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A report on the Dutch ICT labour market with a specific focus on the Amsterdam Metropolitan area

drs. Lara van Druten prof. dr. Gerd Junne Vic Klabbers drs. Mona Hansen

by The Network University, Gebouw Renault, Wibautstraat 224, 1097 DN Amsterdam, The Netherlands, Tel: +31 (0)20 5618166, email: [email protected]

Table of contents Introduction

3

Part 1: The ICT sector and labour market in the Netherlands Dutch ICT Infrastructure The position of the ICT sector in the Dutch economy Implications for the labour market Further growth potential Explanations for the success of the Dutch sector

6 6 7 9 11 11

Part 2: ICT and the labour market in Amsterdam: spatial distribution of ICT employment in the Amsterdam region 12 Overview and sectoral composition of the wider Amsterdam area 12 Overview of the job market in the wider Amsterdam area 13 Part 2.1: The dynamics of the ICT sector in the Amsterdam greater Metropolitan Area Amsterdam ICT capital The model of Porter Composition of Amsterdam’s ICT sector ICT firm size, specialisations and spatial location Main drivers of the ICT dynamic Inter-company networking The rise of corporate Universities Key aspects of Amsterdam’s position as ICT capital of the Netherlands Part 3: Specificities of the current turn-around: How has the labour market restructured as a result of the economic turnaround? From job growth to job loss? Reduced qualified labour demand as a result of the turn around? Cost reduction strategies Professional biographies: What can an ICT professional expect to earn in Amsterdam? Qualitative changes in the application of ICT influencing the labour market Work culture in the ICT sector – subject to change or manifestation of traditional segmentation?

15 15 15 17 18 18 19 19 20 23 23 24 27 30 32 33

Part 4: Public policies to support Amsterdams’ role as ICT capital Boom period policy responses Bust period policy responses

35 35 36

Conclusion

38

Bibliography

40

Annex

43

2

Introduction High economic growth and rapid globalisation characterized the years around the turn of the Millennium, before the boom turned into a bust in 2001. The Netherlands, positioned at the cross-read of international trade, profited greatly from the rise of international flows of goods, services and information. For a number of years, it ranked as the top location in Europe for new enterprises. The international position of the Netherlands economy has helped the country to generate extraordinary growth rates (in relation to other countries of its size and capacity). However another element that has also been vital in fuelling growth in the Netherlands lies with the specific characteristics of the Dutch labour market. This has long been characterised by relatively modest wage increases on the one hand and a very high degree of labour flexibility on the other. It is obvious that especially those industries that are closely related to the “New Economy” need such flexibility. It is no wonder, then, that many companies active in this field flocked to the Netherlands and did quite well in the heydays of the boom. This activity, of course, was not equally distributed over all parts of the Netherlands. The process of globalisation manifests itself mainly in the large cities. These are the locations for a broad range of professional services1 that actually undergo a quick process of globalisation and which form the backbone of what became regarded as “The New Economy”. The “New Media” are very much part and parcel of this. Within the Netherlands, the metropolitan area around Amsterdam is clearly the ICT capital of the country. Approximately 70 % of the optical fibre cables in the Netherlands are concentrated in Amsterdam alone. Amsterdam is an important European Internet-hub and the country’s centre of “New Media”. We can therefore expect that Amsterdam is a very suitable location for a closer analysis of “Opportunities and Risks in the New Media Labour Market”. The steep rise in the demand for qualified labour during the boom years, affected practically everybody with some education and caused a considerable (re-) integration of large segments of the population into the labour market. The fact that the boom was followed by a strong economic down-turn in 2001, was instrumental in making the risks in the New Media labour market somewhat more visible. At this stage however, it is only possible to indicate where some of the fault-lines in this labour market lie, as very few statistics are available.

1

Cf. the work of Saskia Sassen which has described in detail processes of globalisation

3

This report has also had to work with multiple and varying definitions of the “New Media Labour market”. This in turn has impacted on the general coherency of the statistics underlying the report (as it is not always clear what definition of ICT nor new media the statisticians have based their work on). In general, we define the “new media” sector as “that part of the economy that delivers products (ICT industry) and services (ICT services) in the domain of information, communication and technology.” The definition makes a distinction between the ICT industry and services sectors. The industry sector includes the producers of all products that contribute to the electronic infrastructure in order to facilitate the electronic flow of information and electronic channels of communication. The ICT industry sector has been broadly defined, and obviously within this sector, industry also produces products that are not directly related to ICT. The statistics used in this report have (as much as possible) taken this into account. The ICT service industry includes the telecommunications companies, computer service bureaus, content providers as well as Internet providers. Computer service bureaus include those offering complete automation solutions; system development, analysis and programming services, computer centres, databanks and companies that provide maintenance services for computers and offices machines2. Within this broad definition of the ICT sector, typical activities include: - communication o mobile communications o cable companies o satellite services o internet access providers - computing o software development and services o hardware development and manufacturing o services - content o online entertainment o publishing o internet content providers o electronic commerce Developments in the ICT sector have facilitated a number of changes, which are often grouped under the heading of the ‘new economy’ or the ‘networked economy’, these include: - the digitization of economic processes with their concomitant impact on generating new organisational forms; - the acceleration of economic developments that are often expressed in short, repetitive, waves of innovation and ever shortening product 2

Ministerie van Sociale Zaken, “Een virtuele schaarbeweging?”

4

-

development cycles; the increasing interconnectivity of regional economies which result in an ever stronger exchange of economic activities between cities, countries and regions3.

Increasingly the ICT sector is not just seen and analysed as a sector unto itself but it is recognised that it is both an important source of economic innovation as well as often forming the foundation upon which growth is generated in other sectors. An economic zone (such as the greater Amsterdam Metropolitan area) is able to nurture growth within the ICT sector by fostering the presence of ICT capital. The ICT capital of an economic zone, consists of: - the presence of a solid base of both scientific and technical knowledge - a nurturing infrastructure of companies, organisations and policies - the presence of sufficient qualified personnel. In this discussion of the Dutch ICT labour market, a number of facets of the ICT capital of the greater Amsterdam Metropolitan area will come under discussion. This report is part of a larger study to be completed by the University of Hamburg. It involves a comparative study of the ICT labour markets of three major European cities: Amsterdam, Hamburg and London.

3

KPMG, “ICT in Amsterdam en Haarlemmermeer: hun uitgangspositie vergeleken met New York, Londen, Frankfurt en Stockholm”

5

Part 1: The ICT sector and labour market in the Netherlands After a period of enormous growth, the recent global economic downturn has had a very strong effect on the Dutch economy. The Dutch ICT sector was one of the main drivers behind the growth rates. During the boom years, from 1995 to 2000, companies invested heavily on the ICT side. They installed massive enterprise-resource-planning packages; upgraded their equipment as costs for PCs, servers, and storage hardware fell; and tried to tie their hardware and software together by investing heavily in connectivity, including technology to support the leap to the Internet. The general growth period initiated a willingness to experiment with new business models and a strong period of experimentation with ways to create attractive content (low and high cost) and to thus attract the website visitor (in either a business to consumer; business to business or consumer to consumer market). However by 2001, satiated markets, the disappearance of the Y2K bonus, 11/9 and the high costs of 3G (the third generation of mobile communication) led to declining growth rates and tempered the euphoric feeling of a revolutionised economy. Even though the Netherlands generally (and Amsterdam in particular) was hard hit during the post 2001 downturn, some argue that the overall economic decline might be limited to an interim period of the years 2001 and 2002 only. The Economist Intelligence Unit Country Forecast of February 2002 predicts that the Netherlands will be the most attractive business location in the world in the period 2002-06. The country scores particularly high on its political stability and effectiveness, its policy towards foreign investment and the availability of finance. Furthermore, it’s the nature of its workforce is also cited as a motivating factor in its ranking as number 1: “The Netherlands' ample supply of skilled labour and flexible working arrangements spearheaded by the Dutch "flexi-model" system of shortterm contracts and flexible working hours has made it an attractive site for multinational companies. Moreover, the Dutch work force is well known for its high levels of productivity, multilingualism, high percentage of advanced degrees, and familiarity with foreign working styles and environments”.4 Dutch ICT Infrastructure The Netherlands possess one of the most Internet-ready environments in Europe. It has the highest Internet connectivity rates in Europe and one of the top cable penetration rates globally. The country has a 100% digital, advanced fibre-optic network in place, and offers the largest bandwidth on the European continent, which is complemented by relatively low-cost longdistance telecom and bandwidth charges.5 4

