set the ambitious target for the EU to become, by 2010, c the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion d.<br><br> The intelligent use of ICT and of e-business ( ce-skills d) are major enablers to increase productivity and competitiveness, which are at the heart of the Lisbon strategy. This requires a skilled and adaptable labour force. The EITO 2001 Yearbook and several studies commissioned by the ICT industry highlighted the fact that the European industry is suffering from a significant e-skills gap.<br><br> This has initiated, at different levels, a policy debate about how to better promote e-skills in Europe, in order to fully reap the potential benefits of modern information and communication technologies. As a follow-up of the informal meeting of the Council of Ministers responsible for telecommunications and for employment in Luleå in February 2001, a specific Task Force on skills and mobility was set-up in June 2001. Based on their report of December 2001, the Commission adopted in February 2002 an Action Plan for skills and mobility d 1 .<br><br> In this Action Plan, the European Commission acknowledges the evidence of a cshortage in ICT occupations and sectors d as cone of the biggest concerns of enterprises d . Although the current business cycle and the economic downturn have somewhat alleviated this problem, the lack of skilled professionals in the e-business and ICT area seems to be a pertinent issue. Although the e-skills gap may no longer be as threatening as perceived two years ago, there is undoubtedly still an ICT skills mismatch as well as the risk that the current situation may result in future problems.<br><br> This would be the case if the current slowdown of growth in the ICT sector were to result in less effort to further improve the e-skills base. It should be recognised that the use of ICT and e-business are still growing, in particular in user industries which will in future need more ICT experts than ever. The challenge is to develop, nurture and attract talents as well as to strengthen human capital investment.<br><br> The current main issues encompass, on the demand side, clearly defining what e-business and ICT skills are needed, thereafter enabling forecasting and scenarios exercises. On the supply side, the challenges lie in the provision of a sufficient volume of skilled labour, with accurate and up-to-date knowledge that matches the demand requirements. Last but not least, the supply of talented and skilled people needs to be scalable and sustainable over-time.<br><br> In the scope of the eEurope GoDigital initiative, the Commission has established an ICT Skills Monitoring Group with representatives of Member States to better understand the nature of the proclaimed e-skills gap and to identify good policy responses to improve the availability of ICT skills. This report presents the results of this work. 1.<br><br> Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and The Committee of the Regions : Commission's Action Plan for Skills and Mobility Com(2002) 72. Brussels 13.2.2002 2 It has to be acknowledged that it proved to be very difficult to find a common definition for the e-skills gap. Therefore, the statistical basis for policy initiatives in support of e-skills has to be considered as rather weak.<br><br> This applies in particular to the problem of identifying and defining the necessary e-skills for user industries or the needs for cdigital literacy d in general. It should be assumed that half of the total workforce will need to be trained in order to enable an effective use of ICT and e- business. Taking into account, that both the nature and the size of the policy challenge remain widely undefined, it is very difficult to identify cbest d policies in support of e-skills in Europe.<br><br> Therefore, this report is limited to an analysis of existing policies in this area, which are considered to represent good examples for addressing the issue of the e- skills gap. More research is needed to benchmark such policies and to draw general lessons to be learnt from them. 3 1 The problem of the e-skills gap: definitions and measurement There is strong evidence of the particular role of information and communication technologies (ICT) in driving productivity growth 2 .<br><br> The use of ICT is an important tool for enterprises to re-engineer their business models and practices. Furthermore, ICTs are considered as an acceleration factor for innovation. The widest possible diffusion of ICT is therefore essential for enterprises to remain competitive.<br><br> This applies both to new enterprises and to traditional ones. The end of the dot.com era has by no means had a fundamental impact on the effect of ICT on the economy as a whole. Apart from the dissemination of ICT across all sectors, deep organisational changes are required and new skills are needed to fully exploit the new technologies.<br><br> What matters most in a knowledge-based society are people and ideas, and the ability to make commercial use of them. One of the main challenges is therefore to identify, measure, forecast, and finally to provide the necessary e-skills to ensure economic and social sustainability. 1.1 The definition of ICT and e-business skills ( ce-skills d) The still strong growth of ICT industries and services and the further diffusion of these new technologies throughout many other business sectors are generating new skills requirements.<br><br> These span from professional skills to user skills and basic ICT literacy, known as digital literacy. It is important to clearly understand these different concepts in order to define and to measure possible skills gaps and shortages, which may result in different policy challenges and solutions. 