ICT sector - value added, employment and R&D
- Data extracted in January 2018. Most recent data: Further Eurostat information, Main tables and Database. Planned article update: February 2019.
Developments in ICT have led to significant changes to methods of production and patterns of employment within the EU. Indeed, most economic commentators would agree that ICT plays a considerable role in determining the competitiveness of knowledge and information-based economies. This article provides an overview of economic developments within the information and communication technology (ICT) sector of the European Union (EU); the primary sources of information that are used for this article include structural business statistics (SBS), national accounts and research and development (R & D) statistics.
- 1 Main statistical findings
- 2 Data sources and availability
- 3 Context
- 4 See also
- 5 Further Eurostat information
- 6 External links
Main statistical findings
The size of the ICT sector as measured by value added
The total value added of the EU-28’s ICT sector was close to EUR 570 billion in 2015; note this estimate is based on summing the latest data available for each of the EU Member States and includes previous reference periods for some countries. To give some context to this figure, the ICT sector was equivalent to almost 4.0 % of the EU’s gross domestic product (GDP) in 2015 (see Figure 1). ICT services accounted for the vast majority of ICT activity, as they were approximately 10 times as large as ICT manufacturing when measured in value added terms.
Looking at developments between 2010 and 2015, this gap between ICT services and ICT manufacturing within the EU initially widened, as the impact of the global financial and economic crisis continued to be felt within ICT manufacturing; the ratio of its value added relative to GDP declined at quite a fast pace in both 2011 and 2012. By contrast, with the exception of 2013, the share of value added in GDP grew each year for ICT services. In 2014 and 2015 there were positive developments for both ICT manufacturing and ICT services, as their respective shares in GDP rose.
Among those EU Member States for which data are available (see Figure 2), the relative weight of the ICT sector — as measured by the ratio of its values added to overall GDP — was highest in Ireland, where ICT services alone generated value added equivalent to 8.0 % of GDP in 2012 (note this is the most recent figure available and excludes ICT manufacturing). In 2015, the ratio of ICT value added to GDP was also relatively high in Luxembourg (6.6 %; excluding ICT manufacturing), Malta (6.6 %), the United Kingdom (5.2 %) and Sweden (5.1 %; 2014 data). By contrast, the ICT sector’s value added was equivalent to less than 3.0 % of GDP in Spain (2014 data), Austria, Romania, Portugal (note that information is only available for ICT services), Italy, Poland, Lithuania and Greece, where the lowest share was recorded, at 1.9 %.
Figure 3 shows the development of value added for ICT manufacturing and ICT services in the EU during the period 2010-2015; note that this information is in current price terms and that coverage is restricted to just 14 of the EU Member States due to data availability. For this group of Member States, the EU’s value added for ICT services increased every year during the period 2010-2015, rising overall by 15.0 %. By contrast, there were wider fluctuations in developments for ICT manufacturing, with value added falling in 2011 and particularly in 2012. However, the value added generated by ICT manufacturing rebounded and by 2015 had returned to just above its level of 2010. It is interesting to note that value added for ICT manufacturing in these Member States grew at a faster pace than value added for ICT services in both 2014 and 2015.
A closer analysis of ICT manufacturing in the EU-28 (see Figure 4) reveals that it was dominated by the manufacture of electronic components and boards, which provided almost half of the added value within ICT manufacturing (2014 data). The next largest share was recorded for the manufacture of communication equipment, which accounted for just over one quarter (26.5 %; 2015 data) of the value added generated within ICT manufacturing. The manufacture of computers and peripheral equipment (16.6 %; 2014 data) and the manufacture of consumer electronics (9.2 %; 2015 data) followed, while the smallest activity was the manufacture of magnetic and optical media (0.3 %; 2015 data).
As noted above, ICT services were approximately 10 times as large as ICT manufacturing. Across the EU (note that the information presented excludes Ireland, Luxembourg and Malta), computer programming, consultancy and related activities accounted for almost half (48.5 %) of the value added that was generated within ICT services in 2015. ICT services were even more concentrated than ICT manufacturing, as telecommunications accounted for almost one third (32.2 %) of the value added in ICT services. As such, the two largest activities together accounted for more than four fifths of the total value added generated within ICT services, while each of the remaining activities had single-digit shares (see Figure 5).
