Ireland could land a bonanza of 140,000 new jobs and boost GDP annual growth rate by 50pc if it moves swiftly to copper-fasten its position as one of Europe’s digital frontrunners by taking a lead in driving the EU’s Digital Single Market.
New research by Boston Consulting Group, commissioned by Google, identifies Europe’s Digital Frontrunners as Belgium, Denmark, Estonia, Finland, Ireland, Luxembourg, the Netherlands, Norway and Sweden.
These are countries that are driven, to a greater extent than others, by the ICT sector and economic activities related to the internet.
They have small populations, are relatively well-digitised, innovative and export-dependent, and are, therefore, more dependent on easy access to a large digital market in Europe.
‘Embracing digitisation and staying abreast of it is key to maintaining global competitiveness and creating jobs at all levels in society’
– NICLAS COLLIANDER, BOSTON CONSULTING GROUP
“Ireland’s e-GDP as a share of total GDP is the highest of comparable countries at over 12pc (excluding multinational corporations),” explained Niclas Colliander from Boston Consulting Group (BCG).
“This has been driven by a long-term articulated focus on offering ICT businesses an attractive climate and by providing a motivated and skilled labour force. Ireland, with a high share of well-developed digital businesses, has more to gain from digitisation compared to its peers.”
Boston Consulting said that Ireland is unique by virtue of its concentration of tech companies and well-developed digital economy.
But the opportunity to take a lead and profit from it could be fleeting.
“Embracing digitisation and staying abreast of it is key to maintaining global competitiveness and creating jobs at all levels in society,” Colliander said.
“This is even more important in light of the decision by the UK to leave the EU. The potential prize to Ireland is great – by increasing the impact of digital in the economy further, combining the effect of increased trade in an EU Digital Single Market (DSM) with the yet untapped potential of emerging digital technology, Ireland could increase annual GDP growth by almost 50pc until 2020, representing a value in excess of €27bn.”
‘The opportunity is for Ireland to become the world’s best country at leveraging digitisation and technology for economic growth and job creation’
– FIONNUALA MEEHAN, GOOGLE
Google’s managing director for EMEA Sales (SMB), Fionnuala Meehan, said that the EU’s Digital Single Market Strategy is a year old and Ireland needs to take stock of how it is targeting opportunities.
“The opportunity is for Ireland to become the world’s best country at leveraging digitisation and technology for economic growth and job creation,” she said.
“Google hopes that this analysis will kick off a debate on what is required to make it a reality, and that this will translate into action by all stakeholders”.
The net effect of digitisation
Even considering the jobs that will be displaced by automation and increased productivity, the overall impact will be an increase in employment.
Colliander said that new employment will be created as the Digital Single Market creates increased demand and new companies will emerge in digital.
The BCG Research estimates between 140,000 and 190,000 jobs could be created by 2020, corresponding to more than 6pc of the working population, if Ireland and Europe pursue the digitisation opportunity to its maximum extent.
He said that SMEs will be the key driver of the growth, representing 60pc of private sector GDP.
However, their weakness is they lag behind in terms of productivity and digitisation.
“A concern is that only 30pc of Irish SMEs are offering their services online and across the value chain from sales, production, operations and back office, SMEs are trailing behind larger companies in using digital and online tools,” said Colliander.
“As a result, an unnecessary gap between large and small enterprises has emerged with regards to potential productivity, efficiency, growth and profitability. Government support for digitisation in SMEs will help reduce this gap,” he said.
Strong political leadership with a clear agenda and roadmap to drive digital transformation in the Irish economy is required.
Suggested actions include enabling innovation, stimulating entrepreneurship, improving access to capital and policies to build the skills and talents of tomorrow.
“The Government needs to prioritise the right things and, given the importance of Ireland’s SMEs, there needs to be a strong focus on initiatives to drive the SME transition to digital and mobile-first,” said Colliander.
“Ireland can also drive digital entrepreneurship and growth in SMEs with a progressive policy approach to the sharing economy and new business models”.
The Minister for European Affairs, the EU Digital Single Market and Data Protection, Dara Murphy, TD, said that Ireland needs to build on its existing strengths.
“Getting the right EU framework in place, to boost access for consumers and businesses to digital goods and services across the continent, is critically important if we are to realise this potential.”