Southern Europe Makes Headway in the EU’s 2018 Digital Economy and Society Index

The EU has published its 2018 Digital Economy and Society Index, with Spain and Malta both achieving scores above the EU average. More broadly, the report shows how Southern Europe is moving towards greater digitisation.

Last month the European Commission published its annual Digital Economy and Society Index (DESI). The composite index tracks the EU and its member states’ performance across a variety of digital indicators in order to identify trends and weak points in the digitisation of European society, businesses, and governments. While Southern European countries have yet to break into the cluster of high performing countries, the region can boast of having experienced some of the best improvements across the EU.

DESI is composed of data that relates to five principal policy areas. This includes connectivity, human capital, the use of internet service, integration of digital technology and digital public surveys. With countries such as the United States, Canada, and Australia outpacing Europe’s digitisation, the findings of this report are key if Europe is to remain a competitive force in the global economy.

Spain stood out as the highest performing Southern European country. Specifically, it was one of just three EU member states to have increased its DESI score by more than 15 points this year. Of particular note is the progress Spain has made in terms of connectivity.  Currently, more than 83 percent of the population is covered by fiber networks and the country has recently announced a 5G spectrum auction. Therefore, it seems likely that Spain will continue to see impressive improvements in the pace and quality of its digitisation program.

Malta is the only other Southern European country to rank above the EU average DESI score. Highlighted in the report is the fact that Malta is the sole EU member state with full coverage of ultrafast broadband networks. It also ranks above the EU average in terms of the use of its internet services by citizens.

Part of Malta’s successful DESI performance can be attributed to its Digital Malta Strategy. The policy, which was launched in 2014, was designed with the goal of creating a “digitally enabled nation in all sectors of society”.  By focusing on regulation and legislation, infrastructure and human capital, Malta has managed to transform itself into a fintech hub and is now home to two of the largest cryptocurrency exchanges.

Denmark, Sweden, Finland, and the Netherlands currently have the most advanced digital economies in the EU followed by Luxembourg, Ireland, the UK, Belgium and Estonia. Copyright: European Commission Official Site

One area of common weakness across both the EU in general, and Southern Europe in particular, relates to the intersection of human capital and digitisation. DESI’s human capital indicator consists of two pillars – basic skills and usage as well as advanced skills and development. This year’s report shows that 43% of Europeans still don’t have basic digital skills. This represents just a one-percentage point decrease from 2017. The paltry improvement is worrisome as the quality of a country’s human capital determines how that country performs across other digital indicators.

To the credit of several Southern European countries, this skills deficiency is beginning to be addressed. For instance, Italy recently launched the Piano Nazionale Scuola Digitale, a digital school action plan that partners with industry to offer traineeships. This has helped increase the number of students with coding skills, which are increasingly relevant in the modern workplace.  Similarly, Portugal has teamed up with the European Commission to create a pilot education and training program with the specific goal of narrowing the country’s digital skills gap.

France is a notable outlier when it comes to the quality of its citizens’ digital skills. Overall, the country ranks 11th in terms of the quality of its basic and advanced digital skills. Underlying this successful performance is the fact that it has the 9th highest proportion of STEM (science, technology, engineering and mathematics) graduates in the EU. More recently, French policymakers have turned their attention to more vulnerable subsections of the country’s labour market. Last September the Macron government announced a plan to provide digital skills training to one million job seekers and one million school dropouts. The goal is to provide these workers with the sort of digital skills in demand by French businesses.

Southern Europe has shown that it is committed to digitising its economy. While there is still room for improvement, this years Digital Economy and Society Index shows that the region is moving in the right direction. With high performing countries like Spain and Malta paving the way, the region has the potential to reap the considerable financial and social benefits associated with increased digitisation.

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Katrina Pirner

Katrina is a Berlin-based freelance writer who focuses on economics, disruptive technology and politics. She’s previously worked in Canada, Italy, Belgium, and the US. Katrina holds a MA in International Relations from Johns Hopkins University where she concentrated in European political economy.

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