1.1.1 Professional ICT skills at the core Professional skills are understood as the ability to use advanced ICT tools and/or to develop, repair and create them.<br><br> The main elements driving the demand for such skills are the growing importance of Internet technology, telecommunications devices and infrastructure and the increasing use of these technologies to re-engineer business processes and to raise productivity. Until 2001, the ICT sector was among the highest growing segments of knowledge- based employment. Overall, the knowledge-intensive and high-tech sectors were the main drivers of employment in the EU with 60% of all jobs created between 1995 and 2000, and 1.6 million new net jobs in 2000 alone 3 .<br><br> Employment in ccomputer and related activities d 3 one of the several components of these sectors 3 grew at yearly rates above 13% 4 and itself created 1.16 million net jobs between 1995 and 2001. 2 European Competitiveness Report 2002 - SEC(2002) 528 - 21.05.2002 3 For an extensive analysis of employment in knowledge-based economy see European Commission, Employment in Europe 2002 ISBN 92-89403888-6 4 According to the LSF-EUROSTAT terminology. 4 The Eurostat Labour Force Survey data in 2002 estimated that around 1.77 million ICT practitioners are employed in ICT (supply) and ICT (user) organisations 5 .<br><br> This constitutes around 1.3% of the labour force and can be perceived as a conservative estimate as the occupational groupings used are only a subset of all the types of workers involved in information technology. As well as classic employment statistics, most commonly presented according to standard occupational groupings, other systems have been developed which attempt to classify professional skills in this field. Two examples are, by domain (such as Networking, Distributed IT, etc.) or by job profiles (such as Software Engineers, Computer Operators, etc.).<br><br> " The IDC (EITO 6 ) 8domain 9 approach firstly classifies the skills broadly as ICT skills, e-business skills and call centre skills; the ICT skills category is further divided into Networking, Host-based, Distributed IT, Applications, Technology Neutral. These definitions were devised by EITO in order to undertake an in- depth quantitative and qualitative analysis on ICT skills in Western Europe in 2001. According to IDC, demand will be especially strong in three key areas: networking, applications and distributed ICT skills.<br><br> " The 8job profile 9 Career-space consortium measurement uses a classification system based on the nine SOC-90 categories 7 used in the UK. These categories cover all the 13 "generic job profiles" 8 defined by the Career-Space initiative and the main job areas for which the ICT industry is experiencing skills shortages. These core profiles describe the jobs, setting out the vision, role and lifestyle associated with them.<br><br> The specific technology areas and tasks associated with each job are also outlined, as well as the level of behavioural and technical skills required to carry out the profiled jobs. According to the Career-Space measurement the fastest growing ICT occupations are software engineers, analysts and programmers 9 . These two different approaches are equally valid, one looking at the problem from the point of view of industry and skills needs (demand), the other from the perspective of the labour market (supply).<br><br> Both approaches move on from established employment classifications based around sectors, which are naturally easier to define. Both the 8domain 9 approach 9 and 8job category 9 approach relate to skills that are needed in the labour force. This is fully reflective of the progression of ICT from a sector, to a set of specialist skills that are needed across all sectors.<br><br> 5 Taken from the CEPIS report cInformation Technology Practitioner Skills in Europe d which uses Eurostat data (2000) 6 European Information Technology Observatory 7 The Standard Occupational Classification was first introduced by the UK Office for National Statistics in 1990 to provide a systematic and consistent way to group and analyse occupational data collected by government surveys. www.statistics.gov.uk 8 The job profiles can be found at http://www.career-space.com/cdguide/index.htm . 9 This suffers from errors that arise from assuming that the European level of employment shortages can predicted based on a UK classification system 5 The Netherlands - The GRIP project With a move towards lifelong learning and the mobility of workers many questions have been raised about how to interpret jobs, skills and educational profiles in a pan-European environment.<br><br> Europe has a variety of standards not only between countries but also between regions where the economic, cultural and social environments are diverse. GRIP is a project in the Netherlands which is looking at addressing these issues through the provision of a toolkit which facilitates the comparison of (job) profiles and educational profiles. GRIP is a means of facilitating and improving communication between employers, HR managers, educational staff, students and others, about all kind of existing profiles.<br><br> GRIP is a method of analysing profiles, using the toolkit to help make comparable mappings. Originally in the GRIP project, two profiles were published. One was devised by a group of 27 ICT departments in universities and the other by FENIT, the Federation of Dutch ICT companies.<br><br> The first set of profiles were followed by a pilot study attempting to map these two different ways of describing skills and competencies. In November 2001 a second project started, to improve on the original work. GRIP is offering a tool for the better understanding of profiles, wherever their origin.