Digital Economy and Society Index 2022: Digital Skills Lagging – 5G in the EU

Today the European Commission published the results of the Digital Economy and Society Index 2022 (DESI), which tracks the progress made in EU Member States in the digital sector. During the COVID pandemic, Member States have made progress in their digitization efforts, but bridging gaps in digital skills, the digital transformation of SMEs and the deployment of advanced 5G networks continue to pose challenges. The Recovery and Resilience Facility, with around €127 billion earmarked for reforms and investments in the digital sector, offers an unprecedented opportunity to accelerate digital transformation that the EU and its Member States cannot afford to miss.

The findings show that while most Member States are making progress in their digital transformation, business adoption of key digital technologies such as artificial intelligence (AI) and big data remains low. Efforts must be intensified to ensure the full development of the connectivity infrastructures (especially 5G) required for highly innovative services and applications. Digital skills are another important area where Member States need to make more progress.

Executive Vice-President for a Europe Ready for the Digital Age, Margrethe Vesteyjer, said: “The digital transition is accelerating. Most Member States are making progress in building resilient digital societies and economies. Since the start of the pandemic, we have made significant efforts to support Member States during the transition. This is done through the recovery and resilience plans, through the EU budget or, more recently, through the structured dialogue on digital education and digital skills. Because we need to make the most of the investments and reforms needed to achieve the goals of the digital decade in 2030. So changes need to be made now.”

THE Thierry Breton, Internal Market Commissioneradded: “In the EU we have made progress towards our digital goals and we must continue our efforts to make the EU a world leader in the technology race. The Digital Economy and Society Index highlights where we need to further strengthen our work, for example in promoting the digitization of our industry, including SMEs. We must step up efforts to ensure that every SME, business and industry in the EU has the best digital solutions at their disposal and access to a world-class digital connectivity infrastructure.”

The Commission’s proposal on the path to the Digital Decade, agreed by the European Parliament and EU Member States, will facilitate deeper cooperation between Member States and the EU to make progress in all dimensions covered by the Digital Economy and Society Index. This proposal provides a framework for Member States to make joint commitments and establish multi-state projects that will strengthen their collective strength and resilience in the global context.

Finland, Denmark, the Netherlands and Sweden remain the EU leaders. However, they face gaps in key areas: the level of adoption of advanced digital technologies such as artificial intelligence and big data remains below 30% and far from the 75% target set under the Digital Decade 2030; widespread skills shortages, which slow down overall progress and lead to digital exclusion.

An overall positive convergence trend is observed: the EU continues to improve its level of digitization, and Member States that started from lower levels are gradually catching up as they develop at a faster pace. In particular, Italy, Poland and Greece have significantly improved their DESI scores over the past five years, implementing sustainable investments with an enhanced political focus on the digital sector, which are also supported by European funding.

As digital tools become an integral part of everyday life and participation in society, people without appropriate digital skills are at risk of being marginalized. Only 54% of Europeans aged 16-74 have at least basic digital skills. The Digital Decade target is at least 80% by 2030. Furthermore, despite 500 000 ICT specialists entering the labor market between 2020 and 2021, the EU’s 9 million ICT specialists fall well short of the EU’s target of 20 million specialists by 2030 and are insufficient to cover the skills shortages that businesses face today. During 2020, more than half of EU businesses (55 %) reported difficulties in filling job vacancies for ICT specialists. These shortages are a major obstacle to the recovery and competitiveness of EU businesses. The lack of specialized skills is also a brake on the EU’s efforts to achieve the goals of the Green Deal. Hence, massive efforts are needed to reskill and upskill the workforce.

In terms of adoption of key technologies, during the Covid pandemic, businesses promoted the use of digital solutions. The use of cloud computing, for example, rose to 34%. However, the use of IT and big data by businesses is only 8% and 14% respectively (target: 75% by 2030). These key technologies offer enormous potential for significant innovation and efficiency improvement, particularly among SMEs. For their part, only 55 % of EU SMEs have at least a basic level of digitization (target: at least 90 % by 2030), which means that almost half of SMEs do not take advantage of the opportunities created by digital technology. The Commission has today published business-level research on the data economy.

In 2021, Gigabit connectivity increased further in Europe. The coverage of networks connecting buildings with optical fiber reached 50 % of households, which pushed the total coverage of fixed very high capacity network to 70 % (target: 100 % by 2030). 5G coverage also increased last year to 66% of the EU’s built-up areas. However, the allocation of radio spectrum, an important prerequisite for the commercialization of 5G, is still not complete: In the vast majority of Member States, only 56% of the total of harmonized 5G radio spectrum has been allocated (Estonia and Poland are exceptions). In addition, some of the very high figures for coverage are based on the sharing of 4G radio spectrum or 5G low-band spectrum, which does not yet allow the full development of advanced applications. Covering these gaps is necessary to exploit the potential of 5G technology and provide new services of high economic and social value, such as connected and automated mobility, advanced production, smart energy systems or e-health. The Commission also published today studies on mobile and fixed broadband prices in Europe in 2021 and broadband coverage in Europe.

The online provision of basic public services is widespread in most EU Member States. While the European Digital Identity Wallet is imminent, 25 Member States have at least one electronic identification system, but only 18 of them have one or more shared electronic identification systems under the eIDAS regulation, which is a key factor for secure digital cross-border transactions. The Commission has today published its 2022 eGovernment benchmark.

The EU has allocated significant resources to support digital transformation. €127 billion is earmarked for reforms and investments related to the digital sector in the 25 national recovery and resilience plans approved by the Council so far. This is an unprecedented opportunity to accelerate digitalisation, increase the Union’s resilience and reduce external dependencies through both reforms and investment. Member States allocated an average of 26% of the Recovery and Resilience Facility (RESF) funds to digital transformation, higher than the mandatory threshold of 20%. The Member States that chose to invest more than 30% of MAA funds in digital technology are Austria, Germany, Luxembourg, Ireland and Lithuania.

Identifying digital technology as a key priority, providing political support and implementing a clear strategy, strong policies and investments are essential ingredients to accelerate the path towards digital transformation and put the EU on track to achieve the vision set out in the digital decade.

Record

The annual Digital Economy and Society Index (DESI) measures the progress of EU Member States towards a digital economy and society, based on Eurostat data as well as specialized studies and data collection methods. DESI supports EU Member States by identifying priority areas that require targeted investment and action. DESI is also the key tool for the analysis of digital aspects in the context of the European Semester.

The path to the Digital Decade, presented in September 2021 and expected to enter into force by the end of the year, sets out a new governance mechanism in the form of a cycle of cooperation between EU institutions and Member States to ensure jointly achieving the goals, objectives and principles of the digital decade. It also entrusts the monitoring of the Digital Decade goals to DESI, and therefore the DESI indicators are now structured around the four main points of the Digital Compass 2030.

George Fellidis

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