Ensuring growth, productivity and well-being in the face of the digital transformation.
•Download as PPTX, PDF•
1 like•334 views
PowerPoint by Mr. Andy Wyckoff, Director of Science, Technology and Innovation, Skills Summit 2018, Porto. SSESSION 1: UNDERSTAND – Risks and opportunities in a digital world: the changing landscape of skills needs Objective: Build a common understanding of how the digital revolution transforms economies and societies, how the skills that people need in everyday life and in the workplace are changing, and which groups of the population are most at risk of being left behind
Recommended
More Related Content
What's hot
What's hot (20)
Similar to Ensuring growth, productivity and well-being in the face of the digital transformation.
Similar to Ensuring growth, productivity and well-being in the face of the digital transformation. (20)
More from EduSkills OECD
More from EduSkills OECD (20)
Recently uploaded
Recently uploaded (20)
Ensuring growth, productivity and well-being in the face of the digital transformation.
- 1. ENSURING GROWTH, PRODUCTIVITY AND WELL-BEING IN THE DIGITAL TRANSFORMATION ANDREW WYCKOFF, Director Science, Technology and Innovation (STI) SKILLS SUMMIT 2018 Skills for a Digital World 28-29 June 2018, Porto, Portugal
- 2. Key features of the Digital Transformation
- 3. HALF THE WORLD IS ON-LINE… Source: International Telecommunications Union Internet users per 100 inhabitants
- 4. DATA ANALYTICS & SOFTWARE 1010111010101 0010100101010 1011010100101 0101001000100 10001010 1010111010101 0010100101010 1011010100101 0101001000100 10001010 BIG DATA VALUE ADDED & PRODUCTIVITY KNOWLEDGE & INNOVATION …AND THE COLLECTION AND ANALYSIS OF DATA ARE A GAME-CHANGER... 4
- 5. Digitalisation … ENABLING TRANSFORMATION ACROSS THE ECONOMY AND SOCIETY … 5
- 6. ...BUT WITH DIFFERENCES IN SPEED AND IMPACT….. Source: OECD calculations based on Calvino et al. (2018) 0.5 1 1.5 2 2.5 3 3.5 4 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 % Agriculture, Mining, Manufacturing ICT tangible investment Software investment Robot use Intermediate ICT goods Intermediate ICT services ICT specialists Online sales revenues 0.5 1 1.5 2 2.5 3 3.5 4 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 % Services Digital penetration of sectors over time, growth rate, 2001-15
- 7. 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 2003 2008 2013 2018 2023 2028 2033 2038 Conservative - Demand Regulated - Demand Disruptive - Demand Baseline - Demand Conservative - Supply Regulated - Supply Disruptive - Supply Baseline - Supply m. 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 2003 2008 2013 2018 2023 2028 2033 2038 Conservative - Demand Regulated - Demand Disruptive - Demand Baseline - Demand Conservative - Supply Regulated - Supply Disruptive - Supply Baseline - Supply m. 7 US Europe 0.0 0.5 1.0 1.5 2.0 2003 2008 2013 2018 2023 2028 2033 2038 Conservative - Demand Regulated - Demand Disruptive - Demand Baseline - Demand Conservative - Supply Regulated - Supply Disruptive - Supply Baseline - Supply …WITH LEAPS AND LAGS. Projected supply and demand for truck drivers Source: ITF (2017), Managing the Transition to Driverless Road Freight transport, Paris.
- 8. 8 New business models, markets and productivity: The future of the firm
- 9. NEW BUSINESS MODELS EXPLOIT INTANGIBLE CAPITAL AND CREATE VALUE BASED ON DATA... founded in 2009 1bn users, aquired for 19bn in 2014 some 60 employees founded in 1997 USD 12bn revenue in 2017 some 3500 employees founded in 2008 500m users, 1.2bn files stored per day some 1200 employees 9 Intangible capital Servicification
- 10. ... MULTI-FACTOR PRODUCTIVITY GROWTH IS DIVERGING… ICT services -0.2 0.0 0.2 0.4 0.6 0.8 1.0 2001 2003 2005 2007 2009 2011 2013 Frontier firms Laggards Top 2% Top 10% Non-ICT services Source: Andrews, Criscuolo and Gal, 2016 -0.2 0.0 0.2 0.4 0.6 0.8 1.0 2001 2003 2005 2007 2009 2011 2013 Frontier firms Laggards Top 2% Top 10%
- 11. THE NEW NATURE OF THE FIRM • Digital “platform” technology will drive the (re)organisation of firms; • Small units of employment with global reach will require a re-think of what is meant by “small” (employment or revenue to market share); • Peer-to-peer markets are blurring the distinction between a consumer and a business; • Governments will need to work with platforms to implement policies and may want to launch their own platforms.
