Sep 29, 2017 - At the same time, distributed denial of service (DDoS) attacks are predicted ..... .co/wordpress/50680/cy
Tallinn Digital Summit Background Paper 29 September 2017
Contents
••• Introduction
3
Future of economy and society
5
Trust and security for a digital society
12
Future of government
15
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Introduction
••• The Industrial Revolution of the 19th century led to a radical transformation of our societies and the world. Europe was a first mover in industrialisation, putting it at the centre of the world economy, and leading to an explosion in wealth, capital and population. Industrialisation led to the modern social welfare state, which paved the way for decent working conditions and a safety net for all, but also opened the door for disruptive forces. The digital revolution we are now experiencing is equally momentous. By 2020, there will be nearly 4.1 billion internet users world-wide1 and 26.3 billion networked devices2 (more than three times the global population). Additionally, digital technologies are expected to add $1.36 trillion to the global economy by 20203. At the same time, distributed denial of service (DDoS) attacks are predicted to increase 2.6 fold from 2015 to 17 million in 20204. This background paper presents the underlying trends confronting us in four areas: the economic transformation brought about by digital technologies, the ramifications of this transformation for society and the future of work, the destabilising affect this transformation can have for our security, and the opportunities arising from the digital transformation of government. For each section, this background paper briefly reviews the global situation and summarises the case in Europe, highlighting both the key challenges and opportunities.
At the Tallinn Digital Summit, we will focus on the following questions: • What steps are needed to make the EU the best platform for the digital economy? • How can we nurture a highly-skilled workforce and digitally literate citizens? • How can cybersecurity serve as an enabler for trust and confidence in a free and open internet and society? • How can we bring governments and the public sector into the digital age?
1 Cisco (2017) “VNI Complete Forecast 2016-2021” https://www.cisco.com/c/en/us/solutions/service-provider/visualnetworking-index-vni/index.html 2 Cisco (2017) “VNI Complete Forecast 2016-2021” https://www.cisco.com/c/en/us/solutions/service-provider/visualnetworking-index-vni/index.html 3 Accenture (2015) “Digital Density Index: Guiding Digital Transformation” https://www.accenture.com/us-en/insight-
digital-density-index-guiding-digital-transformation?c=strat_digidens_10000001&n=otc_0315 4 Cisco (2017) “VNI Complete Forecast 2016-2021” https://www.cisco.com/c/en/us/solutions/service-provider/visual-
networking-index-vni/index.html
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Digitalisation will lead to tremendous opportunities in the coming decades. To seize this opportunity, we already have part of the answer. Across European countries we have the policies and approaches that can help us thrive on each of these dimensions, but we need the will to apply them. Europeans remain as a whole positive about the digital revolution. Two thirds of Europeans think new digital technologies have a positive impact on society, the economy and their own lives, and a majority is of the opinion that the European Union (EU), Member States' authorities and companies need to take action to address the issues raised around digitisation5. Europe needs to focus on our competitive advantages that are both economic and societal, and linked to our values and our unique welfare model. We will embark on this journey by protecting our citizens, our fundamental values and our freedoms. Europe will only be able to do so when it leads, not when it follows. This journey will help create a more resilient, inclusive and sustainable European Union.