Netherlands Foreign Investment Agency, Economist Intelligence Unit, Country Forecast February 2002, http://www.nfia.com/html/news/articles/news020314.html 5 Netherlands Foreign Investment Agency, “Seeking European E-business? Tap into the Dutch. Connection”, http://www.nfia.com/html/industry/in0.html

6

In November 2002, the Ministry of Economic Affairs announced that Internet penetration into the Dutch population is at 74%. This statistics positions the country as a global frontrunner in the area of connectivity. 6 The position of the ICT sector in the Dutch economy Period before 2001: Whilst the ICT sector is relatively small when placed in an international perspective, the sector forms one of the pillars of the Dutch economy. In 1998 it contributed around 5% to the countries’ GDP. In Sweden and in the US the contribution of the ICT sector averaged around 9%. Figure 1.1 A comparative perspective of the Dutch ICT sector 1998: contribution of the ICT sector to several different GDP’s

8

%

ICT SERVICES ICT INDUSTRY

6

4

2

0

SWEDEN

US

UK

FINLAND

GERMANY

JAPAN

FRANCE

NL

ESB Monitor, 2001

Excluding Japan, all of the countries listed in the table above showed a larger ICT services sector than industry. The Dutch ICT sector is not strong in the production of computer hardware (here countries such as the US and Japan take the lead with their respective companies such as IBM, HP and Hitachi and Matsushita). Whilst hardware production is not strong the Dutch ICT sector is, on the other hand, relatively strong in the production and development of software programmes for the computer service industry. Period after 2001: The economic downturn led to declining growth rates and a general drop in turn over. Earlier optimistic forecasts were rapidly replaced with more moderate numbers. The telecom sector faced the largest decrease of turn over: from 24,2,% in 1999 to 8,6% in 2001. Whilst in the ICT industry, the manufacturers of cables and chips, faced a turn over drop of –1,9 % (in the same year).

6

Emerce, 13/11/2002,“Internetpenetratie Nederland 74 procent”, http://www.emerce.nl/archives/nieuws/Marktcijfers/14481.html

7

However when the Dutch ICT sector is seen as a whole, the sector is still able to show a steady increase. In 1999 the rates of return were set at 43,3 billion EUR in 2001 these were at 50,4 billion EUR . And in 2003 it is projected to reach 57 billion EUR.7 Rates of return in the ICT- and telecom sector in percentages 1999-2003: Real turn 1999 2000 2001 2002 2003 over 24,2% 19,8% 8,6% 5,75% 4,75% Telecom sector 15,5% 7,8% 4,7% 5% 8% Computer services 3,9% 6,5% -1,9% - 0,25% 6% ICTindustry Source: CPB Memorandum 38, CEP-op-maat ICT 2001-2003 Figure 1.2 Real and projected growth rates in the Dutch ICT sector

After the 12% growth rates achieved % 16 over 1996 to 14 1998, (these are said to be 12 largely the result of 10 activities around the 8 Millennium 6 bug and the strong surge 4 of Internet and mobile 2 penetration in 0 the 2003 - 2006 1996 - 1998 1999 - 2002 Netherlands) The central Planning Bureau for statistics [www.cpb.nl] the forecasts are that for the period 2003 – 2006 the ICT sector will achieve growth rates around the 5%. Whilst these are clearly below those achieved a few years ago, the sectors growth is still expected to be higher than the growth rates achieved over other Dutch sectors8. The forecasts provided in the graphic above are of course dependent on a number of different factors including (most importantly) the success or failure of the roll out of new mobile services (I-mode and UMTS). A successful roll out could provide a new impetus to the sector and new growth perspectives. Real and projected growth rates in the Dutch ICT sector

7

Emerce, 12/02/2002, CBP verwacht aantrekkende groei ICT sector”, http://www.emerce.nl/archives/nieuws/Marktcijfers/13820.HTML 8 CPB Memorandum 21, http://www.cpb.nl/nl/pub/memorandum/21/memo21.pdf

8

Published in the third week of November 2002, the Dutch Ministry of Economic Affairs most recent ICT test, has stated that the Dutch ICT sector continues to be one of the main drivers of the economy with a current contribution of 40% to Dutch economic growth. 9 Implications for the labour market Changing economic parameters affect the labour market in several different ways. The following figures focus on the labour productivity and levels of employment. As the telecommunications sector has its own specificities, information on the growth in this sector has been provided as its own graphic. Figure 1.3 employment and labour productivity in the telecom sector

Labour productivity over 2003 – 2006 in this sector is expected to grow as a result of international consolidation amongst telecom providers, reorganizations, as a result of increasing competition (especially on the local land network) and as a result of the introduction of broadband telephone services10.

Job growth and labour productivity in the telecommunications sector

8

%

EMPLOYMENT LABOUR PRODUCTIVITY

6

4

2

0

1996 - 1998

2003 - 2006

1999 - 2002

The central Planning Bureau for statistics [www.cpb.nl]

9

Emerce, 13/11/2002, “Internetpenetratie Nederland 74 procent”, http://www.emerce.nl/archives/nieuws/Marktcijfers/14481.html 10 CPB Memorandum 21, http://www.cpb.nl/nl/pub/memorandum/21/memo21.pdf

9

Figure 1.4 job growth and labour productivity in the computer services sector

In the area of computer services a different image is 20 % expected to emerge. Increased innovations EMPLOYMENT and improved LABOUR PRODUCTIVITY 15 efficiencies in the production process will be focused on 10 improving productivity. The expectation is that 5 products will become increasingly standardized and will 0 2003 - 2006 1996 - 1998 1999 - 2002 be applied on a large The central Planning Bureau for statistics [www.cpb.nl] scale. This will allow the service industry to provide an increasing amount of repeated services which in turn should impact on the increased productivity per employee. Job growth and labour productivity in the computer services sector

The forecast for labour productivity growth in the ICT sector is expected to accelerate to an annual growth rate of 2,25 % over the period 2003-2006. This growth is said to be due to four reasons - a cyclical upturn in labour productivity growth after the slowdown in 2001-2002 combined with an anticipated modest growth in employment - further adoption effects of ICT in ICT-intensive industries and other industries combined with a diffusion and better use of ICT - the projected tight labour market and international competition will force Dutch firms to increase productivity - enduring technological innovations will also contribute to productivity growth11. The CBP memorandum also fore spells that whilst the employment level in the overall ICT sector will continue to increase, this will happen in a much slower fashion than before. In 1999 the sector (including telecommunication) had approximately 300.000 employees. In 2001 this number rose to 324.000 in 2003 it is expected to reach 329.000. Noteworthy is that this growth is distributed differently across the ICT service sub-sectors: computer service companies and the telecom sector will gain jobs while the ICT industry is expected to loose jobs (from 997.000 in 1999 to 940.000 in 2003).12

Further growth potential 11

Wiel, H.P. van der, “ICT potentials for the Netherlands”, in cbp report 2002/3, http://www.cpb.nl/nl/cpbreport/2002_3/s3_1.pdf 12 CPB Memorandum 38, 11/4/2002, “CEP-op-maat ICT 2001-2003”, http://www.cpb.nl/nl/pub/memorandum/38/memo38.pdf

10

In the ICT industry sector it is expected that the breakthroughs achieved in the broadband telecommunications sector will positively influence new communications technology. Great hope is also put on the potential of ecommerce for the Dutch economy. The Netherlands boasts a large, growing number of companies providing services for electronic business, many business communities are shifting from electronic data interchange systems to Internet-based solutions. More than six million Dutch citizens (about 40% of the total population) own cellular phones. This would give the Netherlands a competitive edge in wireless communication as the next wave of Internet connectivity.13 Explanations for the success of the Dutch ICT sector Explanations for the success of the sector largely adhere to two camps. The first, the ‘Polder model’ proponents, argue that economic success has largely been a result of: wage restraints; high flexibility of the workforce as well as the culture of compromise and ‘deal making’ within the Netherlands that has led to an atmosphere in which various social partners (from trade unions to business) are relatively accustomed to accommodating the needs and wishes of the other. The second group of proponents cluster around – what can be called – the Delta model. This group argues that economic success is a result of the position of the Netherlands in the international division of labour at the cross roads of world trade relations

