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OECD Skills for the Digital Transition (2022)

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This report from OECD presents the most recent trends in the demand for those digital occupations, highlighting where labour market bottlenecks are emerging and policy action is – and will be – needed to support individuals to acquire digital skills to thrive in rapidly evolving labour markets and societies.

The granularity of the information used in this report enables to identify the specific skill demands of employers in each country and to support the design of labour market, education and training policies to respond effectively to current and forthcoming challenges. This report also targets the general public, by providing insights on the direction taken by labour markets and on what workers may need to expect in terms of skill demands in the near future so that their education and training decisions can be informed by knowledge of these recent trends.

This report focuses on Belgium, Canada, France, Germany, Italy, the Netherlands, the United Kingdom, the United States, Singapore and Spain. Among the digital occupations analysed, software developers, programmers and engineers, data scientists and data engineers have experienced some of the most notable rates of growth in most countries. 

Evidence for EU countries shows that job vacancies for digital professionals have been negatively affected by the strong decline in economic activity experienced during the COVID-19 pandemic. Despite this, even during the pandemic, some digital occupations have experienced a marked increase in the volume of vacancies relative to the pre-pandemic period in the EU. Looking forward, the demand for many digital professionals in the EU is foreseen to grow in the medium to long term, as the effects of the COVID-19 pandemic on labour markets are fully absorbed.

Evidence in this report also shows that digital jobs require a heterogeneous mix of technical and high-level cognitive skills:

  • database management skills are demanded by employers along with several other data-related and data analytics skills. Similarly, the analysis uncovers recent trends in the skill demands of digital occupations such as the increasing relevance of open source platforms and the knowledge of programming languages such as Java.
  • advanced data analysis skills such as the knowledge of machine learning, data science and data visualisation are at the core of the development and adoption of a variety of different digital technologies that leverage the use of the available digital data.
  • there is a strong increase in the demand for social media skills in labour markets as a whole and not only in occupations that are digital, suggesting that an increasing number of businesses are now hiring (or searching for) workers with skills in the area of social media management.

Finally, this report uses OJPs to identify the skill similarities between occupations and to determine what type of retraining would be needed to make a career transition from occupations whose employment projections are negative to others that are instead expected to grow in the future and that are digital in nature. Results show, for instance, that workers in “traditional” jobs such as advertising sales agents could retrain to become digital marketing specialists by acquiring training in the area of web analytics, online marketing, search engine optimisation (SEO), copywriting and related technical skills such as Semrush. Other retraining pathway examples are provided in the report.

The evidence contained in this report is key for governments to design targeted retraining and upskilling policies and for workers to benefit from the digital transition, thus supporting countries and individuals to thrive in future labour markets.

The AI Act: help or hindrance for SMEs?

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The technological development of artificial intelligence (AI) is proceeding rapidly, with investment in AI-based solutions dramatically increasing across the globe. Europe is no exception. Given the huge impact that these technologies have on citizens and their fundamental rights, regulatory practices must be put in place. The European Commission has a clear strategy in place to foster digital transformation and – in an effort to protect citizens’ fundamental rights – the digital space and AI are being increasingly regulated. To this end, in April 2021, the Commission proposed a regulatory framework on AI (the AI Act). To ensure the fairness and trustworthiness of all high-risk AI systems that are deployed within Europe, the AI Act will require AI systems to undergo compliance and conformity assessments, which will be costly for companies, especially SMEs. SMEs are at the forefront of innovation in Europe, but they are easily crippled by high costs of compliance, risking bearing an unsustainable burden.

The main objective of the study was to estimate the costs that SMEs would face to ensure compliance with the requirements of the AI Act. To do so, we envisioned the following four scenarios:

  • Scenario 1 adapted the IARR standard cost model – which calculates the total costs as the sum of compliance and conformity costs – to the modelled SME, dividing the total AI market value by the value of one AI unit, then multiplying it by compliance costs.
  • Despite following the standard cost model approach, Scenario 2 calculated compliance costs on the basis of R&D value instead of the total AI market value.
  • Scenario 3 provides an alternative approach whereby total costs are not calculated as a proportion of AI value, but rather, consist of software development costs and costs for compliance activities in relation to R&Ds.
  • A fourth scenario (Scenario 3b) builds on the assumptions of Scenario 3 and further includes cost savings for SMEs arising from the involvement of European Digital Innovation Hubs (EDIHs) and Testing and Experimentation Facilities (TEFs).

The results of the analysis show that if compliance costs are calculated as in Scenario 3 (€301,200), they are more than 10 times lower than costs calculated as a direct proportion of the AI market value (about €4 million in Scenario 1). When EDIHs and TEFs are included in the analysis (Scenario 3b), costs are expected to further drop (€229,444), as are the FTEs needed to comply with the requirements.

As has been demonstrated in this paper, EDIHs and TEFs will play a significant role in mitigating the costs of compliance for SMEs when adhering to the AI Act requirements. Timely involvement of EDIHs and TEFs – through the development of common technological, legal, and management services – is recommended to activate economies of scale and generate cost savings for SMEs when complying with the new requirements. Additional research on the benefits SMEs could enjoy from EDIHs and TEFs, would help make a stronger case for AI adoption.