Digitalisation

The coronavirus has hit the world economy hard, with the lockdown having paralysed public life for weeks in many countries. But even with the lockdown easing up, hygiene and distance regulations still make it difficult to work together, shop, and use business services. Irene Bertschek explains what role the digitalisation of companies plays in their resilience to the crisis, and how different industries can react to the markedly changed conditions.

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Almost six per cent of all companies in Germany used artificial intelligence (AI) in 2019. These companies spent around 4.8 billion euros in the field of AI and employed 139,000 people who either fully or partially carried out AI activities. However, there is a lack of qualified personnel: almost one in two vacant AI positions could only be filled inadequately or not at all last year.

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Data play a crucial role in digital markets, including the market for mobile applications. At present, however, app markets are dominated by a few, highly successful and mostly free apps. Apps with high market shares operating in a weak competitive environment are more likely to collect large amounts of privacy-sensitive user data and share them with third parties.

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The digitisation of work has become one of the watchwords of the 21st century. As companies and markets keep up with rapid advances in the digital economy to stay competitive, sceptics fear that the automatization of labour will lead to massive job cuts. The ZEW labour market economist Melanie Arntz discusses what this means for workers and businesses in German and in Europe in general.

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Digital transformation is creating more jobs than it is destroying, but still poses many challenges for establishments and workers alike. To ensure that the German economy remains competitive in this arena, the government needs to take action. This is the main finding of a project focusing on the German labour market entitled “Digitalisation and the Future of Work”, which was carried out by ZEW and funded by the German Federal Ministry of Education and Research.

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Although digitalisation and automation will lead to moderate employment growth in Germany until 2021, they are also likely to increase income inequality among employees. Contrary to widespread public perception, technological change creates more jobs than it destroys. What is of central importance, however, is not so much the number of jobs affected as the structural change in the labour market, which is taking place as digitalisation and automation progresses.

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Our latest Lunch Debate focused on the way digitalisation affects labour markets as well.

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Search engines, social networks, comparison and rating portals, and other digital platforms are increasingly transforming our lives. They make intensive use of algorithmic decision-making, especially of machine learning. Those markets in which digital platforms occur as intermediaries or market participants are also increasingly influenced by algorithms and machine learning applications. Dr. Dominik Rehse, head of the Junior Research Group “Digital Market Design” explains the implications of this transformation.

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Introducing and issuing digital currencies such as Libra, as planned by Facebook, or Bitcoin without strict legal requirements is viewed critically by most financial market experts: around 88 per cent believe that the use of digital currencies without close regulatory supervision poses a threat to financial stability. This is the result of a special question featured in the most recent ZEW Financial Market Survey conducted with 193 financial market experts.

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