13

Netherlands Foreign Investment Agency, “Seeking European E-business? Tap into the Dutch. Connection”, http://www.nfia.com/html/industry/in0.html

11

Part 2: ICT and the labour market in Amsterdam: spatial distribution of ICT employment in the Amsterdam region Overview and sectoral composition of the wider Amsterdam area The Amsterdam Metropolitan Area is part of the larger randstad Holland, which is one of the main centres of economic activity in the EU. When compared with other EU economic zones, the Dutch Randstad area falls into the all important ‘EU Banana Zone’ (see graphic below). Within this zone, regional competitiveness (as measured by GDP per head and normalized by an EU average of 100) reveals the following statistics for regions that contain a world city: Ile de France (160), greater London (140) and a number of German regions such as Frankfurt/Darmstadt (171) and Stuttgart/Karlsruhe (131). In terms of competitiveness the Amsterdam metropolitan area (120) compares to the economic zones of Brussels (123) and the Ruhr/Rhine basin (117). The greater Amsterdam Metropolitan area consists of the capital city, its surroundings and the district of Haarlem/Ijmond. Figure 2.1 The main centres of economic activity within the European banana14

The area is an important economic centre in the Netherlands and accounts for more than 10% of the national economic product. The economy of the area is characterised by a large finance and business services sector in the city, fast growing air transport hub at the Amsterdam International Airport Schiphol, tourism in the old inner city and a competitive sea, transport and distribution industry along the ports of the North Sea Canal.15 When compared to the average growth rates of the EU and the rest of the Netherlands, the region of Amsterdam performs relatively well. According to the department for Economic Affairs of the city of Amsterdam, the growth of the gross regional product bypassed for the sixth consecutive year the national average. This is largely a result of the fact that the region is heavily biased towards the still growing financial, business services and air travel 14 15

Amsterdam Economic prospects 1999 ibid

12

sectors. Investment in tourism and the expenditures of tourists and other visitors has contributed to production growth in the sectors of construction, horeca [hotel, restaurants, catering] and retail trade. “The sectoral composition of the Amsterdam Metropolitan area reflects the Dutch specialisation in the distribution and the presence of the capital city as a supplier of specialised producer and consumer services. Total sales consist of 26% agriculture and industry, 21% transportation and wholesale, 19% banking, insurance and business services, 15% non-profit services, 14% commercial services for consumers and 6% construction.”16 Overview of the job market in the wider Amsterdam area Despite the economic down turn (which had already shown its head early in the year) the annual report 2001 of the Amsterdam Department for Economic Affairs states an overall positive economic and employment situation. Between the period from 1995 to 2000, 180 000 new jobs were created in Amsterdam. Job growth reached an average of 3.3% over this four year period (peaking at 4% in 1999). In 1999, projections were made and growth was expected to reach 2.5% in 2001 and 1.8% in 2002. Figure 2.2: Job growth in the region of Amsterdam and in the Netherlands 1999 projections Projected job growth in the greater Amsterdam Metropolitan area and in the Netherlands 4.0

3.5

Amsterdam region Netherlands

3.0

2.5

2.0

1.5

1.0

0.5

0.0

1995

1996

1997

1998

1999

2000

2001

2002

Foundation for Economic research, University of Amsterdam. Spring 2001

Job growth has been accelerating since the 1970s while the rate of job losses decreased. During the 1980s losses turned around into gains and during the 16

Amsterdam Economic prospoects, 1999

13

1990s the rate of job growth increased further. The new millennium has once again witnessed a drop in job growth (although the average job rate of the Amsterdam metropolitan area is still higher than the national average). In July 2002, Onstat, the Amsterdam Bureau for Research and Statistics, declared that the employment situation is in an overall state of recovery: While the last quarter of 2001 knew an explicit loss of jobs in Amsterdam (proving the above mentioned 1999 projections incorrect), the total amount of jobs decreased by 1.900. In the first quarter of 2002 this number was considerably lower being measured at only 250. Job losses were experienced particularily in the sectors trade, horeca, transport and communication. Figure 2.3: Overview of the Amsterdam work force between 1998-200217 Labour Force, 1 January 1998-2002 1998

1999

2000

2001

2002

Population

718175

727095

731289

734540

735328

population of 15-64 yrs

513097

521421

525826

529015

529903

labour force employed

312200

335700

352300

368400

368000

labour force unemployed

75260

66422

59233

52895

49085

registered unemployment * estimate

43900

31400

27900

24200

24400

*

*

Within the Amsterdam workforce, a clear line of segmentation has been created based on skill level. From 1994 to 2000, 90 000 additional jobs were created for high-skilled workers (professional and scientific educational backgrounds), 50 000 for medium skilled workers and only 2 000 for low skilled workers (high school and lower elementary education). The prospects for high-skilled workers are said to remain positive for the coming years. Recently graduated students will continue to be able to choose among several employers, the same holds for employees that have lost their job due to reorganisation, mergers etc18. The same however does not apply to low skilled labour – for this group the future is more precarious.

17

Amsterdamse Bureau voor Onderzoek en Statiek, 2002, http://www.onstat.amsterdam.nl/index.php?iid=769 18 According to http://www.intermediair.nl, a popular Dutch career management site.

14

Part 2.1: The dynamics of the ICT sector in the Amsterdam greater Metropolitan Area Amsterdam ICT capital Amsterdam is the undisputed ICT capital of the Netherlands. In the words of the Amsterdam local government, “Amsterdam is Silicon Alley”! This is reflected in figure 2.4 below. Figure 2.4 ICT-related employment per thousand inhabitants (age 15-65)19

The model of Porter The characteristics of the city and surrounding area can be mapped out using Michael Porter’s theory for analysing the competitive strengths of a region. This theory is premised on a central ‘diamond’. The four corners of Porter’s20 diamond are: demand, structure and competition, related industries and factors of production. When the city of Amsterdam’s ICT sector is mapped out in Porter’s framework, the following image (also a reflection of the city’s ICT capital) emerges.

19

Spectre Project, 2001, http://www.spectreproject.net/vervolg/nh2.htm#2.2%20Spatial%20 distribution%20of%20ICT%20in%20Noord-Holland 20 Porter,1990, “The Competitive advantage of nations”

15

Figure 2.5 Amsterdam mapped out to Porter’s diamond ORIGIN: well DEVELOPMENT: integrated into strong role as other areas intermediary

REACH: Dutch market ltd.

INFRASTRUCTURE: excellent (Gigapoort, Sara) LABOUR MARKET: highly qualified professionals, but ltd. supply VENTURE CAPITAL: recent initiatives eg. Twinning

DEMAND

GOVT has only recently become active.

