Cebit: Digitization set to become a jobkiller? | Business| Economy and finance news from a German perspective | DW | 14.03.2016
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Cebit: Digitization set to become a jobkiller?

Many German companies, studies show, are somewhat stick-in-the-muddy when it comes to digitization. Is this a sensibly conservative wait-and-see attitude, or does it put jobs at risk, asks DW's Andreas Becker at Cebit.

First the good news: There's WiFi at Hanover's Cebit trade fair, meaning free and fast Internet access. Now the bad news: To use it, you have to register with a 14-digit code that's hidden away in the fine print of your entry pass. Every four hours, you have to log in again anew. A simple and friction-free set-up? Nope.

But at least the access is available. The picture you see when you look at the availability of high-bandwidth Internet in many of Germany's rural regions is much darker. That's a problem, because there are a good many dynamic small and medium-sized enterprises (SMEs) based in small towns and villages, not a few of them machine engineering companies that sell their products worldwide. If such firms want to deepen their participation in the digital economy, lack of fast Internet access can present a barrier, according to Udo Ungeheuer, president of the Association of German Engineers (VDI).

"We simply cannot accept this. In terms of the completion of the high-speed, high-bandwidth internet infrastructure, we really must get on with connecting all of the country's regions," Ungeheuer told DW. "And we have to catch up faster than the competition - that's the challenge."

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At Cebit, Ungeheuer presented the results of a recent VDI survey of 1,000 experts. Nearly 50 percent judged that the competitiveness of Germany as an information technology hub was only average. In a similar survey four years ago, far fewer made such a downbeat assessment. In regards to new business models that depend on networks and online platforms, only 15 percent of the new survey's respondents took the view that Germany is well positioned.

Ready for the second half?

When it comes to the establishment of major online platforms whose clients are private individuals, the train has left the station, and Germany wasn't on it.

Amazon stand at CeBIT

The world-leading companies, Amazon and Alibaba, AirBnB or Uber, are all based in countries on the cutting edge of the digitized global economy

"Not a single one of the major digital platforms is based in Europe. Most are from the US, a couple is from China," said Thorsten Dirks, president of Bitkom, German's federal association for information technology.

That's why it's essential that German companies wake up and play a far better game in the second half, Dirks told DW, using a metaphor likely to resonate in football-mad Europe. "In the first half, the online game was all about offering products and services to consumers. In the second half, it's going to be about digitization of business clients, i.e. the digitization of our key leading industries. We can't afford to fall behind in the second half. We have to set the pace in order to win the second half," he said.

Playing catch-up

Bitkom presented a new study at Cebit as well. Two-thirds of firms surveyed said they were relative laggards at digitization, or even to have missed the boat. At the same time, two thirds took the view that their business models were facing pressure to change from digitization. Despite this, nine of ten firms see digitization more as an opportunity than a risk.

Thorsten Dirks names European aircraft maker Airbus as a positive example. In the past, the company had "a huge problem with warehousing, because it needed to keep a full assortment of spare parts at every airport in the world, in case any of them failed or needed replacing."

Today, "the aircraft sends an electronic message to a ground station whenever any part fails or needs swapping out, and as soon as the message is received, a 3D printer is powered up and the part is created on the spot," Dirks said. The result: Greater efficiency and flexibility, and much lower cost.

Is digitization a jobkiller?

What does the digital transformation mean for jobs? A study by the World Economic Forum presented in January painted a worrying picture: In the next five years, around five million workplaces could be lost to digitization in the major industrial nations.

VDI's own study is much less pessimistic. "The emerging challenges will generate new jobs, different ones than we've had. But on a net basis there won't be a big reduction," said VDI president Udo Ungeheuer.

That, at any rate, was the view taken by four of five survey respondents. Bitkom president Dirks is optimistic too. On the one hand, he admitted, digitization will make a lot of tasks now done by humans obsolete. "But in the end, I'm convinced, we'll have more jobs than beforehand," he said.

Symbolbild Fachkräftemangel in Deutschland

Many business leaders believe the German skills shortage can only be solved through migration. The question, however, remains if refugees from crisis-stricken countries can become the engineers and IT specialists of tomorrow.

Skilled workers and migrants

At present, many German companies have a quite different problem: They're looking for skilled IT workers, but aren't finding enough of them. The problem can only be solved by immigration and open borders within Europe, Dirks believes.

"We need integration, we need open borders, we need a united Europe," because it's only within an open, internally borderless Europe that German companies have a chance of developing the scale and strength needed to win in competitions against rivals from the USA or China, and thereby secure workplaces, he said.

Protectionism and closing the doors, as the new right-of-center populist AfD (Alternative for Germany) party is demanding - a party that gained substantially in three important state elections on the weekend - is "very dangerous," Dirks said. "One thing we definitely don't need and can't use is xenophobia."

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