As may be expected, the five largest EU economies as measured by their share in EU-28 GDP — Germany, the United Kingdom, France, Italy and Spain — were the five biggest contributors, in absolute terms, to total value added in the EU-28’s ICT sector. Looking at the non-financial business economy of each EU Member State (Figure 6), a different picture emerges. In Sweden and Hungary, the ICT sector accounted for almost one tenth (9.9 % and 9.8 % respectively) of the total value added generated within the non-financial business economy in 2015, while shares of more than 9.0 % were recorded for the United Kingdom, Finland, the Netherlands (2013 data) and Slovakia (2014 data). At the other end of the range, the ICT sector contributed a 5.7 % share of the added value generated within the Austrian non-financial business economy in 2015.
Figure 6 confirms that computer programming, consultancy and related activities together with telecommunications were the two largest ICT activities in each of the EU Member States for which data are available. In 2015, computer programming, consultancy and related activities accounted for at least 5.0 % of the total value added generated within the non-financial business economies of Sweden, Finland and the United Kingdom. The relative importance of telecommunications was highest in Greece, where it accounted for 4.3 % of the total value added generated within the non-financial business economy. It is interesting to note that the high share of non-financial business economy value added that was generated within the Hungarian ICT sector could, at least in part, be attributed to a specialisation in ICT manufacturing, as 0.8 % and 0.5 % of Hungarian non-financial business economy value added was generated in the manufacture of communication equipment and in the manufacture of computers and peripheral equipment; these were the highest shares for either activity among those Member States for which data are available.
The EU’s ICT sector employed approximately 6.3 million people in 2015; note that this estimate is based on summing the latest data available for each of the EU Member States and includes previous reference periods for some countries.
In keeping with the information for value added, there was a continuous increase in the number of persons employed within ICT services in the EU during the period 2010-2015 (see Figure 7 for data coverage); by 2015, this workforce had grown by 17.3 % overall when compared with 2010. By contrast, the number of persons employed in ICT manufacturing fell for four consecutive years (2010-2014) before a modest increase in 2015.
Aggregating the data for the EU Member States for which a complete set of data are available, the ICT sector provided work to 4.4 % of the non-financial business economy workforce in 2015 (see Figure 8 for more information on the coverage). In 2015, the ICT sector accounted for 6.4 % of the non-financial business economy workforce in Finland, while a similar share (6.3 %) was recorded in neighbouring Sweden; Hungary and France had the next highest shares, within the range of 5.0-6.0 %. By contrast, the Greek ICT sector had the smallest contribution to its non-financial business economy workforce, at 2.9 %.
Figure 8 shows that computer programming, consultancy and related activities was the principal employer within the EU’s ICT sector in 2015, accounting for more than half of the workforce. Computer programming, consultancy and related activities had the largest share of the ICT workforce in all but one of the EU Member States for which data are available in 2015; Greece was the only exception, with a higher number of persons employed in telecommunications. The relative share of computer programming, consultancy and related activities in the total ICT workforce rose to more than two thirds (67.1 %) in Sweden and was higher than three fifths (60.1 %) in Germany, while computer programming, consultancy and related activities accounted for more than half of the ICT workforce in six additional Member States: Belgium, Spain (2014 data), Finland, Slovenia, Bulgaria and Lithuania.
In Hungary, ICT manufacturing had a relatively high share of non-financial business economy employment. In 2015, some 0.5 % of the non-financial business economy workforce in Hungary was employed in the manufacture of electronic components and boards and 0.3 % was employed in the manufacture of computers and peripheral equipment; these were the highest shares recorded in any of the EU Member States for which data are available. Hungary also recorded the second highest share (0.5 %) of its non-financial business economy workforce employed in the manufacture of communication equipment. Finland had a higher share (0.9 %) and was relatively specialised in the manufacture of communication equipment. Note however that despite having the highest relative share, there was a marked reduction in the number of persons employed in manufacturing communication equipment in Finland. Their number fell from almost 30 thousand persons in 2008 to just less than 12 thousand by 2015; in relative terms this equated to a fall from 2.1 % of the non-financial business economy workforce in 2008 to 0.9 % by 2015.
Apparent labour productivity
Apparent labour productivity in the EU’s ICT sector was estimated to be EUR 87 100 per person employed in 2015 (see Figure 9 for more information on the coverage in terms of EU Member States and latest reference periods). Among the Member States, this ratio ranged from a high of EUR 124 200 per persons employed in the United Kingdom and upwards of EUR 100 000 in Belgium, Sweden (2014 data), and Germany, down to less than EUR 30 000 in Romania and Bulgaria.