Amsterdam’s STRUCTURE + COMPETITION

FACTORS OF PRODUCTION

ICT sector

RELATED INDUSTRY

SUPPLIERS: on Dutch scale close proximity (not important)

ECO. COMPLEX: not so well developed

INNOVATION: relatively negative image of innovation COMPETITION: relatively young companies

PARTNERS: relatively little attention for networks and partnerships

The Amsterdam region, the economic heart of the Netherlands, plays a strong role as an ICT intermediary. It has a strong infrastructure – both physical and ICT – and has an image as an interesting place to work and live for today’s knowledge worker. Within the global backbone infrastructure, Amsterdam is a so-called hub, a location where transatlantic and continental backbone networks split to other major cities in Europe. The Dutch capital is, after London, one of Europe's most important multiple hub cities. It has the Amsterdam Internet Exchange in the Science Park in the Watergraafsmeer which is together with the London LINX , the most important Internet hub in Europe. Furthermore Amsterdam is a node in the backbone structures of several telecommunications operators, for instance KPNQWest, UUNET (owned by the former MCI-Worldcom), PSINet, Ten 155 and UPC21. The region is characterised by a very high number of small and medium sized enterprises (SME’s). These form 95% of all businesses in the greater Amsterdam area. Many of the New Media businesses in the area fall into this category. Yet, from a very different perspective only a limited number of these SMEs currently make use of new technology. In this regard, the SME market is one that has not yet fully developed. The size and under-developed scope of the SME market in the greater Amsterdam area, negatively impacts on the current value and power of the ICT capital of the area. This is however likely to change in the near future. In a study initiated in November 2001, 75% of

21 http://www.spectreproject.net/vervolg/nh1.htm

16

SME’s questioned announced that they were planning to get engaged with using ICT’s in the short term 22. Composition of Amsterdam’s ICT sector Amsterdam’s ICT sector is characterised by a strong dynamic. Especially in the period from 1995 to 2001 (the boom and the bust) ICT companies have mushroomed and collapsed at dizzy speeds. This has made it difficult to find exact statistics over the ICT sector in Amsterdam. In 1998, Amsterdam had 3705 companies registered in the ICT sector23. This number has considerably grown since then. The following graph offers an approximation of the sector based on 1998 statistics. Figure 2.6 Approximate composition of the Amsterdam ICT sector

2%

3%

4%

3% = computer manufacturers 4% = telecommunications

19%

16%

16% = computer suppliers 28% = ICT/IT consultancy services 28% = system development and programming services 19% = datamining, call centres and market research 2% = other (incl. Internet providers)

28%

28%

In 2001, the ICT and NewMedia cluster in Amsterdam grew to 5800 companies with 35.500 jobs. This equalled more than 10% of all companies and about 9% of the work places (and on a different level equals approximately 20% of all the available jobs in the Dutch internet economy)24.

22

KPMG, 2000 “ICT in Amsterdam en Haarlemmermeer: hun uitgangspositie vergeleken met New York, Londen, Frankfurt en Stockholm” 23 ibid 24 Jaarverslag EZ Amsterdam, http://www.ez.amsterdam.nl/version4/Pg1m2m31.html:

17

ICT Firm size, specialisations and spatial location Table 2.7 ICT Employment numbers and company size of the ICT cluster as published by the Amsterdam employment register, 2002

Employment and firms in ICT and new media (2002) Number of employees Number of firms Average firm size

ICTcontent

ICThardware

ICTsoftware

ICTtelecom

12,029 3,751 3

3,930 364 11

8,572 1,297 7

9,131 417 22

Employment and firms in ICT and new media (2002) Number of employees Number of firms Average firm size

ICTconsultancy 6,244 1,112 6

Content 7,300 638 11

ICT & content total 47,206 7,579 6

The table shows that the average size of ICT/New Media firms in Amsterdam is 6 employees, however, the content producing firms are much smaller with an average of 2,8 people. What is striking is the large amount of small-sized content producing companies that are still registered as being active. Despite the assumption of a dynamic rise and fall of small scale entrepreneurs, one of the reasons for this (still) large number might be fiscal advantages: Selfemployed people or companies with 2-3 employees might still exist in order to be used as a tax break even though they may not actually be producing anything. These small ‘attic-room companies’ (as they are often referred to in Holland) may also be going through a transition period in which they are ‘on hold’ waiting to see if there is a market turn around in the hope that this will once again generate new business. The start-ups and small firms especially engaged in content production have scattered foremost around the traditional and densely populated inner city centre and the surrounding inner circle of Amsterdam. A number of them also established themselves in the Amsterdam Science Park (ASP). Once the firms grow bigger there is a trend to relocate to the city fringes or surrounding outskirts of the city. It is in these surrounding areas where most of the software and consultancy firms are located already. Main drivers of the ICT dynamic The main drivers of the ICT local engine are said to be the large financial and service sectors (such as Cisco and KLM airlines) that have established their headquarters in the Amsterdam region. Another important local driver is the presence of big service enterprises such as Schiphol Airport. To refer back to Porter’s diamond, sector-external demand with a strong purchasing power for ICT services and infrastructure has been fundamental in fuelling the Amsterdam ICT growth. This has further been re-inforced by the traditional

18

presence of the print media sector and the creation of a strong demand for ICT-related content. Inter-company networking The high number of start-up firms that have emerged at rapid speed has contributed to an inherent dynamic of the sector and a high level of (often informal) interaction. The Amsterdam New Media Association (ANMA)25, is one of the actors that fosters and supports this exchange of knowledge and experience amongst new media professionals. The network started in December 1997 as an industry based loose alliance of creative and process oriented professionals. By 1999, the network had mushroomed on its own with more than 1 300 new media companies as members. At this late stage, the organisation received support from the city of Amsterdam. Its role was to provide a network platform and form of informal knowledge exchange for Amsterdam’s new media entrepreneurs. Soon after this injection of government capital, and in keeping with developments on the world stage, the network collapsed. ANMA now is composed of a small number of members and is fighting for its existence. The focus has moved from new media companies to those that focus on convergence (i.e. the convergence between new media, IT and telecom). Another interesting networking event that emerged during the boom years was ‘First Tuesday’ – a monthly networking gathering of ICT professionals. A third network that was very active was ‘First Wednesday’ that focussed on the mobile and m-commerce sectors. However, since the bust both First Tuesday and First Wednesday are no longer active on the ICT scene. ANMA on the other hand has continued but there too a strong drop in numbers has been witnessed since 2001. The small size of ICT companies also meant that both project-based cooperation as well as business-to-business activities (such as licensing and selling others’ products) were a key element of inter-firm activity. Informal relationships, again, have been an important driver for growth and have contributed to maintaining the self-reinforcing dynamic of the sector. The rise of corporate Universities The linkages between firms, research institutes and education are however relatively weak in the sector. Partially as a response to these weak linkages, large international companies in the Netherlands responded to both the shortages on the labour market as well as to the lack of skilled ICT labour, by initiating a number of ‘corporate universities’. These universities were meant to ‘fast track’ talent and provide effective mechanisms for aligning company strategy and interests with labour force skill levels. Access to courses available via the ‘corporate university’ were also part and parcel of the secondary employment benefits used to attract top talent in what was a highly competitive labour market. However, since the bust these corporate 25

Anma, http://www.anma.nl

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universities have often been one of the first places to experience the knife in corporate downsizing and slimming endeavours. In March 2000 Cisco announced its plans to build its new Corporate Campus in the greater Amsterdam area. With support from local government, the hope was that this move will cement the city's reputation as one of Europe's primary e-business hubs. The site, Cisco's first foreign campus, will represent the company's largest investment outside of the U.S. In the initial estimations, upon completion in 2005, almost 5000 people should be employed in the campus' various operations. Since the bust, Cisco has had to redesign its original campus plans, reduce staff of its own and to define new targets for its campus26. Key aspects of Amsterdam’s position as ICT capital of the Netherlands The strong points of the area as an ICT region are: Relatively strong creative and content industry: In 2000, Amsterdam had around 1300 companies in the domain of multimedia, providing for around 10 thousand jobs. Of these companies some 700 are active in content production. Many of them are very small with one or two employees. Within the domain of content they concentrate on educational applications and content, multimedia for cinema and broadcasting and games. The capital also houses many cultural institutions, which are increasingly developing into content providers for the Internet. Strong presence of advertising companies: The Dutch advertising sector also operates largely from the country's capital. The majority of international advertising agencies that have a Dutch branch have their seat in Amsterdam. The presence of the advertising industry has also been an important engine in creating opportunities in the ICT sector in Amsterdam. Strong presence of major clients such as the financial and publishing sector: The finance sector was willing in the boom years to initiate a number of large scale experiments with Internet marketing, value chain reconstructions using Internet enabled technologies and even mobile commerce applications. This provided numerous consultancy, web application building, graphic design and content opportunities. International orientation Amsterdam has traditionally attracted an international citizenry, this coupled with an already strong multilingual, high-skilled workforce was an important element in fuelling the growth and sector dynamic. Major international airport nearby and a good traditional logistics sector27 Support for the virtual arts: Amsterdam has supported the creation of an organisation under the name of the ‘Virtual Platform’. The Virtual Platform has positioned itself at the interface between policy, 26

http://www.nfia.com/html/company/c_cs.html KPMG, “ICT in Amsterdam en Haarlemmermeer: hun uitgangspositie vergeleken met New York, Londen, Frankfurt en Stockholm” 27