5 European Commission (2017) “Special Barometer 460: Attitudes Towards the Impact of Digitisation and Automation on Daily Life” http://ec.europa.eu/commfrontoffice/publicopinion/index.cfm/ResultDoc/download/DocumentKy/78997
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Future of economy and society ••• How well companies and economies embrace and grow from digital transformation will determine the economic winners and losers of the 21st century. To thrive, the European economy needs to produce new companies and help existing industries benefit from the digital revolution through adopting new technologies and business models. Today, 7 of the top 20 companies by market capitalisation are tech companies: five American, two Chinese and none which are European6. None of them existed half a century ago, and five have been founded in the last 25 years7. They are emblematic of the upending of the existing economic order that digital transformation will bring. All of these companies rely on business models that leverage technology, relentless innovation and vast amounts of data analysis to create immense value and market share. Today, Europe is a global leader in traditional manufacturing industries, from automotive and pharmaceutical to mechanical engineering. Yet, digital technologies and new business models are transforming traditional value chains: car companies have become software companies and retail companies are fundamentally about data analytics. As digital technology permeates all economic sectors, the main challenge is to ensure that our industry and services can successfully deal with the digital transformation of the next decades. Digital economy - related GDP growth in the EU Source: Copenhagen Economics
6 PWC (2017) "Global Top 100 Companies by Market Capitalisation" https://www.pwc.com/gx/en/audit-services/
assets/pdf/global-top-100-companies-2017-final.pdf 7 Apple, Alphabet (Google), Microsoft, Amazon, Facebook, Alibaba and Tencent
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Digitalisation is a unique opportunity for European industry to modernise, to create the next generation of products and services, to optimise production processes, and to deliver new jobs. Europe’s Digital Progress Report for 2017 indicates that merely a fifth of companies in the EU could be considered highly digitalised8. The lag in digital adoption has hampered the ability of traditional industries to innovate and to internationalise – particularly in the case of SMEs, which as a whole represent a vast majority of all enterprises in the economy9, employ 90 million people and generate 58 % of total added value10. As it stands, less than 20 % of SMEs use the internet as a sales channel11. In general, European companies recognise the potential for positive outcomes from the adoption of digital technologies, yet for the most part they remain an untapped opportunity as companies have been slow to respond to changing trends. The 2017 Digital Transformation Scoreboard found that only 44 % of companies had adopted at least 2 of the 7 key digital technologies with mobile services (26 %) and cloud technology (23 %) being the most widely adopted and big data analytics (19 %) and cybersecurity solutions (16 %) are the least12. The gains from innovation are not simply due to a shift from analogue to digital technology. The revolution is a new approach enabled by digital technologies, where consumers become as central to the economy as producers. In fact, if the industrial age was marked by standardisation, the digital era is about customisation. Therefore, the innovation advantage hinges on the ability of an organisation to engage a new class of ‘prosumers’ (producers who are also consumers and vice versa) in shaping the manufacturing value chain according to their preferences, leading towards tailor-made ‘production on demand’. Customisation and user-centricity are made possible by data analytics. For both start-ups and existing industry, data is a new factor of production and the ability to use data will be a major determinant of success. By revolutionising business models, optimising production and decision-making, and enabling the development of innovative products and customised services, the data revolution can spur job creation and significantly enhance competitiveness and public service provision, to the ultimate benefit of EU businesses and citizens. Forgoing the opportunities of data will seriously harm the competitiveness of European firms, as well as potentially erode the sustainability of the European economic and social model. The exchange and flow of data are levers enabling growth and change, and the value of the data economy is estimated to reach €739 billion by 2020, which is 4 % of EU GDP13. Data powers a wide array of online services and, increasingly, real world services such as design, manufacturing and logistics. Data flows have reshaped trade relations, created new large scale infrastructures and led to new and very successful business models. Moreover, data flows are also emerging as a potential substitute for trade in physical goods, namely thanks to technologies such as 3D printing: between 2008 and 2012, world-wide cross-border trade in data increased by 49 % while trade in goods or services rose by just by 2.4 %14. The
8 European Commission (2017) "Europe's Digital Progress Report 2017" SWD(2017) 160 http://ec.europa.eu/newsroom/
document.cfm?doc_id=45188 9 Eurostat (2015) “Statistics on Small and Medium Sized Enterprises” http://ec.europa.eu/eurostat/statistics-explained/
index.php/Statistics_on_small_and_medium-sized_enterprises#Further_Eurostat_information 10 European Parliament (2017) “Helping European SMEs to Grow” http://www.europarl.europa.eu/RegData/etudes/
IDAN/2017/603967/EPRS_IDA(2017)603967_EN.pdf 11 European Commission (2017) "Europe's Digital Progress Report 2017" SWD(2017) 160 http://ec.europa.eu/newsroom/ document.cfm?doc_id=45188 12 European Commission (2017) "2017 Digital Transformation Scoreboard" https://ec.europa.eu/docsroom/ documents/21501/attachments/1/translations/en/renditions/native 13 European Commission (2013) “European Data Market Study” SMART 2013/0063 http://datalandscape.eu/
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14 European Political Strategy Centre (2017) “Enter the Data Economy“ https://ec.europa.eu/epsc/sites/epsc/files/ strategic_note_issue_21.pdf
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combined economic impact of the automation of knowledge, work, robots and autonomous vehicles is estimated to reach between €6.5 trillion and €12 trillion annually by 202515. According to the Information Technology and Innovation Foundation (ITIF), data localisation and other barriers to data flows can cause prices for some cloud services in the EU to increase between 10.5% and 54 % and reduce the GDP of the EU by between 0.7% and 1.7 %16. On the other hand, a fully functioning Digital Single Market, including the free movement of data, could contribute €415 billion per year to the European economy and create hundreds of thousands of new jobs17. However, current legislation does not address data localisation requirements as set out in the national laws of Member States.
