Digitization can have a serious impact on employment. They must be managed by the state, but also by the employees themselves.
We replaced the agency report with editorial content.
Slovakia could increase its annual gross domestic product (GDP) by EUR 16 billion by 2025 through digitization. This is a new study by McKinsey & Company, a consultancy focused on the potential of the digital economy in Central and Eastern Europe.
According to data from 2016, the digital economy accounts for 6 percent of Slovak GDP – 4.8 billion euros. If Slovakia and its industry support the growth of digitization, in 2025, revenues could be estimated to rise to 20.9 bn. euros.
Allegedly, we have good assumptions. We can help the surrounding countries, which are lagging behind in terms of digitization, just as we are. Together we can tackle challenges such as the outflow of talent abroad. But with the advent of the digital economy, and especially automation, there is a threat of a negative impact on employment.
We have potential
According to the study, we are lagging behind two comparative groups of states. One is the “big five EU”, ie Britain, France, Germany, Spain and Italy. The second is the so-called “digital champions”, including Estonia, Ireland and the Benelux countries and Scandinavia.
Compared to them, we are significantly lagging behind in productivity (GDP per hour worked) and in the total amount of capital per employee. The paradox is that the Slovaks do more than 100 hours more than the workers in those countries.
Slovakia is currently growing thanks to a “non-digital” economy. The analysis says that we benefit most from exports, foreign investment, eurofunds and the low price of our cheap labor force. But these sources of growth are slow to meet their limits.
So what would help to start the digitalisation of the economy? The authors name market openness, high quality and availability of digital infrastructure or talent in ICT.
One of the components of digitization should be even more automation. Already today, up to 53 percent of Slovakia’s work activities can be automated by technology.
“This would amount to up to 1.2 million jobs. The impact on employment and overall productivity will depend on human readiness and the structure of the economy, ”said Dan Svoboda, Managing Partner for McKinsey Czech Republic and Slovakia.
At the same time, they think that people will find work anyway, just like in previous industrial revolutions.
Everyone must give a helping hand
Digitization is expected to bring even more demand to IT experts, programmers and people with advanced technological skills. However, we are currently lagging behind in the latter category – especially in the age category over 35 years. People should therefore invest time to improve their skills.
What about state support? The study advises him to introduce technologies in the public sector, to support their use by entrepreneurs, to improve the environment for startups and start-ups, or to work with neighboring countries.
In turn, the private sector should be more involved in the process of staff training, lifelong learning or retraining.