It is no secret to you here today that the economy is digitising rapidly.
It is a transformation of the economy on a global scale. It is changing the world, its economy and its society, as once the steam engine and electricity did.
Digital has for a few decades now dramatically changed the ICT sectors, the delivery of services and even to a certain degree how public administrations work. But what we are witnessing today is how digital is profoundly changing the more traditional sectors. Our friends from across the Atlantic call it industrial internet, we call it Industrie 4.0 or to put it simpler the digitisation of industry.
Digital is changing the way we produce cars or chemicals, the way banks deliver financial services. As part of this phenomenon the interactions between manufacturers and their suppliers and their clients are changing profoundly. The cars, chemicals and medical devices themselves are changing, are becoming smarter, more connected. And we are only at the first stages. With the advent of the factories of the future, of the internet of things and of 5G this transformation will become even more dramatic.
So what is at stake today is how we prepare for this on-going dramatic transformation of our economy ? To be very clear, distinguished guests, not only the jobs of tomorrow are at risk also those of today. The challenge in front of us is to turn this digital transformation to our advantage, to reap the opportunities it brings. Concretely this means we must in Europe adapt ourselves to safeguard our global competitiveness as well as today's jobs in all those sectors for which we in Europe are renowned: car manufacturing, textiles, chemicals, pharma, banks and insurance to name just a few.
So the title of this panel session says it all: how to maintain our industrial leadership !
In the digital economy, "who comes late is punished by the market", not in a decade but tomorrow. Europe has finally come round to understand that digitisation will affect all sectors of the economy. What we have not yet fully grasped is how fast this is happening.
So my first message today is that we can no longer wait. We must act now. We must not wait and adapt now to the digital transformation of all sectors of our economy.
Secondly we all have a role – and an active one – to play to make this happen. We need a Digital Union with clear division of tasks between what the EU can best do, and what should be done by Member States and Regions.
At European level, Commission President Juncker understood the challenges for Europe well when he made the digital economy and the realisation of a digital single market one of the top three priorities for his mandate. Heads of State and government have endorsed this priority at their European Council last June. So we have a clear roadmap and strong political support at the highest level..
Our priorities are two-fold:
[1. Industrial leadership through investment in R&D and innovation]
Firstly we must foster research, development and innovation and boost investments. This is of course at the core of the ICT 2015 Conference. Issues most of you here today are working on very actively.
Digital industry should benefit from the Juncker investment package, the € 315 billion European Funds for Strategic Investment (EFSI), in particular through its SME window of € 75 billion. The EFSI will reduce investment risk and help achieve critical mass for major investments that the European economy badly needs.
We are confident that the EFSI will contribute to unlocking investment in next generation networks and are working together with the EIB and the Member States to identify a pipeline for investment in broadband as well as on other "game changing" initiatives such as cloud and high performance computing.
[1.2 Horizon 2020 for Digital]
But the real engines of economic growth are new digital technologies. Europe has significant strengths in areas such as micro-electronics, embedded systems and networking technologies. We need to build on these and seize new opportunities in new and often cross-cutting areas such as Big Data, Internet of Things or Robotics.
We need to be competitive in all of them. In fact, they are all different reflections of the same medal. For example, without IoT there will be much less Big Data, without 5G the full potential of IoT will not be realised, and Big Data without the Cloud would also be seriously hampered, etc. etc.
That's why I am proud that I can announce here today that we have earmarked almost 3 billion euros for 2016 and 2017 in the Digital part of Horizon 2020.
Around 40% of the budget (~1.1 billion) will go to major Public-Private-Partnerships in 5G, Big Data, Robotics, Photonics, Micro-electronics, Manufacturing technologies and High Performance Computing. We expect that at least 20% of the budget will go to SMEs and Startups.
This is very concretely how the EU will contribute. I call on all of you to mobilise yourselves and forge good and strong consortia built on technological leadership and innovative potential.
[1.3. Digitisation by industrial sector]
Progress with digitising industry is mixed. In some sectors, Europe's companies are amongst the leading enterprises when it comes to the use of new technologies, or at least close to the top. The automotive industry is an example. It has clearly measured the challenge of digital. The recent purchase of Nokia's digital map business for close to 3 billion euros by European manufacturers shows how serious digital is being taken there. And the automotive industry is not alone. There are a few others. But a few world-class digitalised industries will not be good enough to maintain our standard of living.
The potential to do much better is there thanks to Europe's strong manufacturing base. However, that potential needs to be realised, first and foremost by existing industry.
[1.4 Start Ups]
Fortunately we also have a vibrant start-up scene in Europe which does create growth and new jobs. However we lose quite a few of them to the US when they are growing, not least because they have trouble finding venture capital. We have a chance to nurture the next generation of e-health, big data, IoT, content or robotic companies, but we need to give them the room to grow, and grow fast. After all that's what the US did: Many of the top 100 companies in US did not exist 25 years ago. Start up is great, scale up is better!
