment in the digital world.
In its report, the OECD says the full potential of the digital economy has yet to be realised.
But it notes that not all countries have a
well-thought-out strategy to deal with the
transition to the digital economy, although Governments in OECD countries are increasingly aware of the need to develop the digital economy in a strategic manner.
Such an approach is necessary if countries hope to expand the benefits and to respond to key challenges, such as reducing unemployment and inequality and lifting people out of poverty.
The digital economy now permeates every aspect of the world economy, impacting on sectors as varied as banking, retail, energy, transportation, education, publishing, media, health information and communication technologies.
Carblanc says: “The global economy would not be what it is without the digital economy today.  You take the global value chain, global financial system and global innovation – they all rely on digital technologies.” In Asia, she says, the adoption rate varies from country to country. The more developed countries are far ahead of the curve, with a high rate of connectivity in business and the societies.
But the developing countries are still trying to put in place ICT regulations and legislation. The OECD has deployed technical teams to a number of countries in Asia, including the
larger economies of Indonesia and Thailand, to help them develop policies on Internet. She says: “The rate of business adoption varies. It depends on business size and degree of sophistication. If you take broadband connectivity as an example, Korea has the third highest level of connectivity among OECD countries. Almost every firm has broadband connection in Korea, compared to 90 per cent in Japan. “When it comes to the business website, almost 90 per cent of Japanese firms have a web presence, compared to over 60 per cent in Korea. The average in OECD countries is 80 per cent.”
Asia is surging ahead in adoption of the Internet of Things (IOT) – connecting machines to the Internet to enable them to communicate with each other without human intervention.
Carblanc says that, in China alone, more than 84 million devices are now connected to the Internet. This is almost a quarter of the global total of 365 million devices. “China has more devices connected to the Internet than the United States (78 million devices), South Korea (18 million) and Japan three million,” she says.
But, on a per capita basis, Korea has the highest level of connection with almost 40 devices for every 100 inhabitants, compared with 25 per 100 in the US, eight in Japan and six in China. The reason, she explains, is the focus of the Korean Government, which has put in place a number of initiatives for the adoption of IoT. The country has had an IoT strategy since February last year.
“There is a strong political will to promote IoT development and this is evidenced in key projects, such as Korea’s Sodong smart city project, near Incheon Airport.” Sodong has been described as the world’s first fully-connected IoT city or city of the future.  (See breakout)
Economic gains from high productivity when economies go digital are becoming more evident. Carblanc points to a 20 per cent improvement in efficiency in the delivery of health services in the European Union, which is in the midst of implementing its e-Health Action Plan 2012-2020. Similarly, elsewhere in the world countries and their citizens are benefitting from the efficiency of Government services and interaction with the political process through e-Government.
“Broadly speaking, productivity increases come through channels such as computers, software, knowledge and so on,” she says.
“We have measured for a long time productivity increases arising from ICT investment. In Australia, ICT investment accounted for a 47 per cent increase in labour productivity from 2001-07.  In most OECD countries, ICT investment raised productivity by 20-35 per cent over the same period.” But she has noticed that the rate of improvement has slowed since the global financial crisis.  
Intangible benefits also come from adopting new methods of doing things and new organisation, she says. While existing evidence points to important increases in productivity, the OECD team is still working to quantify the gains. “It is still early work,” she told ATI.
The global challenge is to ensure that all nations, big and small, have access to ICT and the wherewithal to go digital. To date, some countries are being excluded because of the level of development or geographies.
“We know broadband coverage is low in rural and geographically-difficult areas. Liberalisation of telecom markets is still very important because it stimulates new investment, reduces prices and offers new innovative products.
 “We are working with Indonesia, Vietnam and many countries in Southeast Asia to build policy capacity to develop ICT and the digital economy. We work with their regulators on telecommunications policies and to improve supply and demand.”
Carblanc says Governments take the lead in opening access to data. “The history of ICT and the Internet shows the success of the Internet has been made possible thanks to Government initiatives in collaboration with the private sector.  And development of the Internet was initially financed by the US Government.”
But in practice, she adds, the private sector has been the early adopter.
The adoption of ICT in the OECD region is widespread among businesses. “But we want to highlight the point that, although businesses are using the technology, small businesses lag behind.” OECD data shows that, in 2014, 92 per cent of business software applications, for instance, required enterprise resource planning software, but only 42 per cent of smaller companies use such software.
She says ongoing expansion of the digital economy is dependent on  a conducive global environment, including finding solutions for issues such as lack of trust, privacy concerns and threats to open Internet. These issues are heavy with political overtones.
OECD Ministers will gather in Mexico next year to discuss a wide range of issues related to the digital economy, including job careers, barriers to Internet and regulations.
Having established the pillars of a digital economy, now that it is taking off the task is to look at the broader impacts on societies.
 “We are looking at different regulations and policies that could affect the Internet and free flow of data across the Internet,” Carblanc says.
She warns that any move to roll back the openness of the Internet will lead to fragmentation and affect the free flow of data. That will
in turn limit trade competition and innovation.