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new media and popular culture in the Netherlands. It stimulates the incorporation of ICT into mainstream cultural life in the Netherlands whilst simultaneously promoting the Netherlands as a hub of new media culture to the rest of the world. Located in Amsterdam, the organisation is also well integrated into various international cultural networks28.. The Virtual Platform is in turn supported by a motley network of well recognised performance, art institutions and thinktanks who in turn receive funding from both the City of Amsterdam as well as from national government29. New Media in local government: Cyburg (a municipality within the greater Amsterdam area) has been created with subsidy from Europe, the city of Amsterdam and the Dutch government, to become a ‘knowledge community’. Within Cyburg, individuals, organisations, companies, educational institutions and government are offered the opportunity to experiment with New Media via broadband infrastructure in order to explore the dilemmas and opportunities of digital networks. Support to the initiative demonstrates the support given by local government to maintaining the region’s position as the ‘Silicon Valley of the Netherlands’30. The website of the local government: The local government website has received numerous awards as a front-runner in the area of Egovernment. As such it has re-inforced the image of the city as a cutting-edge ICT city31. The Foundation Academic Computer Services Amsterdam (SARA) and the National Institute for Nuclear Physics and High Energy Physics (NIKHEF) have contributed to the use and expansion of the computer technology, data communication and Internet. As mentioned earlier, Sara also houses the Internet infrastructure of the Netherlands (and second most important Internet hub in Europe) in Amsterdam32. Presence of pioneer Internet Service Providers: XS4ALL and Planet Internet; both companies belong to the most important Internet providers who made the access to the Internet possible in the 90's have their roots in the city33. Note: companies from the ‘old economy’ have also purchased both ISP’s. Infrastructure initiatives: Between Amsterdam (WTCW ) and Chicago (University of Illinois en Northwestern University) a stateof-the-art optical network connection (2,5 gigabit/s lambda connection) has been established focussed on research purposes. The connection is though to eventually become the new standard for all future experiments with a fully optical internet34. 28

http://www.virtueelplatform.nl Such as http://www.waag.org; http://www.steim.nl/; http://www.doorsofperception.com; http://www.montevideo.nl/ 30 http://www.cyburg.nl 31 http://www.amsterdam.nl 32 http://www.sara.nl 33 The provider Xs4all was bought out by KPN at the height of the Internet boom in the Netherlands. With the buy-out KPN gave an enormous boost to their own ISP position and provided support to their own battling ISP ‘HetNet’. 34 http://www.ez.amsterdam.nl 29

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Part 3: Specificities of the current turnaround: How has the labour market restructured as a result of the current economic turnaround? From an historical perspective, Amsterdam has a reputation as being a cosmopolitan, multi-cultural city. 45% of the present population originates from a foreign country. Immigration from industrialised countries (such as those in the EU) is particularly high. Annually, approximately 1000 new immigrants (from industrialised countries) move to Amsterdam. These skilled professionals mainly find employment in the services, banking and ICT sectors35. This background partly feeds another characteristic of the city: its creative atmosphere. This tradition is set forth within the New Media sphere requiring innovative, flexible, fast and creative people. As the sectors of publishing, advertising and content generation form a very strong cluster of the Amsterdam ICT sector, the sector was able to thrive – during the boom years - on Amsterdam’s ‘natural’ potential. But, what has the effect been of the recent economic turndown on the ‘natural potential’ of the labour segment? The following section focuses on providing insight in the Amsterdam ICT labour market situation by looking at career perspectives, typical biographies and the culture of the work within the capital city. From job growth to job loss? In 1998 the Research Centre for Education and Labour (ROA) estimated that approximately 185 000 people were employed in the ICT sector. Since 1995 the number of jobs in the ICT sector has increased by 28%36. From 1998 to 1999 the Dutch ICT labour market was characterised by a chronic shortage of personnel. Professionals were in short supply and headlines such as “25 IT jobs: 2 applicants!” were not uncommon in Dutch newspapers. ICT professionals were riding high on the general economic boom felt in the international economy and particularly its manifestation within the Dutch economy. In spring 2001, around 3 000 ICT graduates (from various backgrounds such as technical high schools, technical professional and scientific education) were entering the ICT labour market in the Netherlands37. In February 2001 the Netherlands Advisory Board for Science and technology policy (ATW) estimated that the country would need 10 000 new ICT professionals per year to fulfil the needs of industry. Clearly, the amount of students entering into a technical training would be insufficient to fulfil the market need. The latter half of 2001 inaugurated a very different economic scenario in both the Netherlands and in Amsterdam. 35

Meer, André van der, “The ICT region, ICT cluster study”, Annex 1, Institute for comparative urban research, 2002 36 ITIQ, spring 2001 37 ITIQ, Spring 2001

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Figure 3.1 A snapshot of job losses in the ICT sector over 3 months, 2001 Bursting the high-tech bubble: a three month snap-shot of the ICT labour market

Website developer “Change the Script” declares bankrupcy. 65 people loose their jobs. Two months earlier 35 people were fired

the US telcom company Viatel closes its Dutch operations: 25 people loose their job

June 2001 Software developer “Davilex” fires 41 staff menbers: most of them active in the development of interactive , educational CD-ROMS

Ebusiness solutions provider ‘Escador’ fires 22 employees Scoot.nl closes two offices. 60 jobs are lost Kabel company Casema scraps 300 jobs

Aug 2001

July 2001 Kabel company Casema scraps 300 jobs Ecommerce site Autobyte! drastically slims down its European headquarters in the Netherlands. Only 3 employees remain

Lan Alyst declares bankrupcy. 58 people unemployed

Lucent Technologies restructures and 900 jobs are lost. Earlier the same year, 1200 jobs are scrapped

By 2001 economic growth rates no longer reflected the heights that were achieved in 1999. Rather than job growth, job loss became a more frequently cited headline. The graphic above provides a selected visualisation of very real job losses in the sector over a three month period. By 2001 – for the first time - labour cuts and redundancy had become part of the discourse of the ICT labour market. Whilst job-hopping was still a familiar phenomenon in the ICT sector, it often was forced rather than an issue of career mobility. Has the number of company bankruptcies and staff redundancy translated into reduced demands for qualified ICT labour in Amsterdam? Reduced qualified labour demand as a result of the turn around? In 2001 the Dutch magazine ITIQ (focused on ICT professionals) conducted a survey among more than 400 subscribers. 59% of all respondents reported that their organisation currently still had open positions for ICT professionals. Of those respondents who work for organisations offering ICT services (as opposed to being located in the ICT industry sector), the percentage was quantitatively higher i.e. it lay at 74%. Only 34% of the respondents reported that their organisation was not planning to hire any new personnel over the remainder of 2001. The functions for which organisations are still seeking ICT professionals are quite diverse. They are listed in the following table.

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Figure 3.2 In what skill domain have organisations expressed the need to still find ICT personnel? In which area does your company most need ICT staff?

Network specialist

206

System administrator

173

Developer

169

Consultant

164

Programmer

162

Project manager

152

Application manager

150

Project manager

141

Helpdesk assistant

138

Functional designer

118

DBA

117

Information annalist

112

Technical designer

88

System designer

82

System annalist

72

Webmaster

71

Application annalist

67

Other

63

Tester

58

Multi media specialist

52

Source: ITIQ, Spring 2001

Of the organisations that responded virtually all of them employ more than 20 staff members. They report that they have vacancies for ICT staff more often than their competitors (65%); have out-sourced their ICT needs more than once over the past two years (58%); have spent considerable sums in training their own ICT staff (36%) and have merged ICT departments (19%) in an effort to reduce the drastic staff shortages in these departments. Whilst organisations have indicated that there are still open vacancies for ICT positions, can we still speak of a shortage of ICT professionals in the Dutch labour market? 78% of all respondents answered that their organisation is still experiencing a severe shortage of qualified ICT staff. Furthermore, the large majority state that this has strong repercussions for their productivity. 85% of the respondents agreed that the lack of qualified ICT staff has stunted the general development of their organisation. Noteworthy in the ITIQ questionnaire is that the shortage of ICT personnel is not just experienced as a shortage in staff numbers but is experienced as a shortage in knowledge and quality. 69% of all respondents agreed that the ICT labour shortages of the past years has resulted in hiring staff with skill levels that do not allow them to meet all of the requirements demanded by their job descriptions.