<br><br> In September 2002 national and international experiments and tryouts in industry and education started that will last for six months. ICT specialists can be found in organisations across the whole of the economy as many make use of ICT or have 8IT 9 10 departments that employ ICT experts. In many countries the number of ICT experts employed outside the ICT sector is much greater than the numbers employed in ICT companies 11 .<br><br> It is these highly specialised computer skills that are at the heart of the problem and where the majority of data can be found. However, in addition, there are a number of people employed in jobs across other sectors who are using ICTs at an advanced level in their work and are not classified as ICT or computer experts. 1.1.2 User needs for ICT expertise are growing steadily User skills refer to the ability to use or apply ICT tools in general workplace situations that are not related to the ICT sector, such as banking and stores.<br><br> The rapid diffusion of ICT and the resulting re-engineering of business processes drive the demand for such ICT skills. Supply Chain Management and Customer Relationship Management are examples of activities where professionals with no ICT sector experience have to adapt to the use of ICT solutions to increase productivity and competitiveness. There are currently very few formal definitions of user skills although there is a high level of commitment at the European level and Member State level to increase the number of people with user skills.<br><br> CEPIS 12 for example is committed to working to achieve 8a high level of user skills within the European workforce 9, but does not define them explicitly. 10 Here we use ICT and IT interchangeably. The IT sector is now often referred to as the ICT sector although departments are often still called IT departments.<br><br> 11 Council of European Professional Informatics Societies (CEPIS) report on IT practitioners in Europe 12 Council of European Professional Informatics Societies 6 The EITO 2002 report classifies user skills as 8e-business skills 9 or skills of those employed in business positions with intensive logical/physical use of the Internet and requiring a wide variety of non-technical skills. EITO 2002 states that there is a high demand for these types of user skills within bricks and mortar companies, especially in the Business to Business (B2B) areas. There is also a need to develop effective online content and this remains a key driver for skills demand in this area.<br><br> Although 8user skills 9 are not just found in the 8user industry 9, figures from the EITO 2001 report estimate that at the European Union level over 8 million people are employed in the ICT user industries, mainly banking, manufacturing industries, commerce, insurance, communications and business services. Users skills are clearly an area of growing importance across all industry sectors. Evidence at the national level shows a similar situation.<br><br> The UK 8e-skills UK Ltd 9, the industry representative body responsible for addressing the IT and telecoms skills needs of employers in the UK, recently reported in its 8Employers report 9 that a generic gap in ICT user skills amongst current employees is, after occupationally- specific skills, one of the most significant problems they face. Nearly one-third of employers believe the skills gap has a major effect on losing business or orders, and around half of employers believe that the failure to train is the main reason for the existence of skills gaps. In terms of projections, to maintain the current ICT user levels of 75% means that the number of ICT users will need to increase by 1.6 million by 2009 and to increase this to 95% there would need to be 7.3 million users of ICT in the workplace 13 .<br><br> In 2002, the e-skills Italian 14 labour market statistical service Excelsior gave an overview of some of the current statistics associated with shortages in both firms dedicated to providing ICT goods and services and those in dedicated ICT roles in the economy more generally. In general, Italian manufacturers and suppliers will need a total of about 685,000 workers for 2002 of which approximately 3.2% will need a technical profile. This gap adds up to approximately 21,000 ICT skills workers.<br><br> Additionally, the report states that around another 4.8% of these workers are needed in more general ICT roles, for instance those within ICT services maintenance and assembly/information of technological products or administrative ICT roles. In Germany, a recent report from the German Institute for Occupational Research (IAB) estimates that around 3 million people work in occupations that use ICT skills in an advanced way as part of their job, representing 8% of the total workforce 15 . As well as advanced users of ICT, technology is of increasing importance in generic workforce settings as well in schools, universities and at home.<br><br> Everyday activities have been transformed by ICT and as a result there is a growing need for all citizens to acquire a basic knowledge of ICT termed 8digital literacy 9. 13 These figures include basic ICT users in the workforce. 14 A service implemented from the Ministry of Labour- aiming to improve the competitiveness of Italian business by delivering statistics focusing on the 8e-skills 9 available in the current and future workforce.<br><br> 15 IABKurzbericht Ausgabe Nr 19 / 21.8.2002 7 1.1.3 Digital literacy and the risk of social divide Digital literacy relates to the ability to grasp and use information as presented on a computer installation (audio, video, text, etc.). Being digitally literate implies being able to search and retrieve information, to navigate and communicate on-line, to participate in digital, and virtual communities. It is perceived as a key element in the battle to overcome social exclusion and divisions in European society.