There are considerable differences in productivity levels between the individual EU Member States. Many of these may be of a structural nature and therefore relevant to any if not all activities, rather than being specific to the ICT sector. It is therefore generally more revealing to analyse apparent labour productivity based on a ratio comparing this indicator for the ICT sector with an average value for the whole of the non-financial business economy. In 2015, the apparent labour productivity of the EU’s ICT sector was 73.4 % higher than that recorded for the non-financial business economy as a whole.
This pattern was repeated in each of the EU Member States for which data are available, with apparent labour productivity consistently at a higher level in the ICT sector than for the non-financial business economy. In 2015, apparent labour productivity for the ICT sector in Greece, Slovakia and Bulgaria was more than twice as high as the average recorded for the non-financial business economy. At the other end of the range, the ICT sector recorded a level of apparent labour productivity that was 46-50 % higher than the non-financial business economy average in Finland, France, Austria, Estonia and Sweden (2014 data).
A comparison between 2010 and 2015 reveals that the gap between apparent labour productivity ratios for the ICT sector and the whole of the non-financial business economy were generally narrowing. There were only two exceptions to this rule, namely, Sweden (2010-2014) and Austria, where the apparent labour productivity of the ICT sector rose at a marginally faster rate than the gains recorded for the whole of the non-financial business economy.
Figure 11 provides a different perspective by detailing average personnel costs in the ICT sector compared with those for the whole of the non-financial business economy. In 2015, the average cost of an employee working in the EU’s ICT sector (see the footnotes to Figure 11 for more information on the coverage in terms of EU Member States and latest reference periods) was 61.5 % higher than the average for someone working in the EU’s non-financial business economy.
This pattern was repeated in each of the EU Member States, which is perhaps unsurprising given some of the highly skilled jobs that are carried out by the workforce in the ICT sector, coupled with skills shortages in some areas (which may lead to salaries being pulled upwards). Furthermore, the ICT sector is often characterised by a relatively high share of foreign-controlled and multinational enterprises and these tend to pay higher wages and salaries than domestic competitors.
In 2015, average personnel costs in the ICT sectors of Bulgaria and Romania were more than twice as high as in their non-financial business economies. By contrast, the difference was much lower in France and Italy, where average personnel costs per employee for people working in the ICT sector were 36-38 % higher than for the whole of the non-financial business economy.
A comparison between 2010 and 2015 reveals that the gap between average personnel costs for the EU’s ICT sector and the whole of the EU’s non-financial business economy was closing somewhat, although this was largely due to a rapid reduction in the premium paid to employees in the ICT sectors of the United Kingdom and France (note there is a break in series). Aside from these two relatively large EU Member States, the only other countries to report a closing of this gap at a faster pace than the EU average were Latvia and Slovenia. By contrast, the gap in average personnel costs between the ICT sector and the non-financial business economy average widened in a majority (14) of the 21 Member States for which data are available; the gap widened at its most rapid pace in Greece (note there is a break in series), Slovakia and Romania.
Research and development (R & D)
The main contributors to the total value of business enterprise R & D expenditure (BERD) in the EU-28’s ICT sector were the four largest contributors to the EU’s GDP — namely, Germany, France, the United Kingdom and Italy — although relatively large contributions were also made by the two Nordic Member States of Finland and Sweden.
Figure 12 provides an alternative analysis which takes account of the differences in country sizes; it presents the ICT sector's share of business enterprise R & D expenditure. In 2014, this ratio peaked in Malta, where the ICT sector accounted for almost half (49.6 %) of all business enterprise expenditure on R & D, which was considerably higher than in any of the other EU Member States, as the next highest proportions were recorded in Greece (21.4 %; 2013 data, excluding ICT manufacturing) and Hungary (20.7 %; also excluding ICT manufacturing).
In a majority of the EU Member States for which data are available, the ICT sector accounted for between 10 % and 20 % of business enterprise expenditure on R & D; note that the lower shares that are shown for France (2013 data), Austria (2013 data), Germany and Poland exclude ICT services (for which only a partial set of information is available).
A similar analysis is presented in Figure 13, which shows the share of the ICT sector in total R & D personnel. In 2014, this proportion peaked at 51.4 % in Malta, while a high share was also recorded in Ireland (39.4 %; 2013 data) and the share of the ICT sector in R & D personnel was within the range of 30-34 % in Cyprus, Croatia and Hungary. Note that the relatively low shares that are shown for Germany (2013 data), Austria (2013 data), the Netherlands and Poland exclude ICT services (for which only a partial set of information is available).