Infrastructure as a backbone for digital society As the industrial transformation relied on electricity, roads and railroad, so the digital transformation will require new infrastructure. High capacity networks, such as 5G, are a pre-requisite to the evolution of a competitive digital economy, the facilitation of modern public services and the take-up of cutting-edge innovations, such as autonomous vehicles and smart homes. With envisaged capabilities such as low-latency, more mobility, and high reliability and availability, 5G can provide uninterrupted, high-speed bandwidth connectivity, which is essential in a world where more and more people are coming online. According to the Digital in 2017 Global Overview, there are now 3.773 billion global internet users, more than half of the world’s population and an increase of 10 % since January 201618. Bandwidth and latency requirements for generic applications Source: GSMA Intelligence 2015
15 European Commission (2017) “Communication on the Mid-Term Review on the Implementation of the Digital Single Market Strategy” COM(2017) 228 http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52017SC0155 16 Information Technology and Innovation Foundation (2017) “Cross-Border Data Flows: Where are the Barriers and
What do they Cost?” http://www2.itif.org/2017-cross-border-data-flows.pdf 17 European Commission (2015) ”A Digital Single Market Strategy for Europe” COM(2015) 192 http://eur-lex.europa.eu/
legal-content/EN/TXT/PDF/?uri=CELEX:52015DC0192&from=EN 18 We Are Social (2017) "Digital in 2017: Global Overview" https://wearesocial.com/special-reports/digital-in-2017-
global-overview
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By one estimate, if Europe spends €56.6 billion by 2020 on 5G development, €113.1 billion per annum in benefits and 2.3 million jobs could be created in the EU19. However, there remain obstacles to the rollout of 5G, including the need to better coordinate and swiftly allocate spectrum, and a lack of investment in telecoms infrastructure and standards development. High-performance computing (HPC) is also part of the new frontier for European digital infrastructure. At more than 100 times faster than the fastest machines available in Europe20, high-performance computing has become a compulsory tool in areas such as big data analytics and biomedicine. Moreover it can make our online transactions more secure, reduce development costs for businesses and improve the environmental friendliness of the production process. At the moment however, the EU provides about 5 % of HPC resources worldwide, but consumes almost 30 % - a dependency which runs the risk of the EU being delayed or deprived strategic know-how21.
Questions • What should we do to make the EU the headquarters for global digital companies? • How can we support the adoption of digital technologies by companies, in particular SMEs? • How can we ensure that Europe has the necessary infrastructure to support the digital economy, the exponential growth in internet use, and online public services?
At a glance • Only one fifth of companies in the EU could be considered highly digitalised
• Less than 20% of SMEs use the internet as a sales channel
• The value of the data economy is estimated to reach €739 billion by 2020
• Completing the Digital Single Market,
including the free movement of data, could contribute €415 billion per year • More than half of the world’s population uses internet (3.773 billion global) • 5G deployment could create 2.3 million additional jobs in Europe
The skills gap and changing nature of work Steam mechanised the production process, electricity created mass production and computers automated production; the previous three industrial revolutions have profoundly changed society and the nature of work. Now, as we stand on the threshold of the Fourth Industrial Revolution, artificial intelligence, robotics and the Internet of Things (IoT), will do the same at a much faster pace than ever before and in ways that are as yet unimaginable.
