Scenarios For A Digital Europe

Wolfgang Kowalsky

A lot of hype has built up around digitalisation, in some Member States as well as in Brussels. On one side, the over-enthusiastic camp bases its assumptions on wishful thinking: digitalisation will bring a circular economy with less waste, better use of resources, fantastic opportunities for information, communication, connectedness and transparency, easier reconciliation of life and work and a new world of sharing and collaboration. The more apocalyptic camp predicts a gloomy future with dramatically high job losses, 24/7 availability, deteriorating working conditions, blurring of barriers between private and working life, increasing supervision and control, polarisation of jobs, widening wealth inequalities, and a new machine age with a global pool of workers competing against each other, leading to a race to the bottom in wages and working conditions.

The European Commission, under pressure from big groups such as Uber and Airbnb, leans more towards the euphoric side and, in the interests of the single market, tries to get rid of barriers to establishing a European digital single market better able to compete with its US and south east Asian rivals.

Where will digitalisation lead? Different trends are already detectable, and each one would lead towards a quite different vision of a future digital Europe. We will focus on six of them:

The first five: failed digitalisation

1. Internal causes scenario. This scenario would generate higher unemployment, a polarisation of employment, an increase in crowdworking and deregulation of working conditions. What role would the European Commission play? One option would be to muddle through and give priority to a technocentric and technological approach, with a mistaken focus on the fight against geo-blocking. This approach is based on the better regulation agenda in an unstable political environment in which populism and nationalism thrive and (economic and political) integration stalls.
2. Failure due to external drivers scenario. Under massive pressure from the US, China and other south east Asian countries, Europe lags further and further behind because of underinvestment. A collateral effect of this underinvestment would be Europe falling apart owing to a growing social malaise in many Member States. Following Brexit, there might be a Frexit, if Le Pen came to power, a Swexit, a D(anish)exit….
3. The narrow focus scenario. Some European regions or Member States would invest massively in digitisation of services and digital skills – others not. Discrepancies amongst Member States would increase rapidly. A more and more divided Europe would risk further disintegration in the context of an unresolved financial and debt crisis, a refugee crisis, and a deteriorating security environment.
4. The other narrow focus scenario. Some European regions or Member States would invest massively in digitisation of industry and digital skills of the workforce – others not – with the same consequences.
5. The market scenario. A laissez-faire approach would deepen the gap between a strong digital centre with high income and wealth on the one hand and an underdeveloped periphery with high unemployment and social unrest on the other. The European Commission would continue its austerity agenda in a context of secular stagnation.

Successful digitalisation: investment-led success

Massive investment would bring good, new digital jobs, and improved digital skills leading to more European cohesion and integration. The European Commission would adopt a horizontal approach, addressing social challenges such as rising social inequalities, and opt for large-scale investment bringing prosperity for all citizens so that market deficiencies could be easily corrected.

The latest Commission communication on “Digitising European Industries”) gives the impression that the Commission has changed strategy somewhat, from focusing purely on removing internal market barriers towards a cautious opening to the real world. The coordination of national digitalisation initiatives is now on the agenda, as well as stakeholder meetings to steer digitalisation in the right direction. The main focus is still on technical questions, but the opening implies that at least in the very last chapter of the communication the Commission no longer turns a blind eye to the challenges of the future of work. It is worried that Europe may lag behind the US and others, but the Commission itself is lagging a long way behind some Member States in developing a digitisation strategy for the future. The €50bn put on the table might soon appear like a drop in the ocean: too little but hopefully not too late.