Data sources and availability
The ICT sector is delineated according to a definition first published by the OECD in 2006; see the OECD Guide to Measuring the Information Society (2011) for more details. It provides, among others, a classification of those activities that produce ICT goods and services, following the statistical classification of economic activities, NACE Rev. 2. At an aggregated level, information on the ICT sector may be analysed for the total ICT sector, ICT manufacturing and ICT services; definitions for these are provided below.
The primary data sources that are used in this article include structural business statistics (SBS), national accounts and research and development (R & D) statistics. Being a derived statistics product, the ICT sector domain bases its statistical concepts and definitions on its respective primary sources of information. This approach has the virtue of ensuring cost-efficient and high-quality data collection. However, it also results in some limitations, such as restrictions to considering the introduction/design of new indicators or a lack of control over the timing of data releases. For the most detailed methodological information and metadata users should refer to the three primary sources of data.
Structural business statistics (SBS)
Structural business statistics (SBS) describe the structure, activity, competitiveness and performance of economic activities within the business economy; these statistics are available at a much more detailed level than national accounts, covering several hundred different economic activities. The data are collected within the context of Regulation (EC) No 295/2008 concerning structural business statistics (recast).
SBS cover the business economy, which includes industry, construction and services. Because of their specific nature and the limited availability of most types of standard business statistics, financial services are included in SBS but treated separately. SBS do not cover agriculture, forestry and fishing, nor public administration and (to a large extent) non-market services such as education or health. To date, this is the only primary source that provides information pertaining to the economic activity of the aggregated ICT sector, ICT manufacturing and ICT services.
National accounts provide statistics focusing on the structure and development of economies. The European system of national and regional accounts (ESA 2010) is the latest internationally compatible accounting framework used within the EU. It provides a systematic and detailed description of the economy; its legal basis is provided by Regulation (EU) No 549/2013 on the European system of national and regional accounts in the European Union.
National accounts describe and analyse the economic interactions (transactions) within an economy, of which there are an almost unimaginably large number; they may be used to capture economic activity within the domestic territory. The most well-known indicator from national accounts is the gross domestic product (GDP), which provides a measure of the overall size of a country’s economy, as measured by the sum of the gross value added of all resident institutional units engaged in production, plus any taxes on products and minus any subsidies on products.
Research and development (R & D)
The main concepts and definitions that are used in research and development (R & D) statistics are presented in the Frascati Manual; it provides guidelines for collecting and reporting data on R & D. The manual also provides a definition of R & D which comprises creative and systematic work undertaken in order to increase the stock of knowledge — including knowledge of humankind, culture and society — and to devise new applications of available knowledge.
From 2012 onwards, the legal basis for this data collection is provided for by Commission Implementing Regulation (EU) No 995/2012 laying down detailed rules for the implementation of Decision No 1608/2003/EC concerning the production and development of Community statistics on science and technology.
The business enterprise sector generally accounts for the largest share of R & D expenditure and personnel in most industrialised economies. Intramural expenditures cover expenditure on R & D within a statistical unit or economic sector, whatever the source of funds; also included is money spent outside the unit or sector but in support of intramural R & D.
Note: Eurostat is currently working on improving the coverage of SBS and R & D data for the ICT sector and it is likely that a more complete set of data will be available before the end of 2018 which should assist readers in analysing this important sector of the EU economy.
Definitions employed to monitor indicators for the ICT sector
The total ICT sector, ICT manufacturing and ICT services are based on an OECD definition (2006). Using the statistical classification of economic activities, NACE Rev. 2, Eurostat has applied this definition to data from reference year 2008 onwards; prior to this date an alternative definition was employed (based on NACE Rev 1.1). As a result of this break in series, users are advised not to combine the two different data collections.
The ICT sector is defined in terms of the following NACE Rev. 2 activities.
