The digital economy is growing 10 times faster than the traditional economy and firms that engage in online trading are twice as likely to be creating jobs as firms that aren’t, said Ireland’s Communications Minister Pat Rabbitte, TD, who today will unveil the first phase of the National Digital Strategy. From next year, Rabbitte envisages at least 2,000 firms will secure e-commerce vouchers worth €2,500 to change their fortunes but the wider target is 10,000 firms.
Rabbitte, who will unveil the strategy officially later this morning, explained to media that digital contributes 4.4pc to Ireland’s GDP (€7.1bn) and this is growing at 16pc a year – more than 10 times the rate of growth of the economy as a whole.
Digital, he says, supports almost 95,000 jobs directly and indirectly in the Irish economy.
The National Digital Strategy, which will work alongside the National Broadband Plan, the National Payments Plan, the Action Plan for Jobs and the E-government Strategy, consists of four components.
The first component consists of cross-government measures to ensure Ireland embraces the digital economy, the second measure focuses on increasing trading online and entrepreneurship, the third element is around citizen engagement and digital inclusion, and the final part consists of education and learning.
“Every nine jobs out of 10 today presumes digital skills of one standard or another.”
73pc of online spend by Irish consumers leaves the country
He said that in Ireland today some €3.7bn a year is transacted online. Some six out of 10 Irish adults now shop online and 61pc of consumers plan to increase their online expenditure.
“However, 73pc of this is leaking out of this economy to international vendors. There’s no point in trying to stop that, but what we can do is compete and sell our wares and services online.
“Twenty-three per cent uptake of e-commerce by indigenous firms (CSO) is disappointing. We’ve set a target of trying to get 10,000 business online for the first time.
“The evidence is that small companies who engage in online trading grow twice as fast and employment increases if they exploit the technology optimally. It’s a pity but understandable because a lot of companies’ reaction when asked why they haven’t gone digital is to say ‘leave us alone, we’ve enough problems complying with bureaucracy and sure, haven’t we got a website in a way.’
“But they’re not transacting online and that’s the difference.”
The key issue is employing digital to accelerate a change of pace within the Irish economy by raising participation by SMEs in the digital economy and boosting digital literacy skills across the nation. Almost one in five adults (577,200 people) have never used the internet. That’s 18pc of the Irish population. Furthermore, only 27pc use the internet once a week.
Rabbitte said digital literacy skills courses under BenefIT 3 are having an impact but fewer men than women have so far opted for the training courses. From next month, a new wave of BenefIT 3 courses will take place in 700 locations across Ireland.
“Education and learning is central to everything, really,” he added.
Rabbitte said the Government will achieve its target of having every secondary school in the country connected to “industrial-strength” 100Mbps broadband ahead of time next summer.
He added that the appointment of the new Government CIO, who will perform as more of an evangelist than a procurer, and the digital champion, filmmaker Lord David Puttnam, will help to build awareness and knowledge in Ireland.
Rabbitte conceded that despite the progress Ireland is making with broadband, rural areas are still not being adequately served and rarely a week goes by without the phone ringing with someone complaining about the problem.
He said work is almost complete on the State’s application for European structural funds to close the digital divide between urban and rural broadband coverage and said that the mapping part of the application provided a lot of insight.
€2,500 e-commerce voucher scheme
A department spokesman explained that firms that apply for the €2,500 voucher will be expected to match that amount in terms of the investment they are making. The proposed investment isn’t strictly confined to e-commerce trading sites but some digital endeavour that could drive change in the business, be it an app, a new software system, or a social media marketing strategy.
The e-commerce voucher scheme will be managed by local enterprise offices.
“The voucher is the Government’s contribution to helping owner-managers to make the first step into the digital economy.”
He said the Government is targeting 10,000 businesses to take up the voucher scheme with 2,000 trading digitally by next year and said the voucher scheme will be included in the next budget.
“Small businesses that trade online grow twice as fast and are twice as likely to grow employment levels,” Rabbitte reiterated.
“We are in a recession. Companies are under pressure and there is a lot of red tape they must comply with. As a result, they are retrenching, pulling back and don’t see technology as an enabler to grow. It is important to persuade them of the advantages of technology.”
He cited the example of a steel mill in Tallaght, Dublin, that was caught off-guard by the economic downturn. But after catching up with the digital economy and through training from Enterprise Ireland, it is now winning business in China. It is discovering entirely new markets as a result of deciding to go online.
Rabbitte said the aim of the strategy is to encourage changes that run deep in Irish society and the economy, pointing out that UK households are likely to derive greater cost savings than Irish households because they conduct more commerce online.
Rabbitte pointed to comments made yesterday by John Fitzgerald of Economic and Social Research Institute. “I’m sorry to say but he’s right. Unless there is a lift-off in the UK economy we will continue to run still if Europe doesn’t start to grow. It’s an economic fact.”
Rabbitte also addressed Ireland still being a cash and cheque-based economy, where e-payments systems that would ensure faster payment for SMEs are still a rarity, and that banks should be doing more to facilitate online trading.
“The National Payments Plan has provisions that are designed to try and force the pace on that. The difficulty is causing banks to respond. They have a single-minded focus on bringing ratios to some kind of kilter, rather than the normal business of banking, which is extending credit and presenting credit. The thinking behind the plan is designed to accelerate that change,” Rabbitte said.