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Digital economy Press Release No. 11 24. February 2015

Empirical evidence for Germany

Smart manufacturing, smart devices, smart services, internet of things – these are only four out of the many keywords that are used to describe how we will do business, how we will work or how we will consume in the future when digital technologies will rule. A new era is dawning according to many observers.

Much has already been said and published about what might be, but less evidence exists about what already is and to what extent the key features of a digital economy have already affected businesses and the world of labour across Germany. Thus, the Cologne Institute for Economic Research, in cooperation with the German Association for People Management and the Federal Ministry for Economic Affairs and Energy, recently conducted a representative survey of German companies on the prevalence of digitised models of doing business and their impact on skill requirements and human resource management (HR).

The evidence suggests that about one in three companies in Germany has already strongly advanced towards doing business more digitally (see figure). A small vanguard of four per cent of German businesses not only deal intensively with digitisation in all areas of business, such as finance, HR, sales, transport, production, procurement/purchasing departments, but also deem the internet highly significant for a variety of different purposes, such as recruiting, and using cloud services or data exchanges between machines and devices within the firm and beyond the boundaries of the company.

The prevalence of doing business more digitally is more likely in service industries that are closely affiliated to manufacturing and provide services for other companies (b2b). In addition, companies belonging to the group of advanced businesses exhibit interesting features. Not surprisingly, the proportion of employees working with the internet and exploiting its potential for professional purposes is larger in advanced firms than in less advanced firms. Moreover, the workforce is typically composed of a larger proportion of young and highly skilled people.

Furthermore, employees of digitised companies are increasingly expected to have a good command of IT and online skills – and this trend will continue to be relevant. The same applies to occupation- and firm-specific skills that can be acquired, maintained, transformed and expanded by learning on the job and with increasing work experience. The evidence clearly suggests that the adoption of digital technologies does not generally put jobs at risk. On the contrary, their efficient and effective application requires a profound occupation-specific qualification. In addition, workers should be able to plan and organise their tasks on their own while cooperating and smartly communicating with colleagues and external collaborators.

Doomsday prophecies are highly likely to fail as digitised companies are aware of the need for pre-emptive action to empower employees to deal with challenges as they arise. The companies are not only more engaged in the policies and practices of developing employees’ skills on the job, but also provide more formal training than conventional firms do.

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