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Figure 3.3: Do you think that the current ICT personnel shortage will be alleviated within 6 months? Do you think that the shortage in ICT staff will be over within the next six months?

Agree fully

10

Agree

85

Disagree Disagree fully

300 41

Source: ITIQ, Spring 2001

The perception of a mismatch in ICT labour market opportunities and current ICT labour skill levels, seem to be an enduring feature of the Dutch labour market. This is a perception that outlasted the boom and is still very real in the period of ‘bust’. Is the ICT labour shortage in 2001 less pronounced compared to 2000? 22% of the ICT’ers questioned think that the knowledge and quality of ICT professionals is currently worse than it was one year ago. 41% believe that the quality of ICT professionals approximates the levels it was at one year ago. Whilst 37% believe that there has been a definite improvement in the quality of ICT professionals compared to a year ago. In order to fulfil their ICT needs, 36% of all respondents reported that they expected their recruitment budgets for ICT staff to increase over the coming year. 48% believed that their budgets would remain the same, whilst only 16% reported that the downturn in the economy had forced their ICT recruitment budgets to be reduced. Even though the majority of respondents did not expect their ICT recruitment budgets to be reduced, it seems that this may just be the case. When the details of the number of ICT job advertisements that have been placed over recent years - are mapped out - a very different picture of the current ICT labour market emerges.

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Figure 3.4 Number of advertisements placed for IT jobs

This graph shows a very sharp drop in the number of ICT job advertisements placed in the Netherlands over 2001 and 200238. As a response to the downturn, there does seem to be a shift in focus: 51% of the respondents believed that the budget for training and education of their own existing ICT personnel would increase, 47% reported that the budgets will remain the same. Cost reduction strategies A process of rationalisation and consolidation (2001) followed the period of unprecedented growth in the ICT and new media sectors. The September 2002 edition of the bimonthly ICT Barometer (a research publication distributed among 600 ICT professionals by Ernest&Young) published the following Giarte research: of some 137 companies researched in the summer of 2002, 60% of them had introduced general cost saving measures over the last 12 months. Figure 3.5: Expected development IT-budget 2003 compared to 2002 39

17% = strong budget decrease 16% = decrease of 5-10% 10% = less than 5% decrease 19% = budget stays the same 18% = limited increase 14% = increase 5% = strong increase (more than 10%) 1% = no answer

38 39

NRC Handelsblad 5 March 2002 (statistics from the ING Barings Bank) Gianotten, http://www.topmanagement.giarte.com/show.html?art_id=82

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Thus whilst the mismatch between ICT skills and labour market needs will remain, this is likely to be exacerbated as in 2003 approximately half of the companies will reduce their ICT budgets compared with 2002. One consequence of this is also likely to be a drop in expenditure on personnel training and development. Figures 3.6 outlines parts of the IT budget to which cost reductions have been applied40

One of the important cost saving strategies that are likely to be employed are saving on the costs of outsourcing of ICT September 2002 services to an external workforce. This CMG changes labour laws could prove to be disastrous news for the Indeed on the labour front, one vast – already hard hit - ICT and Business company – CMG – has already started Consultancy firms. These companies (such to show its colours in this area. The soas Atos Origin, CMG, Cap Gemini and Pink called ‘detachering’ branche in the Roccade) have strongly felt the bite of the Netherlands, shows many comparison current recession. Giarte research also with a temporary employment agency. forecasts that outsourcing will continue to However, rather than being employed decrease in 2003. Coupled with the purely on a temporary basis, the increased focus on standardised software, difference is that those who are these companies may find that they are ‘gedetacheerd’ have been given a fullgoing to have to be VERY creative in order time contract by their organisations and to stay in the market. are offered full secondary employment benefits. Well ….. they have been until The decrease in budgets on the ‘demand’ recently. CMG initiated a court case in side of the market, is not evenly distributed which they tried to fire 118 staff over the sector: Demand and accordingly members based on the premise that the budget are dependent on company they do not have full time contracts with size. As the SME market has never really their staff but simply employ them on a developed the ‘demand’ side of it, has as temporary basis. Thus, whilst some of yet not played any significant role these staff members may have been employed full time by CMG for the past 5 years, CMG is now able to fire staff in a way similar to their being ‘temporary’ staff with no contract. 40

From ‘Trendonderzoek & IT’ , October 2002

Figure 3.7: Expected ICT budget reductions for 2002 according to company size41

Number of employees < 20 persons 20 – 99 persons > 100 persons

Expected reduction in ICT budgets 2002 compared to 2001 23% 3% 15%

Contrary to the experience of ICT decision-makers, for employees the budget cuts have become already apparent. In 2002 wage freezes were announced in many of the ICT service companies (such as CMG, Cap Gemini). Other ICT service companies that did provide wage increases (e.g. Atos Origin announced 2.8%), invariably did so at a level that fell under the general inflation rate. The measures that were introduced by ICT companies to reduce costs were varied. In cases of necessary dismissals, the rule of ‘first in first out’ was widely applied (for example this was applied to many advertising agencies that entered the market for Internet advertising and market services e.g. HVR Bridge). Others chose to reduce high entrance salary levels that had developed during the period in which the employment market was so competitive (e.g. The Lost Boys). Yet other companies offer to exchange part of the salaries into holidays, whilst still others reduced the extended job packages such as car leasing, the provision of notebooks and mobile phones (such as CMG and Atos Origin).

41

Source: http://www.emerce.nl/archives/nieuws/Industrie/14058.html

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Professional biographies: what can an ICT professional expect to earn in Amsterdam? In this section, profiles have been created of fairly typically ICT professionals working in Amsterdam. The date gives an indication of what an ICT professional (at various levels in his/her career) can expect to earn. Figure 3.8 An average ICT Manager42

Employee profile:Jan de Wit Head of ICT Unit 38 years old, university graduate 13 years work experience leads a team of more than 10 people

Bruto Salary (incl. vacation pay and thirteenth check): Euro 72 363.Secondary employment benefits: - pension scheme

96%

- medical insurance

89%

Figure 3.9: Technical consultant

E m p l o y e e p r o f i l e : Bart de Ruiter Technical consultant 30 years old, university graduate + 2 years postgraduate study background natural sciences, hired by a friend company size: 600 Bruto Salary (incl. vacation pay and thirteenth check): Euro 37 020.Secondary employment benefits: - bonus - lease car - basic medical coverage

42

Estimations based on figures cited at: http://www.intermediair.nl

30

After the bust however, the prospects facing ICT professionals had differed dramatically. The following two figures provide an overview of two very similar ICT professionals. Figure 3.10 a sketches likely income levels before the bust. Whilst figure 3.10b shows that the same candidate is likely to earn around EU 9000 less per annum. Figure 3.10a An average ICT professional: programmer43

Employee profile:Piet Coen Programmer 28 years old, professional technical education 3 years work experience is not in a management position

Bruto Salary (incl. vacation pay and thirteenth check): Euro 35 363.Secondary employment benefits: - pension scheme

78%

- medical insurance

64%

Figure 3.10b: Programmer: same education, 5 years older, 6 month later

E m p l o y e e p r o f i l e : Kees van Wijk Java programmer 33 years old, professional technical education 1,5 years in current position is not in a management position

Bruto Salary (incl. vacation pay and thirteenth check): Euro 26 320.Secondary employment benefits: - saving scheme - car

