1.2 million jobs in the Digital Industry for the first time
- Forecast: ITC sales increase by 1.5 percent to 172.2 billion euros in 2020
- Optimism: Business climate climbs to highest level since May 2019
- Programme: Bitkom presents "Digital Strategy 2025"
The digital industry continues to grow and will continue to increase its revenues in 2020. The German market for IT, telecommunications and consumer electronics is expected to grow this year by 1.5 percent to 172.2 billion euros. Companies in Germany are expected to create 39,000 additional jobs by the end of the year. This would mean that for the first time more than 1.2 million people would be employed in the industry. After subdued expectations in the second half of 2019, the business climate has recently brightened again. At 26.9 points, the Bitkom-ifo digital index climbed in December to its highest level since May 2019, the digital association Bitkom announced in Berlin at the start of the year. "Current debates about artificial intelligence, 5G networks and digital sovereignty show the enormous importance of the digital economy in Germany," says Bitkom President Achim Berg. "The stable growth of the Bitkom industry is an expression of the increasing digitalization of economy, state and society. This also and especially applies to the generally very difficult economic year 2019, which was marked by trade conflicts, economic slowdown and brexite dispute". Last year, the ITC market exceeded expectations. Revenues increased by 2.0 percent to 169.6 billion euros in 2019. At the beginning of the year, Bitkom had expected growth of 1.5 percent.
Digitization of the economy drives demand for information technology
Information technology continues to gain in importance as the largest segment of the industry. According to Bitkom calculations, sales in this sector will rise by 2.7 percent to 95.4 billion euros in 2020. The strongest growth is in the software sector with a plus of 6.4 percent to 27.6 billion euros. The market for IT services, including project business and IT consulting, is also showing above-average growth of 2.4 percent to 41.9 billion euros. "Companies are changing their organizational structure and developing digital strategies, which stimulates demand for IT consulting and software applications. In contrast, business with IT hardware is expected to decline slightly. Sales are expected to fall by 0.4 percent to 25.9 billion euros.
Telecommunication services are under pressure
Telecommunications is expected to continue the growth of the past two years. In 2020, the market is expected to grow by 0.9 percent to 68.8 billion euros. According to Bitkom calculations, 48.8 billion euros will be generated with telecommunications services, which corresponds to a moderate increase of 0.4 percent. The terminal equipment business will grow to EUR 12.8 billion (+2.5 percent). Investments in infrastructure will increase by 2.0 percent to EUR 7.2 billion. "Last year, network operators spent billions to purchase 5G frequencies at auction," says Berg. "Network operators' revenue growth is hovering around zero, while at the same time they are being asked to invest billions in the networks. The network operators are under massive pressure and now need stable investment conditions instead of constantly new discussions about the framework conditions for network expansion".
Consumer electronics in the red for the third year
The consumer electronics industry is still on the decline. According to Bitkom forecasts, sales will fall sharply for the third time in a row in 2020. The smallest ITC sub-market is expected to shrink this year by 7.0 percent to 8.0 billion euros. Berg: "The market for consumer electronics is currently largely saturated. Although prices are almost stable, consumers currently prefer to invest in smartphones or new services rather than in consumer electronics devices".
In 2019, 42,000 additional jobs were created in the Bitkom industry. "Digitization creates tens of thousands of new jobs every year and is the strongest employment engine in Germany. Since 2016, the Bitkom industry has created a good 200,000 additional jobs," says Berg. "The positive job balance is clouded solely by the lack of IT specialists, which is becoming increasingly acute." According to a current Bitkom study, 124,000 jobs for IT experts were unfilled at the end of last year. This is an increase of 51 percent compared to 2018 with 82,000 vacancies. "The problem of skilled workers is the brake on the digital industry and thus also on the entire German economy. Every unfilled position represents less growth, value creation and innovation - which sets us back in global competition," says Berg.
"Digital Strategy 2025" - Programme for Digital Germany
In order to help digitization to achieve a breakthrough in Germany, Bitkom has presented a "Digital Strategy 2025". Berg: "Germany is currently losing touch with the international pioneers of digitization such as Denmark, Singapore, China and the USA. The Digital Strategy 2025 is a critical review of the status quo and proposes concrete measures on how Germany can fundamentally and massively increase its digitisation capacity. The German system needs more than an update, it needs a restart". The Digital Strategy 2025 identifies four central fields of action:
- The federal government needs more educational competence, further education needs more recognition: In education, the federal government must be enabled to set nationwide minimum standards and to support and commit schools where they do not meet these minimum standards. Irrespective of this, continuing education and competences acquired outside formal educational pathways must be given much greater social and financial recognition. In the public sector, too, they must be easily recognised as a prerequisite for access to careers. The importance of further training must be given much greater political and communicative focus and must also be strengthened within the companies themselves.
- Creating the best infrastructures for the smart country:Germany needs first-class digital infrastructures: high-performance fibre-optic-based and mobile data networks, intelligent transport and energy networks and high-performance digital networks in smart cities and communities, administrations, security authorities and health and educational institutions. As the most important player, the public sector is called upon to take decisive action and must invest heavily. In addition to efficient support programmes, effective incentives for private investment should be created. Following the example of other countries, Germany should abolish the licensing requirement for standard infrastructure such as radio masts. This applies equally to the use of new and more efficient procedures for laying optical fibre. At the same time, traditional infrastructures in the transport and energy sectors should be digitally upgraded throughout the country.
- Our state - digital by design:As a leading user of digital technologies, the state is called upon to fundamentally restructure its administration. State structures and processes must be "digital by design" and must be digitally conceived from the outset. Existing analogue processes must be given an expiry date and thus terminated. As a side effect, this would counteract the worsening shortage of personnel in the public sector. Employees who would no longer be employed in administrative activities could, as digital street workers, help those who need support in the online world.
- Rethinking data policy: A functioning digital economy and an inclusive digital society need a new, holistic approach to data policy. Data is the basis of key digital technologies such as artificial intelligence and thus also of individual medicine, intelligent traffic control, needs-based educational offerings or, for example, Industry 4.0. From shoe size to the analysed genome, data of varying quality and criticality are currently being shorn from the same comb. This approach no longer does justice to the importance of data for a functioning community and an efficient economy. We need to take a new approach to balance the protection of personal data and the use of data.
Berg: "Digitalization is not the free programme, digitalization is our compulsory programme. We do not have to reinvent the wheel. Others have shown how digitization works, even under difficult conditions. Digitization is not waiting for us. Now it's: "Last Call: Germany!"
The detailed version of the Digital Strategy 2025 with proposals for all policy areas is available online at 2025digital.de.
Methodological note: Data from the European Information Technology Observatory (EITO) form the basis of the information provided. EITO (http://www.eito.com/) is a project of Bitkom Research GmbH in cooperation with the market research institute IDC. The Bitkom-ifo Digital Index is based on the monthly ifo business survey and is calculated from the geometric mean of the values for the business situation and business expectations. Data from the digital industry, which is made up of companies in the manufacturing, trade and service sectors, is taken into account. These include manufacturers of IT and communications technology, consumer electronics, providers of software and IT services, telecommunications services and the wholesale and retail trade in ICT. The weighting is based on the number of employees. The digital index and the other time series are presented as seasonally adjusted balances.