- 12. 12 Jobs and skills in the digital age
- 13. Share of non-routine employment and ICT task intensity, 2012 or 2015 AUS AUT BEL CAN CHL CZEDEU DNK ESP EST FIN FRA GBR GRC IRL ISR ITA JPN KORLTU NLD NOR NZL POL SGP SVK SVN SWE TUR USA 15 25 35 45 55 65 75 30 35 40 45 50 55 60 65 70 ICT task intensity Non-routine employment (%) Market service industries β = 0.97*** AUS AUT BEL CAN CHL CZE DEU DNK ESPEST FIN FRA GBR GRC IRL ISR ITA JPNKOR LTU NLD NOR NZL POL SGP SVK SVN SWE TUR USA 15 25 35 45 55 65 75 30 35 40 45 50 55 60 65 70 Manufacturing β = 1.32*** ICT task intensity Non-routine employment (%) Source: OECD Science, Technology and Industry Scoreboard 2017 , Statlink: http://dx.doi.org/10.1787/888933617586 THE NATURE OF WORK IS CHANGING …
- 14. Average skill levels in digital and non-digital industries Cross-country averages, 31 OECD and non-OECD countries, 2012 or 2015 DIGITAL INDUSTRIES REQUIRE HIGHER SKILLS… Source: OECD Science, Technology and Industry Scoreboard 2017 , Statlink: http://dx.doi.org/10.1787/888933617453 40 42 44 46 48 50 52 54 56 58 60 Digital Industries Non-Digital IndustriesAverage Score COGNITIVE SKILLS TASK-BASED SKILLS
- 15. Additional labour market returns to skills in digital-intensive industries, 2012 or 2015 …AND REWARD THEM. Source: OECD Science, Technology and Industry Scoreboard 2017 , Statlink: http://dx.doi.org/10.1787/888933617472 See: Grundke et al. (2018), Which skills for the digital era? Returns to skills analysis 0 2 4 6 8 10 12 % Additional returns to skills in digital-intensive industries not significant
- 16. Share of jobs at HIGH RISK (>70%) of automation and at SIGNIFICANT RISK (50-70%) Source: Nedelkoska and Quintini (2018) EQUIPPING PEOPLE WITH APPROPRIATE SKILLS WILL BE A HUGE CHALLENGE. 0 10 20 30 40 50 60 70 …..many jobs will experience significant change
- 17. Source: OECD calculations based on SIZE of bubbles : average shortage WITHIN groups of occupations in GENERAL COGNITIVE skills MEASURING DISTANCES BETWEEN OCCUPATIONS, WITHIN GROUPS OF OCCUPATIONS Managers Professionals Technicians Clerks Service workers and shop and market sellers Agricultural and fishery workers Plant and machine operators Craft and related trade workers Elementary occupations -0.5 0 0.5 1 1.5 2 2.5 3 3.5 4 -10 0 10 20 30 40 50 60 70 80 90 Shortage in task-based skills (to all other occupation groups) Shortage in general cognitive skills (to all other occupation groups)
- 18. JOBS AND SKILLS - KEY POLICY ISSUES Regulation. Balancing flexibility with security. Social protection. Repairing or replacing the safety net? Social dialogue. Rebuilding or reinventing? Skills. Lifelong learning: from rhetoric to reality.
- 19. Contact: andrew.wyckoff@oecd.org OECD Going Digital website: www.oecd.org/going-digital STI newsletter: www.oecd.org/sti/news.htm Twitter: @OECDinnovation THANK YOU
Editor's Notes
- Acknowledge authorities. A great pleasure to participate in this skills summit, the focus of which is at the heart of OECD’s “Going Digital” 2-year project which is entering the final 6 mo: how to ensure, and even enhance, growth, productivity and well-being in the digital transformation ? What are the opportunities? What are threats? To answer these questions it is important to get a better understanding of what is the digital transformation ? What are its key components? What’s the pace at which it unfolds? How do we shape with public policies so that it improves economic performance and well-being?
- In brief, we identify 3 key features that distinguished what is going on from earlier tech waves: Hyper-connectivity Ubiquitous computing Data-driven innovation
- Half the world is now connected to the Internet, up from just 4% only 20 years ago. Few “general purpose technologies” – electricity, the internal combustion engine, even clean water – have diffused this fast Crossing this threshold is significant for a variety of reasons but especially for the network effects it generates. Hence things goes viral / diffuse faster than in the past. Increasingly in the OECD world and beyond, the device being used is a smart phone which is really a pocket computer. Always connected, we have entered the era of ubiquitous computing and with it an era of vastly reduced transaction costs. This enables applications ranging from GPS guided mapping to like ride-sharing services like Uber where those in need of a ride can find those offering one. This change in transaction costs is transformative and is a fundamental property that will reshape markets, business, work and communities.