43

Estimations based on figures cited at: http://www.intermediair.nl

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Whilst the individual circumstances facing employees has changed over recent months, the larger context of the labour market of the ICT sector has NOT shown any dramatic changes. The largest differences between the ICT and other sectors in Amsterdam have been summarised into the following four key characteristics: a) many large ICT companies have high-skilled professionals who can often bargain very well for themselves and therefore get tailor-made (secondary) working conditions. In the ICT sector, highly skilled employees are still less likely to have to settle for standard packages. The same does not however apply to their some what less highly skilled ICT colleagues. b) Within the sector, a heightened degree of flexibility is expected from the employee. c) Compared to other sectors, ICT staff often cite that they lack an (emotional) relation with their employer. Staff prioritise their own development over that of the employer and, in case of better prospects elsewhere, staff seem to show no problem in picking up and moving on. d) In the case of lay-offs and redundancy, the ‘last in, first out principle’ is most often applied. This rule does not extend to those who are outsourced by a company. Where changes in the labour market have occurred these are often subtle. For example, large companies (such as ABN/AMRO) are now providing the same employment conditions to all employees - including the ICT department. Whilst job-hopping is still very much accepted as a way of life in the ICT sector, it has become far less common as people are more inclined to stay in one place in times of economic uncertainty. Qualitative changes in the use and application of ICT influencing the labour market The ICT sector is characterised by rapid change, a drastically shortened product cycle (regarding hard- and software) and the need for continuous innovation. These characteristics have a considerable impact on the numbers in the workforce, their qualification levels, career perspectives, working conditions and terms of employment. Several trends in the use of ICT services can be identified that will differently impact on the level of ICT employment and the kind of activities / level of qualification carried out. Among these trends are: 1) An increased preference for packaged software as compared to tailormade software and for standardised services. The preference for standardised software is most prevalent among large companies. 2) A focus on the centralisation of manpower and means (said to be planned until 2004). This could translate into a reduction of the amount of applications and platforms that are run. Or, could mean mergers of several IT organisations in an attempt to centralise knowledge into competence centres that cluster around specific ICT skills.

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3) The primacy of the technical side that dominated the ICT sector is drawing back at the expense of the content according to the annual KPMG IT-trend research 2001.44 The economic department of the city of Amsterdam forecasts that the various activities and subsectors of ICT will become more interwoven as content, computing and communication will grow towards each other and offer perspectives for new product market combinations.45 4) Dissemination of and assistance to use software that facilitates html writing and website (‘do it yourself’) building as well as inter- and intranet publishing (example Dreamweaver, plug&play Intranet of the BIA).46 All of these trends, whether forecast or already witnessed mean that the sector and its workforce will continue to undergo change. This implies potentially good opportunities for the high-qualified workforce whilst the ‘onthe-job’ trained staff are most likely to be hit first by the pressure to reduce costs. A further cushion for the sector may come from an unexpected segment of the labour population. Amsterdam has a strong presence of highly qualified, international staff that has also come to the city to enjoy its inspiring and liberal atmosphere. This segment is strongly represented in the ICT sector. The inherent flexibility of this segment may also help Amsterdam to cope relatively better than other areas with the flexibility that the ICT sector is currently demanding from its workforce. Work culture in the ICT sector – subject to change or manifestation of traditional segregation? The ICT sector is first of all characterised by a predominant young workforce that often works in processes of mutual interdependence. Speaking of the overall ICT sector is very much ‘a male world in which developments take place with high speed, very diverse salary levels, hard work and very varied career perspectives”. According to a study by the University of Amsterdam only 11% of the overall sectors’ workforce is female (a statistic calculated before the recession). In other sectors on average 40% of the workforce is female. The average age in the sector is still below 36, but whilst it was often thought that the fact that the sector was so young traditional assumptions about gender roles and relations to technology could be outdated. The statistics show this not to be the case. The researchers of the study provide two possible reasons for the skewered gender bias in the sector. One part of the problem is the image of the sector itself: long working days, the strain of attending courses to constantly keep pace with quickly changing technology and new knowledge may keep many women – trying to balance a family life with work – away from the sector. Another aspect is the growing interest of the workforce in part-time work. This 44

bfa, 31/1/2002, “ICT en de stad Amsterdam. Beleid en programma 2002-2005”, http://www.bia.amsterdam.nl/documenten/ICTstad.pdf 45 Jaarverslag EZ Amsterdam 2001, http://www.ez.amsterdam.nl/download/EZ_JVS_2001.pdf 46 http://www.bia.amsterdam.nl/documenten/BIAnieuwsbrief4.pdf

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wish is particularly strong amongst women who have to combine work and childcare. The work culture of the ICT sector clashes strongly with the prospects for part time work47.

47

Brekel, C. van den; Klaveren, M. van; Tijdens, K.., 1999, “The Absence of women in the ICT sector”, AIAS, University of Amsterdam

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Part 4: Public policies to support Amsterdams’ role as ICT capital During the boom years, a number of different government sponsored initiatives were set in place to provide support to some key problems that had emerged in the ICT labour market. Boom period policy responses ISSUE: Insufficient supply in the ICT labour market coupled with the low participation of women in the labour market POLICY RESPONSES: Reactions to counter the low participation of women in the ICT labour market varied. FeNIT, the Dutch federation for IT representing about 80% of the Dutch IT market, for example, initiated an image campaign that was focussed on convincing women that the ICT sector was not just composed of nerds and geeks but really was quite sexy. In so doing, they hoped to increase the appeal of the sector to more women. ICT business and consulting firms (such as CMG) supported by government policies, tentatively initiated a 4 day work week and created an increasing number of flexible workplaces. It was hoped that the increased flexibility would attract more women to the sector. The impact was limited. Government also promoted the re-entry of women into the labour market after a period of absence. Cisco, for example, offered this group of women re-training courses in ICT skills. And, government often subsided companies who were willing to employ these women for on the job training48. ISSUE: Insufficient supply of qualified ICT labour and shortage of training programmes POLICY RESPONSES: A heated debate emerged in the government around policies that were intended to ‘fast-track’ refugees and asylum seekers with proven ICT skills, through their application process. The aim was to alleviate pressure on the ICT labour market. The minister for cities and integration, initiated a project entitled ‘Digitale trapveldjes’ or ‘digital playgrounds’. The aim of these government-sponsored internet-café’s were to offer low-entry ICT opportunities (including training and access to the internet) in special low income neighbourhoods of larger cities. The project was seen as one government attempt to reduce the digital divide within Dutch society whilst increasing the potential supply of candidates who could eventually take up positions on the ICT labour market49. A further step to reduce the labour shortages was the creation of an attractive tax-incentive scheme for international, highly qualified 48

Cisco.com, http://www.cisco.com/global/NL/news/berichten2001/news_persberichten_ 112701.shtml 49 http://www.trapveld.nl

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professionals willing to work in the country for a few years. It was also manifest in lenient policies towards companies wanting to bring in new international staff. The creation of techno-centres. The city of Amsterdam financed a chain of techno-centres for the city (with a link to business to ensure that the training package is focussed on the learning needs of industry). In these training centres a consortium of partners are active. These include ROC’s (regional training schools for medium skilled labour); business representatives and municipal representatives. The techno-centres are focussed on the sectors, electro-technique; multimedia ICT, transport and logistics. ISSUE: Support for entrepreneurship POLICY RESPONSE: The creation of a government sponsored venture capital consortium, ‘Twinning’. Twinning, based in Amsterdam, stimulates ICT entrepreneurship in the Netherlands by providing risk capital and placing its network at the disposal of start-up ventures. Twinning's objective is to earn a yield on invested funds. Twinning provides venture capital to early-stage ICT businesses established in the capital. ‘Early stage’ refers to companies said to be in the development phase of their product and/or are embarking on the commercialisation of their product. As a rule, these are companies that are younger than three years and start-ups are emphatically included under the term “earlystage’50. Establishment of the Amsterdam Science and technology park. The park is a co-operation between various scientific organisations, university research centres and Internet and biotech start-up firms. The aim is to increase the sharing of knowledge between start-ups, the scientific community and the business world. Bust period policy responses The Dutch government has explicitly chosen to pursue an implicit strategy of support for the ICT sector. The underlying idea is reliance on the self-dynamic and market forces of the sector instead of trying to stimulate the sector with a top-down approach. As a result, the focus has come to lie with the provision of a high quality, state of the art infrastructure that should support the sector and further stimulate the creation of new innovations. On a regional level, funding has been given to develop the Province NorthHolland into a ‘cyber polder’ with a strong New Media and ICT cluster. The aim is twofold: To improve the climate for ICT companies wishing to establish themselves in North-Holland and to stimulate these companies to improve their operational business with ICT. Six Million Euro from provincial, EU and private sources will be invested in this programme51. 50 51

http://www.twinning.nl http://www.cyberpolder.net

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On a local level, the ‘Amsterdam ICT policy plan for 2002-2005’, published by the Amsterdam Office for Computerization highlights nine core strategies that aim at strengthening Amsterdam’s role as ICT capital, among them are: - Decreasing the gap between citizen and local government - Stimulating digital society - Innovative application of ICT in the various policy fields - Further development of electronic service provision - Further establishment of Amsterdam as ICT capital - Development of broad band internet infrastructure - Stimulation of ICT development for internal organisations52 Also on a very local level, another initiative mentioned earlier is Cyburg. The concept behind the project is to develop broadband infrastructure, services and access in a synchronised way. Within two years, 10.000 inhabitants of the recently build neighbourhood ‘Zeeburg’ will have access to either ADSL or fibre optic cable. They will be virtually connected to each other via the portal site www.cyburg.nl. These people are also thought to function as pilot group for further ICT-applications as the city government wants to bring fibre to the home for all 400.000 homes and businesses in the city within 10 years. The costs of the pilot are estimated at 14,4 million Euro to be covered by public and private partners53.