19 European Commission (2014) "Identification and Quantification of Key Socio-Economic Data to Support Strategic
Planning for the Introduction of 5G in Europe" SMART 2014/0008 http://ec.europa.eu/newsroom/dae/document. cfm?doc_id=17802 20 Ansip, A. (2017) "Digitising Europe with Sheer Computing Power" https://ec.europa.eu/commission/ commissioners/2014-2019/ansip/blog/digitising-europe-sheer-computing-power_en
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21 Ansip, A. (2017) "Digitising Europe with Sheer Computing Power" https://ec.europa.eu/commission/ commissioners/2014-2019/ansip/blog/digitising-europe-sheer-computing-power_en
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To make the most of this opportunity, Europe needs a highly-skilled workforce. Already 90% of all jobs require at least a minimum level of digital skills, yet: 100 million Europeans have yet to use the internet; 45 % of the EU population and 37 % of EU labour force have insufficient digital skills; 42 % of those with no digital skills are unemployed; and 40 % of European employers report that they cannot find people with the right skills22. While the digital revolution holds tremendous benefits for the European economy, it also has the power to widely disrupt the labour market across all sectors. As part of this change, certain jobs may go by the wayside or become much cheaper to perform through automation. Almost half of all activities that people perform in the global economy have the potential to be automated by currently demonstrated technology23. Globally, disruptive labour market changes could lead to a net loss 5.1 million jobs between 2015 and 202024. Social Skills and Change in Share of Jobs in the United States, 1980 to 2012 Source: David Deming, Harvard University
At the same time, employers suffer from a chronic shortage of workers with the necessary digital skills. There is high demand globally for experts specialising in IT-related fields. In 2015 the EU counted nearly 8 million ICT specialists, representing 3.5 % of total employment25. 1.5 million of these jobs have been added since 201126. Digitalisation is changing the nature of work in every sector, and there persists a large mismatch between the needs of the economy and the skills of workers.
22 Rute, M. (2017) “Learning and Skills for the Digital Era”, Future of Work: Making it e-Easy Conference, Tallinn https:// www.rk.ee/owncloud/index.php/s/9WFGLiH3RMDkYtR/download?path=%2FDay%202&files=Rute%2C%20Maive%20 14.09.pptx 23 McKinsey Global Institute (2017) “Harnessing Automation for a Future that Works” http://www.mckinsey.com/~/ media/McKinsey/Global%20Themes/Digital%20Disruption/Harnessing%20automation%20for%20a%20future%20 that%20works/MGI-A-future-that-works_Full-report.ashx 24 World Economic Forum (2016) "The Future of Jobs" http://www3.weforum.org/docs/WEF_Future_of_Jobs.pdf 25 Eurostat (2017) "Employed ICT Specialists - Total" http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=isoc_
sks_itspt&lang=en 26 Eurostat (2017) "Employed ICT Specialists - Total" http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=isoc_
sks_itspt&lang=en
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The greatest opportunities will lie in blending artificial and human intelligence. Computers excel at logical reasoning processes, but need to be complemented by 'softer' skills such as creativity, high-level cognitive and interpersonal skills. In the US, jobs that require high levels of social interaction grew by nearly 12 percentage points as a share of the labour force between 1980 and 201227. All of this will require not simply new skills, but a new approach to skills and learning. Lessons learned in school from age 6 to 22 are no longer sufficient to last a lifetime, e.g. 50 % of subject knowledge acquired during the first year of a four year technical degree is outdated by the time a student graduates28. By one estimate, more than a third of the desired core skill sets of most occupations will be comprised of skills sets that are not currently considered crucial to the job today29. Additionally, 65 % of the jobs that children entering primary school today will occupy do not even exist yet30. Digital skills by competence dimension and level, 2016 (% of internet users) Source: Commission services based on Eurostat data
Building a workforce ready for the future means more than improving traditional education offerings. As companies are already facing shortages of skills in their industries, we do not have the luxury of waiting a new generation to upskill the workforce. Particularly as citizens in their 30s today will still be in the labour force in 2040 and still be using eGovernment and eBanking and other digital services well into the 2060s. Social partners must keep up with the demand for skills and provide the workforce with the opportunities to develop a broader skills base (including learnability, problem-solving, critical-thinking and entrepreneurship) to better adapt to the digital economy, through initiatives such as life-long learning. However, many Member States continue to under-perform in the international league tables of skills and qualification achievement. Digitalisation and new technologies are also changing the nature of work with significant implications for social security. Digitisation is a key driver in the increase in non-standard employment, such as freelance work, work provided via digital platforms, voucher based work and crowd employment. By one estimate, 42 % of the European workforce is employed in atypical forms of work31. While these types of work can have advantages such as flexibility, autonomy and an improved work-life balance, the gig
27 Deming, D.J. (2017) "The Growing Importance of Social Skills in the Labour Market" https://scholar.harvard.edu/files/ ddeming/files/deming_socialskills_aug16.pdf 28 World Economic Forum (2016) "The Future of Jobs" http://www3.weforum.org/docs/WEF_Future_of_Jobs.pdf 29 World Economic Forum (2016) "The Future of Jobs" http://www3.weforum.org/docs/WEF_Future_of_Jobs.pdf 30 World Economic Forum (2016) "The Future of Jobs" http://www3.weforum.org/docs/WEF_Future_of_Jobs.pdf
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31 Schoukens, P. (2017) http://efese.eu/wp-content/uploads/2017/07/Prof.-Paul-Schoukens.pptx
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society is disrupting traditional labour markets and social security systems which for decades in Europe have been defined by the relationship between the employer and employee. At the same time, the convergence of digital technologies and globalisation have created an environment where mobile technology, email, social media and virtual meetings tools contribute to a constant access lifestyle and have broken down the barriers between the physical office and where the work actually takes place. For example, on average 3 out of 4 European employees have access to some work-schedule flexibility32.
Questions • How can we nurture a highly-skilled
At a glance • Half of all activities that people
workforce and digitally literate citizens? • How can we support lifelong learning and non-traditional forms of education? • How can we support Europeans in benefitting, and not losing out, from rapid digital change?
perform can be automated by current technology • More than a third of the desired core skill sets of most occupations will be comprised of skills sets that are not currently considered crucial to the job today • 42 % of the European workforce is employed in atypical forms of work • 3 out of 4 European employees have access to some work-schedule flexibility
32 OECD (2016) “Be Flexible! Background Brief on How Workplace Flexibility Can Help European Employees to Balance Work and Family” https://www.oecd.org/els/family/Be-Flexible-Backgrounder-Workplace-Flexibility.pdf
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Trust and security for a digital society ••• Cybersecurity is crucial for both our prosperity and our security. Alongside new economic models and new jobs, the digital revolution has also brought opportunity for the bad guys: rogue states, criminals, terrorists, bullies and vandals. The global cost of cyberattacks currently sits at an estimated $400 billion per year, with projections of $2.1 trillion by 201933. The internet has virtually no borders - and operating on the internet is inherently an international business. Many of the traditional methods we use to protect our societies – geographical distance, national borders, local trust relationships – do not insulate us in the digital age. Malicious cyber activities not only threaten our economies, but also the very functioning of our democracies, our freedoms and our values. Motivations Behind Attacks - August 2017 Source: http://www.hackmageddon.com/2017/09/12/august-2017-cyber-attacks-statistics/
Cybercrime is one of the largest global threats to business. Estimates vary, but they place the cost of cybercrime between €500 billion34 and €3 trillion35. The cost to individual businesses can be severe. Following a large-scale malware attack this year, the British pharmaceutical company Reckitt Benckiser reported a revenue loss of nearly €100 million as a result36. The logistics company TNT saw many of its systems go down for over a month, causing significant problems for thousands of small businesses relying
33 Titania (2017) “Cyber Security Predictions for 2017” https://www.titania.com/about-us/news-media/cyber-securitypredictions-for-2017 34 CNBC (2017) “Cybercrime Costs the Global Economy $450 Billion” https://www.cnbc.com/2017/02/07/cybercrime-
costs-the-global-economy-450-billion-ceo.html 35 Security Affairs (2016) “Global Cost of Cybercrime Will Grow from $3 Trillion in 2015 to $6 Trillion Annually by 2021”
http://securityaffairs.co/wordpress/50680/cyber-crime/global-cost-of-cybercrime.html 36 The Guardian (2017) “Massive Cyber-Attack Could Cost Nurofen and Durex Maker £100m” https://www.theguardian.
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com/business/2017/jul/06/cyber-attack-nurofen-durex-reckitt-benckiser-petya-ransomware
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on the logistics company. All in all, 50 % of businesses in the EU have suffered a cyberattack and the projected growth of cybercrime is now higher than ever before37. While the greatest daily cost comes from cybercrime, nation states are also building offensive capabilities, and cyber is quickly becoming the fifth domain of warfare. Over 30 countries are developing cyberweapons, and many states hide their activity behind cybercriminals38. We must also contend with terrorists and criminals who use the internet for their own purposes, from organising attacks to selling drugs. Consumer vs enterprise ransomware infections, 2017 to date Source: https://www.symantec.com/content/dam/symantec/docs/security-center/white-papers/istr-ransomware-2017-en.pdf
Two new threats are now starting to appear. First, as we enter the IoT age, connected devices will provide many millions more access points that hackers can target to launch cyberattacks or plant malware. Already today, your refrigerator, car, oven and front door could be hackable. And without a European approach to secure IoT, manufacturers will not be able to take full advantage of the size of the Digital Single Market. Second, digital vulnerabilities affect the sustainability of democracy. The massive screening of voters and deployment of accurate “information marketing” strategies subtly crafted to hijack people’s votes have tilted the balance in elections. Hacking into the machinery of democracy, whether voter rolls or parliamentary email, undermines the integrity of our democratic processes. These vulnerabilities threaten to undermine consumer and business confidence in technology and slow down important steps to digitalise our societies and economies. 85 % of internet users in the EU agree that the risk of becoming a victim of cybercrime is increasing39. If the EU fails to respond to cybersecurity challenges, it could sacrifice up to €640 billion of potential EU economic value40.
37 European Commission (2015) “Special Eurobarometer 423: Cyber Security” http://ec.europa.eu/commfrontoffice/
publicopinion/archives/ebs/ebs_423_en.pdf 38 ZDNET (2017) “US Intelligence: 30 Countries Building Cyber Attack Capabilities” http://www.zdnet.com/article/us-
intelligence-30-countries-building-cyber-attack-capabilities/ 39 European Commission (2015) “Press Release: Daily News 10/02/2015” http://europa.eu/rapid/press-release_MEX-15-
4322_en.htm 40 ENISA (2016)” ENISA's Role in the European Digital Single Market” https://www.enisa.europa.eu/publications/enisaposition-papers-and-opinions/enisa2019s-role-in-the-european-digital-single-market-dsm
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Where there is risk, there is also opportunity. Annual cybersecurity spending by business will be €100 billion by 202041, and there will be more than 3 million unfilled cybersecurity jobs by 202142. As awareness of security grows, companies and consumers will prefer devices and services that are secure. There are also many low hanging fruits: nearly 90 % of cyberattacks can be stopped with fairly simple cyberhygiene measures and existing best practices43. International cooperation can also work. Global cooperation has taken down botnets engaged in distributed denial of service (DDoS) attacks, and targeted global criminal networks involved in exchanging paedophilic material or selling drugs. Europe has grounds for optimism. The EU has some of the world’s best performers in cybersecurity. As a region, the International Telecommunication Union (ITU) ranks Europe highest on cybersecurity development44. European cooperation has yielded tangible results, including the disruption and arrest of dozens of cybercrime networks. The measures agreed in the NIS directive helped some Member States entirely avoid harm from this year’s malware attacks. European countries are major contributors to global capacity building. There is an unavoidable European dimension. You cannot have a Digital Single Market without ensuring its security. Our shared transport, energy, telecoms and banking infrastructure need a common approach to cybersecurity. And no European country is big enough to go it alone on the world stage in defining cybersecurity standards or developing a global policy approach.
Questions • How can cybersecurity serve as an enabler for trust and confidence in a free and open internet and society? • How can we ensure the highest level of resilience of digital infrastructures, for both competitiveness as well as in face of changing threats? • How and in which areas can we enhance our cybersecurity cooperation? • How can cyberspace be a used best to protect our values?
At a glance • The cost of cybercrime between 500 billion and 3 trillion euros
• 50 % of businesses in the EU have suffered a cyberattack
• 3 million unfilled cybersecurity
jobs by 2021
• 90 % of cyberattacks can be stopped with relatively simple cyberhygiene
• A cyberattack of global scale could cost $120 billion - as much as Hurricane Katrina45
41 Gartner (2017) “Gartner Says Detection and Response is Top Security Priority for Organisations in 2017” http://www.
gartner.com/newsroom/id/3638017 42 CSO (2017) “Cybersecurity Labour Crunch to Hit 3.5 Million Unfilled Jobs by 2021” https://www.csoonline.com/
article/3200024/security/cybersecurity-labor-crunch-to-hit-35-million-unfilled-jobs-by-2021.html 43 Scoop News Group (2017) “Verizon’s Annual Data Breach Report is Depressing Reading, Again” https://www.
cyberscoop.com/verizon-annual-data-breach-investigations-report-depressing-dbir/ 44 International Telecommunication Union (2017) “Global Security Index” https://www.itu.int/dms_pub/itu-d/opb/
str/D-STR-GCI.01-2017-PDF-E.pdf 45 The Guardian (2017) “Lloyd’s Says Cyber-Attack Could Cost $120bn, Same as Hurricane Katrina”https://www.