- Smart phones are only the very beginning of a new era where everything is networked. All these connected devices generate torrents of data … the growing volume, velocity and variety of data opens up new opportunities for “data-driven innovation” This provides a new competitive advantage to organisations that can harness it and exploit it – Like Rolls Royce whose turbines are now studded with sensors that provide real-time information on the performance of the jet engine and how best to maintain it when it lands. Data has properties that are much different from capital and labour and hence could represent a new factor of production that few governments currently fully appreciate.
- And because information and data are essential to all sectors, the impact of this transformation is felt across the economy and society more broadly; Unlike previous large scale technological transformations like electricity – this one is unfolding in one generation instead of two, three or four; and is effecting nearly every sector simultaneously… Combined: it is different this time.
- Recent OECD work has succeeded in measuring some of its key components digital transformation , and to understand the extent to which different sectors are being affected by this transformation. With respect to the technology component of the DT, we have been able to measure the intensity of investment by sector: in ICT hardware (like e.g. computers), in software, the stock of robots in intermediate ICT goods (like chips and sensors) and in intermediate ICT service (like the cloud). the share of ICT specialists in the workforce And the intensity of E-sales. As can be seen, the speed at which the different components of the digital transformation are penetrating manufacturing (top panel) and services (bottom panel) differ, depending on the feature considered. It is far from a homogenous transformation… adding to our uncertainty
- Rather than a smooth predictable process, expect “leaps and lags.” Take the case study of long-haul trucking done by the ITF of the OECD: They constructed 3 scenarios of how demand for truckers (dashed lines) may change due to the introduction of various levels of automation; In the middle in the “regulated scenario” we see a large drop after 2028 (10 years) where demand for truck drivers will fall by 1.6m in the US and 2.1m in Europe in just a few years – not a manageable steady decline but a tipping point and then a cliff.
- To understand the Future of Work, you need to understand the Future of the Firm
- A crucial characteristic of new digital business models is “Scale without mass” where digital products can be developed without much fixed capital investment (examples in the top-half) combined with the global reach of the Internet, companies can scale across borders without adding much mass (tangible assets, employees) or a geographic footprint; Related to this is the changing nature and use of capital investment where intangible capital (R&D, software, data, intellectual property, and organisational know-how) are increasingly important relative to traditional capital. These changes alter the nature of value creation: many goods are becoming hybrid goods/services enabled by data-driven services (Photo: self-driving tractor) It also challenges policies that target firms by measures of mass (e.g. employees) and could raise new thoughts about competition policy
- The speed, scale and scope of the digital transformation is changing the way firms operate, perform and compete. And this translates into differences in economic performance across sectors. OECD evidence shows that over the last 15 years, the performance of firms, measured in terms of multi factor productivity, has been diverging. During this period, differences in economic performance between firms at the frontier (the top 2% or even the top 10%) and those at the bottom (the laggards) have been widening. This “great divergence” has been even more marked in ICT-services than in non-ICT services sectors; Clearly, some businesses “get it” and are pulling away while many lag behind. Catching them up, or cushioning their exit will be a policy challenge with clear implications for labour and skill policies.
- Expect a reorganisation of firms around software that will maximises flexibility and responsiveness; Future Firms are likely to mix and match small units of expertise that will respond to changes in production. Less stability and predictability and more dynamically agile. Expect clean divisions that exist between sectors and even between consumers and businesses to fade
- Let me conclude by quickly addressing the main topic of this Summit and the key issue that keeps policy makers up at night: work, jobs and skills….
- OECD evidence shows that economies where workers use ICT more intensively at work (horizontal axis) are also characterised by a higher share of “non-routine jobs” (vertical axis) These are jobs composed of relatively more complex tasks that cannot be easily codified nor easily automated. This is the case for both services and manufacturing jobs.
- 14
- …and businesses in digitally-intensive industries are willing to pay for more skills as seen through this analysis that shows additional wage premia
- Technological change has raised fears about automation and unemployment. OECD analysis finds that the proportion of jobs with high risk of automation (probability higher than 70%) varies from around 5% to around 25% with average of around 14% [blue bars]. For me the most important take-away is that in addition to this 14% many more jobs (about one third across countries) are at risk of significant change [green bars] Together they underscore the large training challenge that is on the near horizon.
- …but new analytical work reveals the “inconvenient truth” that the “skill distance” many workers will need to travel to fit into the new labour market may be formidable; general cognitive skills like literacy and numeracy (on the horizontal axis) and task based skills, like management and communication or ICT skills (on the vertical axis). This is work in progress, but as you can see that managers and professionals display on average the smallest skill shortages when trying to move to other occupations - they are closer to the origin of the axis. Conversely, elementary occupations (at the top right hand corner) have the biggest distance to any other group of occupations. Hence moving to any other occupation might entail substantial retraining and upskilling. The size of the bubbles shows how close or far occupations within the same group. For Example, the biggest bubbles, e.g. elementary occupations and technicians where there are big differences between maids and garbage collectors) .
- Let me end with a slide borrowed from Stefano that lays out the key policy issues facing us.