- Total ICT sector: NACE (Groups and Divisions) 26.1-26.4 + 26.8 + 46.5 + 58.2 + 61 + 62 + 63.1 + 95.1
- ICT manufacturing: NACE Groups 26.1-26.4 + 26.8
- Manufacture of electronic components and boards: NACE Group 26.1
- Manufacture of computers and peripheral equipment: NACE Group 26.2
- Manufacture of communication equipment: NACE Group 26.3
- Manufacture of consumer electronics: NACE Group 26.4
- Manufacture of magnetic and optical media: NACE Group 26.8
- ICT services: NACE (Groups and Divisions) 46.5 + 58.2 + 61 + 62 + 63.1 + 95.1
- Wholesale of information and communication equipment: NACE Group 46.5
- Software publishing: NACE Group 58.2
- Telecommunications: NACE Division 61
- Computer programming, consultancy and related activities: NACE Division 62
- Data processing, hosting and related activities; web portals: NACE Group 63.1
- Repair of computers and communication equipment: NACE Group 95.1
- ICT manufacturing: NACE Groups 26.1-26.4 + 26.8
Gross value added at factor costs: can be calculated as the gross operating surplus (a measure of profit) plus personnel costs; alternatively it can be calculated from turnover, plus capitalised production, plus other operating income (including operating subsidies), plus or minus the changes in stocks, minus the purchases of goods and services, minus other taxes on products which are linked to turnover but not deductible, minus the duties and taxes linked to production.
Number of persons employed: the total number of persons who work in the observation unit (inclusive of working proprietors, partners working regularly in the unit and unpaid family workers), as well as persons who work outside the unit who belong to it and are paid by it.
Apparent labour productivity: value added per person employed. This ratio measures how efficiently labour input is combined with other factors of production and how it is used in the production process.
Average personnel costs: are defined as total personnel costs divided by the number of employees. In turn, total personnel costs are defined as the remuneration, in cash or in kind, payable by an employer to an employee (regular and temporary employees, as well as home-workers) in return for work done by the latter during the reference period. An employee is a person who works for an employer on the basis of a contract of employment and receives compensation in the form of wages, salaries, fees, gratuities, piecework pay or remuneration in kind.
R & D personnel includes all persons employed directly in the field of R & D, including persons providing direct services such as managers, administrators and clerical staff; those providing an indirect service, such as canteen or security staff, should be excluded.
Digitalisation and automation can generate new business opportunities through the development of new production processes, new products and new markets. Indeed, the impact of ICT has generally resulted in increased productivity and efficiency, as well as in a range of possibilities for more flexible working practices.
ICT attribute a strategic role in promoting growth and competitiveness of European economies. A developed ICT sector is essential for capitalising on digitisation, keeping up with competitors in the globalised markets, and establishing Europe’s technological leadership. Awareness of the importance of the ICT sector is reflected in European policy initiatives, in particular, the Digital Agenda for Europe and the Digital Single Market strategy.
The Digital Single Market emphasises ensuring the free movement of persons, services and capital, whereby businesses and individuals can seamlessly exercise and access online activities under conditions of free competition, with a high level of consumer and personal data protection. The Digital Single Market strategy is built on three pillars:
- access — better access for businesses and consumers to digital goods and services across Europe;
- environment — creating the right conditions and a level playing field for digital networks and innovative services to flourish;
- economy and society — maximising the growth potential of the digital economy.
- Digital economy and society statistics - enterprises
- ICT security in enterprises
- ICT specialists in employment
- ICT specialists - statistics on hard-to-fill vacancies in enterprises
- ICT education - a statistical overview
Further Eurostat information
- SBS - main indicators
- Annual enterprise statistics for special aggregates of activities (NACE Rev. 2) (sbs_na_sca_r2)
- SBS - industry and construction
- Annual detailed enterprise statistics for industry (NACE Rev. 2, B-E) (sbs_na_ind_r2)
- SBS - trade
- Annual detailed enterprise statistics for industry (NACE Rev. 2, B-E) (sbs_na_ind_r2)
- SBS - services
- Annual detailed enterprise statistics for services (NACE Rev. 2 H-N and S95) (sbs_na_1a_se_r2)
- ICT sector
- Percentage of the ICT sector in GDP (isoc_bde15ag)
- R&D expenditure (BERD) of businesses in ICT sector as % of total R&D expenditure by NACE Rev. 2 activity (isoc_bde15ar2)
- R&D personnel in ICT sector as % of total R&D personnel by NACE Rev. 2 activity (isoc_ic_biper2)
Methodology / Metadata
- ICT sector (ESMS metadata file — isoc_se_esms)
- Structural business statistics (ESMS metadata file — sbs_esms)
Source data for tables and figures (MS Excel)
- Digital Agenda for Europe
- Digital scoreboard
- Digital Single Market strategy
- Digitising European Industry
- Europe 2020
- Europe’s Digital Progress Report
- Shaping the Digital Single Market
- International Telecommunication Union (ITU) — World Telecommunication/ICT Indicators database
- OECD Guide to Measuring the Information Society 2011
- OECD — Key ICT indicators
- OECD — The ICT sector
- The World Bank — ICT