So we need to make every effort to keep the existing companies and the existing industrial jobs.
Now, when I say "existing" jobs, of course they will evolve. Workers need to acquire more digital skills. Public authorities need to help companies in providing these skills. Moreover, we need to ensure that digital skills are already taught at school as an integral part of the overall education for the new generation. After all, these kids will do the research we will finance under Horizon 2050 or whatever our R&D programme will be called by then.
What the European Commission can do on digital skills education is limited. This is mainly the task of Member States. Some of them have already taken decisive action, but many have not yet done so. We need a Digital Union where everybody has to play their role: the European Union, the Member States and the social partners. Indeed we also need the social partners. The European social model may not be perfect, but when it comes to training and education the social partners certainly have better first-hand information than anybody else.
[2. A Digital Single Market]
But at the European level, we cannot only help through investment and through our R&D and innovation programmes.
We must also create the conditions whereby our companies can compete globally, whereby our start ups and SMEs can grow and scale-up, whereby the results of our R&D investment translates into successful products and services on the world markets.
Our biggest asset in European for that to happen, is to leverage our internal market of nearly 510 million customers and over 20 million companies.
Unfortunately, whereas most boundaries and obstacles for the single market have disappeared in the physical world, we see new ones appearing in the digital one. Therefore our second top priority at EU level, as you know, is to realise very quickly a Digital Single Market, as set out in our Strategy presented last May.
[2.1. Key features of DSM: free flow of data, geoblocking, copyright]
Perhaps the most important element is the free flow of data. Data is the lifeblood of the digital economy, and if data can't flow across borders, the digital economy remains stunted. For data to flow, there needs to be connectivity at competitive conditions. That's why the telecommunications single market is important. For the same reason copyright reform is so crucial. Nowhere else are national borders such bottlenecks as in the area of copyright.
We also attach a lot of importance to fighting geo-blocking beyond the area of copyright. If we want to achieve our goal of a DSM, we need the support of citizens. The Digital Single Market needs to be there for the citizens – it is not just about efficiency and money, but about values, too. Equal rights for all citizens is the core value of the European Union. But if citizens keep on being blocked by 89
foreign websites because of the country they live in, claims of a common European purpose will ring hollow indeed.
However, the DSM strategy goes beyond the purely border-related areas. A huge single market is of no use if the preconditions for exploiting this new market are not present.
[2.2. International cooperation as part of DSM: the example of 5G]
We also play an active role in facilitating cooperation. For example, earlier this morning, I opened a major workshop on 5G, hosted by the European Commission, with active participation of the US, Japan, Korea and China. We strongly support the development of 5G as the future key digital infrastructure, and this is the reason why we have launched a Public Private Partnership (5G PPP) under H2020, with a 700 M€ EC support.
[2.3. Standardisation: Internet of Things & Digitisation of industry]
Coordination is also crucial for the Internet of Things, where market up-take is hampered by the fact that many devices do not speak the same language and cannot exchange data across different gateways and smart hubs. The same may very well become true for the digitisation of industry.
Therefore as part of the DSM strategy we have announced to prioritise standardisation and interoperability in Europe. To prepare our priority action plan we are currently conducting a 90
public consultation on standardisation which I invite you to respond to.
[3. A Digital Union for European Leadership]
Distinguished guests, ladies and gentlemen,
These are the actions that we are taking at European level and that are top of our priorities.
However it is not just for the European Union to act.
National and regional governments and actors have a key role to play too. They are closest to the ground, to the companies and employees' organisations. They can foster partnerships, create a competitive environment to boost investment in the needed infrastructures, channel their European Structural and Investment Funds to promoting digital infrastructures in areas where the business case is weak. Member States need to create an environment for innovation, for SMEs and start-ups to thrive. They should work on upgrading skills and preparing their citizens for qualifications for the future by modernising their school curricula and stimulating life-long learning. What Member States should of course NOT do is create new barriers to the single market.
Finally, the social partners, employers and employees' organisations have to work together to reap the opportunities offered by this transformation to a digital economy, to accompany pro-actively the digitisation of all our economic sectors. From my time serving in one of the most dynamic regions of Germany, I know from first-hand experience how well such partnerships, often referred to as the Rhineland model, can work to the benefit of all, create jobs and boost highly competitive and innovative companies.
In this way, by working all together, at the European level, at the national, regional and local level, at the level of the social partners, I am convinced that we will be successful in creating a Digital Union for Europe. A Digital Union that allows Europe to maintain its world-wide industrial leadership. A Digital Europe that will help us secure our standard of living, our prosperity and our social models for ourselves and for future generations.
I now invite Mark Spelman and his panel to discuss these topics in more detail and to formulate some concrete suggestions of how to realise this Union.