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Future of government
••• Government needs to be where the people are. 79 % of EU citizens (aged 16-74) go online weekly, and regular internet use is growing particularly fast among disadvantaged groups (63 %). In 2016, almost all enterprises were connected to the internet. Today 59 % of individuals in the EU (aged 16-74 years) use a mobile device to access the internet when they are away from home or work. More than half of the population needing public services choose the online channel - both old and new internet users alike46. eGovernment usage potential (preferred channel for submitting forms to public authorities by citizens), EU27 Source: European Commission calculations based on Eurostat - Community survey on the ICT usage in households and by individuals. EU27: EU28 excl. IT
The public sector constitutes between 20 % and 30 % of European GDP47. ‘Public services’ is a broad term covering a wide range of services provided by public authorities to their citizens – ranging from justice and law enforcement, healthcare, education to payment of welfare benefits. The quality of the public sector and the services it provides are inextricably linked to the well-being and future prospects of citizens. It also provides the backdrop for the business environment, which largely determines countries’ competitiveness and long-term prosperity. Europeans remain as a whole positive about the digital revolution. Two thirds of Europeans think new digital technologies have a positive impact on society, the economy and their own lives48. Indeed, a
46 European Commission (2017) “Europe’s Digital Progress Report” SWD(2017) 160 http://ec.europa.eu/newsroom/
document.cfm?doc_id=45188 47 Arundel, A., Casali, L., and Hollanders, H. (2015) “How European Public Sector Agencies Innovate: The Use of Bottom-
Up, Policy Dependent and Knowledge-Scanning Innovation Methods“ http://www.sciencedirect.com/science/article/ pii/S0048733315000670# 48 European Commission (2017) “Special Eurobarometer: Attitudes Towards the Impact of Digitisation and Automation on
Daily Life” http://ec.europa.eu/commfrontoffice/publicopinion/index.cfm/ResultDoc/download/DocumentKy/78997
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majority are of the opinion that the EU, Member States' authorities and companies need to take action to address the issues raised around digitisation49. It is important that the quality and convenience of public services match the level of service provision that citizens have come to expect from the private sector. Businesses are able to interact with and serve their customers in a matter of seconds, providing instantaneous service in bookings and reservations, overnight delivery and rapid action to refund or otherwise compensate unsatisfactory service. Citizens and business should get the same service from the public sector. The promise of a more modern, digitally-powered government relies on the delivery of more targeted, user-centric services, for instance in education, health or employment. The ‘one-size-fits-all’ approach of the past is increasingly inefficient in societies that are becoming more diverse and which see more transitions than ever before - between jobs and even careers that demand longer working lives and upskilling along the way. The need for this flexibility will grow even more as so-called digital natives become almost middleaged in the next decade and come to make up the core of our working aged citizens and it is extremely important to provide them with the best environment in which to live and work. This generation will expect to interact with government in a new way, with more tailor-made solutions, often co-created with the user. They expect to give and receive feedback in a constant loop, which, through big data analytics, has the potential to improve services - both in quality and cost-effectiveness - and optimise outcomes, resulting in greater citizen satisfaction. Among young people with all levels of education there has been a marked progression in the use of eGovernment, proving that digital natives' online activities are not limited to social media and digital content consumption, but they do extend to more complex services. Similarly, among the elderly there has been a marked progression50. Governments have advanced in making public services digital, but focused less on the quality of the delivery from the user’s perspective. While the online availability of services at EU28+ level reached 81 % and online usability 83 %, the ease and speed of using these services online advanced poorly, increasing by only 1 percentage point since 201251. Digital government can cut the costs of government, but the real savings come from saving time for businesses and citizens. Estimates suggest that the Digital Single Market could cut the administrative burden the public sector by 15% to 20%52. Two goals stand out as particularly important: the ‘once-only’ principle and the broad adoption of electronic identification (e-ID).