52

bfa, 31/1/2002, “ICT en de stad Amsterdam. Beleid en programma 2002-2005”, http://www.bia.amsterdam.nl/documenten/ICTstad.pdf 53 http://www.cyburg.org and http://www.cyburg.nl

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Conclusion: Kevin Kelly – the recognized ‘chief evangelist’ of the new economy – noted that above all else, changes in our economic models require flexibility. The Netherlands for many years proved to be a highly attractive market that provided such flexibility and allowed for new things to be ‘tried-out’. The country has one of the highest Internet connectivity rate in Europe; one of the top cable penetration rates globally; a 100 % advanced fibre-optic network in place; offers the largest bandwidth on the European continent and relatively low cost long-distance telecom rates. Its position as an important nodal point in the international division of labour at the crossroads of world trade relations, has been coupled with its ‘polder tradition’. This includes wage restraints; high flexibility; and consensus building. Together these have placed the country in a strong position to benefit from the global economic boom. Within the framework of these favourable conditions, Amsterdam has always been the undisputed ICT leader. The position of the capital is strengthened by its strong creative and content industry; a robust presence of advertising companies; major clients such as those found in the financial and publishing sectors as well as the presence of a major international airport and strong traditional logistics sector. Added to this is a strong scientific and technical community in the city; a nurturing infrastructure and qualified personnel. Companies moving to the city or deciding to expand their activities, together with the myriad of SME’s leveraged these favourable international and local conditions to ensure that the ICT sector was the major engine of growth in the country. The results were (amongst others) the creation of new organisational forms with concomitant changes in old hierarchies and job descriptions; shorter product cycles resulting in increasing stress on the work floor, longer hours and radically changed work processes; as well as a much more sharply defined division of labour. This new division of labour strongly favoured the highly skilled segment of the labour market. Over the period 1994 – 2000 approximately 90000 additional jobs were created in Amsterdam, of these less than 2000 were for staff with low skill levels. For many years the sector was filled with great hopes. And indeed, on the surface everything seemed to be moving in the right direction. Breakthroughs were being achieved in the area of broadband technology; e-commerce was thought to hold great potential for radical changes in consumer behaviour and spending; a growing number of companies and organisations started providing their services online; more than 6 million Dutch owned cellular phones; technology breakthroughs held the promise of giving the country a competitive edge in wireless computing and the Dutch were overcome by a surge of entrepreneurship that took the economy by storm. When the storm broke and the boom turned to bust (part of which is still being felt), the Amsterdam ICT sector was hit by a wave of job losses, redundancies, bankruptcies, shrinking markets and reduced ICT spending

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budgets. In the last quarter of 2001, the sector lost 1900 jobs. In the first quarter of 2002 this had been reduced to 250. The ICT sector of Amsterdam has been dynamic, flexible, innovative and informal. Despite the bust, and the fact that the sector has become much leaner and more cautious and that many of the innovations from the start-up scene have been integrated into the mainstream old economy, there have not been any fundamental changes to the nature of the sector. The sector has always held risks and opportunities for the workforce. The bust has been highly instrumental in exposing the vulnerabilities of the sector for the labour market. The search to gain insight into these recent sectoral changes with its concomitant impact on labour, was partly hampered by the very dynamic of the sector itself. Forecasts about the overall economic prospects of the sector that were made a year ago were revised shortly after. Even small changes in the market often initiated another round of forecasts and these in turn were often turned around just as quickly. Estimates about employment development and cost reductions strategies, have in consequence often appeared contradictory. Pattern of segregation and barriers to employment and career perspectives are a little researched field. The result of this dynamic is that what is offered is a snapshot in time – a snapshot which reveals some of the characteristics inherent to the Dutch labour market itself. The economic malaise that started in 2001 and hit all sectors of the economy has undoubtedly also affected the Dutch – and Amsterdam - ICT sector. Despite the current job losses, declining growth rates of ICT turn over and the constraint to introduce cost reduction strategies (about half of the ICT companies plan to cut their IT-budgets in 2003) the sector is still considered a motor for economic growth and as such an important driver of the Dutch economy as a whole. The outlook in Amsterdam is not that gloomy. As van der Meer notes: “Even after the dot.com crisis, the cluster is still growing with an average of more than one hundred firms and 3000 employees per year.” 54 Our conclusion, the Amsterdam ICT sector is currently running on ½ full not ½ empty!

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Meer, André van der, “The ICT region, ICT cluster study”, Annex 1, Institute for comparative urban research, 2002

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Appendix: 1) Agenda Workshop: 14 June 2002 “Risks and opportunities in the ICT labour market in Amsterdam and Hamburg: a comparative perspective” 2) Participants list Workshop 2002

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Workshop: 14 June 2002 “Risks and opportunities in the ICT labour market in Amsterdam and Hamburg: a comparative perspective” Agenda 9.30

Arrival and coffee

10.00

Welcome, opening and introduction round Workshop chair, Prof. Dr. Gerd Junne

10.30

Presentation on the objectives of the EU project and the framework of the research Project lead, Prof. Dr. Dieter Läpple

11.00

Breaking through the vicious circle: a personal perspective on labour issues in the Netherlands, Michiel Westermann, comissaris Twinning

11.30

First results: The sector in Hamburg (with a specific focus on how the ICT sector has structured and re-structured in light of recent changes and specifically on how the questions have changed as a result) Project researcher, ing. Joachim Thiel

12.00

Zooming in on the greater Amsterdam Metropolitan Area Ton Veldhuizen, director Amsterdam New Media Association

12.30

First results: discussion on impressions of the sector in Amsterdam Chaired by prof. Dr. Gerd Junne

13.00

Lunch on the terrace

14.15 Workshops: two working groups will be formed each focused on a particular issue. 15.30 Break: tea/coffee 16.00 Report back. The two working groups share the key insights and results of their sessions with each other. 16.30 Wrap up Chair: prof. Dr. Gerd Junne 17.30 Boat trip around the canals of Amsterdam with drinks 19.00 Dinner

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Workshop: 14 June 2002 “Risks and opportunities in the ICT labour market in Amsterdam and Hamburg: a comparative perspective” Participants list Name:

Organisation:

Email:

Prof. Dr. Dieter Läpple Ing. Jürgen Wixforth Ing. Joachim Thiel Prof. Dr. Gerd Junne

University of Hamburg University of Hamburg University of Hamburg TNU/University of Amsterdam TNU TNU TNU Province North Holland Interactive Media, Higher School of Professional Education of Amsterdam LostBoys b.v. Twinning Amsterdam New Media Association Economic affairs, Municipality of Amsterdam Federation of Dutch Trade Unions [FNV] Atos Origin KPMG MeetingMoreMinds b.v. Basic Orange b.v.

[email protected] [email protected] [email protected] [email protected]

Drs. Lara van Druten Vic Klabbers Drs. Mona Hansen Pim van Herk Andrew Bullon Marlies Tan Michiel Westermann Ton Veldhuizen Drs. C. van Oosteren Lily Evers Hugo van der Mark Geert van Aken Jean Louis Thiernen MBA Drs. Alewijn Medendorp

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[email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected]