Digitization and digital transformation – an overview of the most important topics from the month of October
04. November 2016
Another month has passed, so it’s time to look back. What were the top issues relating to digitization in October? This month’s overview looks at the investment that is needed in Germany’s schools in order to prepare the younger generation for the digital future. It also considers the kind of jobs that will still be available in the future. Another hot topic last month was the lack of transparency at Google and Facebook, and the lack of data protection provided by WhatsApp and Yahoo.
Digitization: more winners than losers (Wirtschaftswoche)
Martin Feldstein, Professor of Economics at Harvard University, considers the kinds of jobs that will disappear and be created as a result of digital transformation. In his column in the Wirtschaftswoche magazine, he explains that in the future, the same quantity of goods and services will be produced by fewer people. This will not only be noticeable in manufacturing but also in offices, where more and more tasks will be performed by computers.
Nevertheless, Feldstein remains optimistic. “Although some individuals will lose out from the transformation, it is likely that more people will profit,” he writes. Even in recent decades, an increase in automation has caused upheavals on the labor market. As a result, the number of industrial workers in the USA has fallen from 13 million to nine million since 1950. Yet this has not led to an increase in unemployment. In fact, quite the opposite is true. Feldstein is convinced that digital transformation will mainly lead to a displacement of jobs. Those people who are unable to find work in industry or in certain service sectors will work in other parts of the economy. For example, there would be a continued increase in the demand for staff in the healthcare sector and in elderly care provision.
In addition to this, he said that today’s young people are better educated than the older generations, which means they are better equipped to take on roles that cannot be replaced by computers and robots. Another advantage of digitization is the reduction in staff working hours: “With longer holidays and weekends, shorter working hours make for a more pleasant life.” This is also associated with an increase in demand for services in the tourism and catering industries, which in turn creates many new jobs in these sectors. Feldstein is convinced that the successful execution of digital transformation can ensure that there is lower unemployment in the future.
A qualified workforce is the crucial prerequisite for ensuring that digital transformation will create rather than destroy jobs. A significant foundation for digital competencies must be established during an employee’s time at school and in higher education. This message has finally got through to Minister of Education, Johanna Wanka. She wants to provide a 5 million euro funding boost in order to improve the way that pupils are taught to use digital technologies. “When it comes to digital education, we need to take some huge steps forward,” explains Wanka. “In the 21 century, getting a good education involves having good IT skills, being confident when it comes to technology and assessing the risks of digital communication, and making the most out of digital media as an aid to learning.” This step is long overdue. According to a study undertaken by the Bertelsmann Foundation, only a third of vocational colleges have a good Wi-Fi service and 40 percent have no Wi-Fi at all. In addition to the poor infrastructure, the teaching staff are also insufficiently qualified. They do not have enough time to get to grips with the new learning methods.
President of the German Teachers’ Association, Josef Kraus, however, sees the digital offensive in a very different light. He explained his views in an interview with the Passauer Neue Presse newspaper: “Everyone is always trying to convince us of the benefits of digitizing lessons but I do not believe this is beneficial. Equipping our 40,000 schools with fast internet connections will not improve lessons at all. We don’t need laptop classes!” This statement shows all too clearly how little understanding Kraus has of the big picture of digitization and its effects. Frank Schmiechen, Chief Editor of Gründerszene, comes to a similarly damning verdict: “One thing is certain: if there is an emergence of new stimuli for the education system that prove vital for our country’s survival in the coming decades, they will definitely not be coming from him. And when our children’s chances on tomorrow’s global labor market are looking slim, they will ask us why we didn’t do more to boost digital literacy.”
At the ‘Medientagen’ congress in Munich, German Chancellor Angela Merkel called for large internet platforms such as Facebook and Google to be more transparent about their algorithms and mechanisms. Her criticism was that social media users are now only reading things that affirm their existing opinion. The article summarizes her view that this threatens society’s ability to grapple with other opinions, which is so crucial for democracy. She said that due to their market power, these large platforms were also becoming a “bottleneck that is squeezing the diversity of providers,” which has serious economic implications for other media providers. Internet businesses are also increasingly squeezing the share of the advertising market that is held by newspapers and magazines. “By next year, or the year after at the latest, the net advertising revenues of general interest magazines will have fallen below the one billion euro mark,” says Philipp Welte, Manager of Hubert Burda Media. He calls for a stronger partnership between publishing houses regarding the digitization of services.
While Facebook and Google are mainly under fire for their lack of transparency and (in particular with Facebook) for the way that hate speech is handled, WhatsApp and Yahoo are currently being singled out by data protection officials. According to heise online, the ‘Article 29 Data Protection Working Party’ is “criticizing WhatsApp for exchanging data with Facebook, and Yahoo for its response to the latest data theft and due to reports that it cooperated with intelligence services.” As a result, the CEOs of both companies received warning letters from Brussels-based European data protection officers. The data protection officials called for WhatsApp to stop transferring user data to Facebook until the changes to WhatsApp’s terms and conditions have been reviewed. Their particular concern is that by only having an opt-out option, the right to informational self-determination is compromised. Yahoo, on the other hand, is being called to shed light on the data theft in 2014, whereby the login details for more than 500 million user accounts were stolen. It is also being asked to explain its cooperation with the NSA.