49 European Commission (2017) “Special Eurobarometer: Attitudes Towards the Impact of Digitisation and Automation on
Daily Life” http://ec.europa.eu/commfrontoffice/publicopinion/index.cfm/ResultDoc/download/DocumentKy/78997 50 European Commission (2017) “Europe’s Digital Progress Report” SWD(2017) 160 http://ec.europa.eu/newsroom/
document.cfm?doc_id=45188 51 European Commission (2016) “eGovernment Benchmark 2016: A Turning Point for eGovernment Development
in Europe?” SMART 2015/0027 https://vrm.lrv.lt/uploads/vrm/documents/files/LT_versija/Veikla/Veiklos%20sritis/ Elektronin%C4%97_vald%C5%BEia/Elektronin%C4%97s_vald%C5%BEios_steb%C4%97sen%C5%B3_tyrimai/eGov%20 BM%202015_insightreport_27092016.pdf 52 European Commission (2012) “Press Release: Digital To-Do List: New Digital Priorities for 2013-2014” http://europa.eu/
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rapid/press-release_IP-12-1389_en.htm
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2016 E-Government Development Index Source: https://publicadministration.un.org/egovkb/en-us/Data/Region-Information
The concept of the once-only principle is that companies and citizens should provide any information to public bodies only once, and public bodies should share data with each other to reduce the administrative burden. The once-only principle implies that governments re-use data to deliver services automatically. Such data exchange already works well within Estonia and some other Member States, but not yet at the EU level53. Where implemented, the once-only principle leads to major savings for citizens and businesses. For instance, the Belgian region of Flanders has realized cost savings of nearly €100 million per year from implementing the once-only principle54. Extending the once-only approach to the cross-border EU level could generate total net savings of around €5 billion per year55. All new services should be digital from end-to-end and able to perform cross-border. Digital change in public services is inevitable and expected by Europeans. Widespread use of e-ID and e-signatures saves time and reduces costs for all actors involved, while also guarding against identity theft and poor cybersecurity. In Estonia, it is estimated that near-universal adoption of e-ID creates savings of 2 % of GDP annually56. There is EU legislation in place for crossborder recognition of e-ID and signatures, and most Member States have national e-ID schemes, though adoption rates by citizens and business remains low. The benefits of a digital approach to public services are potentially huge. Governments can lead digital transformation in publicly funded sectors like healthcare and create the conditions for growth in highly regulated sectors like transport or energy. Autonomous vehicles will mean safer roads, better traffic management, particularly the management of freight traffic, and cleaner, more loveable cities. It is estimated that the annual global market for fully autonomous cars could grow from €5 billion in 2025 to
53 Krimmer, R. (2017) “TTÜ Scientists are Leading 8 Million Euro Project for Diminishing Bureaucracy for Businesses in EU” https://www.ttu.ee/ttu-scientists-are-leading-8-million-euro-project-for-diminishing-bureaucracy-for-businessesin-eu 54 Hewlett Packard Enterprise (2014) “Flemish Government Streamlines Service for Citizens” https://www.hpe.com/ h20195/v2/GetPDF.aspx/4AA5-6171ENW.pdf 55 European Commission (2014) “Final Report: Study on eGovernment and the Reduction of Administrative Burden” SMART 2012/0061 http://ec.europa.eu/newsroom/dae/document.cfm?doc_id=5155 56 E-Estonia (2016) “e-Estonia Facts” https://e-estonia.com/wp-content/uploads/updated-facts-estonia.pdf
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€35 billion in 203557. The combined economic impact of the automation of knowledge work, robots and autonomous vehicles is estimated to reach between €6.5 trillion and €12 trillion annually by 2025 including gains in productivity and benefits in areas such as healthcare or security58. Europe needs to focus on our competitive advantages that are both economic and societal, linked to our values and our unique welfare model. We will embark on this journey by protecting our citizens, our fundamental values and our freedoms. Europe will only be able to do so when it leads, not when it follows. This journey will help create a more resilient, inclusive and sustainable European Union.
Questions • How can we bring governments and the public sector faster into the digital age? • How can we enable the end-to-end, cross-border digital access of all public services within the EU? • What sectors should we concentrate the development of digital government efforts the most?
At a glance • More than half of the population • • • • •
needing public services choose the online channel 59 % of individuals in the EU use a mobile device to access the internet The online availability of services at EU28+ level reached 81 % The middle-aged population with lower education has one of the lowest uses of eGovernment (39 %) The annual global market for fully autonomous cars could grow from €5 billion in 2025 to €35 billion in 2035 Extending the once-only principle to the EU level could generate total net savings of around €5 billion per year
57 European Commission (2017) “Communication on the Mid-Term Review on the Implementation of the Digital Single Market Strategy” COM(2017) 228 http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52017SC0155 58 European Commission (2017) “Communication on the Mid-Term Review on the Implementation of the Digital Single
Market Strategy” COM(2017) 228 http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52017SC0155
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