<br><br> According to ESDIS, the European Commission High Level Group on the Employment and Social Dimension of the Information Society 16 , basic ICT usage for work increased by a fifth in the EU and more than half of EU workers use computers for their jobs, and this number is continuously growing. Although this number is high and Internet usage has been increasing across all socio-economic sectors, the 8access gaps 9 3 for example those between men and women, employed and unemployed, high and low income groups 3 has grown in absolute terms since 2001 17 . Also, less than a third of the EU labour force has ever received any ICT training and only 4% of low- income earners (3% for female) have ever received training paid for by their employer.<br><br> The 8Strategies for Jobs in the Information Society 9 18 therefore highlights the importance of widespread digital literacy and set out key areas of progress to help people make greater use of ICT to enter or re-enter the labour market and improve the adaptability of workers at risk of losing their jobs. These numbers are reflected at Member State level and a recent report from the Bundesanstalt für Arbeit (German Institute for Occupational Research) reported that in Germany, around 50% of the total workforce, use PCs in their jobs. Overall it is, however, difficult to separate figures of ICT users at an advanced level, who are not ICT professionals, from digital literacy figures.<br><br> In many instances the figures presented only count the number of people who use a PC in the work force per se, without recognising that there are different levels of PC usage. It also assumes that PC users are digitally literate and since 50% of the workforce use a PC and only one third have ever received training, this may not be the case. A survey 19 was recently carried out for the European Commission (DG Enterprise) which looked at 15 industry sectors.<br><br> This scoreboard of e-business indicators is based on the European e-Business Survey, a cornerstone of the monitoring activities of the e-Business W@tch . The fieldwork of this enterprise survey was carried out in June and July 2002, covering in total, about 10,000 interviews with decision makers in European enterprises. The survey showed that in nearly all sectors, employees have access to e-mail and the Internet.<br><br> Among the strongest ICT users are, as one would expect, the telecommunication and computer services sector, followed by a traditional sector in manufacturing (electrical machinery) and a service sector, the insurance and pension funding services. However, only in retail and health and social services do less than 60 % of the employees use e-mail for external communications. These figures apply 16 http://europa.eu.int/comm/employment_social/soc-dial/info_soc/esdis/ 17 e-Inclusion, The Information Society 9s potential for social inclusion in Europe, with data from Eurobarometer June 2001.<br><br> 18 Information Society jobs 3 Quality for Change 3 ESDIS/02/05 19 Scoreboard of e-Business Indicators:Benchmarking 15 industry sectors. Chart Annex to the Quarterly Report 3/2002 of the e-Business W@tch 8 to the four biggest economies in Europe. Overall it is estimated that half of the workforce uses a computer in its work.<br><br> Exhibit 1 Access of employees to ICT (% of employees having access) 0 10 20 30 40 50 60 70 80 90 100 1) Food, beverages and tobacco 2) Publishing, printing & audiovisual services 3) Chemical industries 4) Metal products 5) Machinery and equipment 6) Electrical machinery and electronics 7) Transport equipment manufacturing 8) Retail 9) Tourism 10) Financial sector 11) Insurance and pension funding services 12) Real estate activities 13) Business services 14) Telecommunications and computer services 15) Health and social services Total (EU4) e-mail for external communication www Computational base: all enterprises (EU4, employment weighted) In addition, the results of the survey show that, on average, in Germany, France, Italy and the UK 69 employees per 1000 are occupied with the maintenance of IT and networks, and 26 with the maintenance of company web site. The most ICT intensive sectors are real estate, telecommunication and computer services, retail, business services and health and social services. It is striking that telecoms and computer services do not come first here, and that ICT and e-business are indeed spreading across all sectors.<br><br> Raising productivity across the European economy therefore implies the further improvement of the ICT and e-business usage and diffusion to all sectors, beyond the ICT sector. 9 Exhibit 2 Average size of the IT / web department: Staff per 1000 employees (2002) 0 10 20 30 40 50 60 70 80 90 100 110 120 130 1) Food, beverages and tobacco 2) Publishing, printing & audiovisual services 3) Chemical industries 4) Metal products 5) Machinery and equipment 6) Electrical machinery and electronics 7) Transport equipment manufacturing 8) Retail 9) Tourism 10) Financial sector 11) Insurance and pension funding services 12) Real estate activities 13) Business services 14) Telecommunications and computer services 15) Health and social services Total (EU 4) No. of employees mainly occupied with maintenance of IT and networks (per 1000) No.of employees mainly occupied with maintenance of company web site (per 1000) 1.2 The demand and supply for ICT and e-business skills Employment figures over time can give an interesting insight into the trends of supply and demand in industry sectors and therefore the ICT sector.<br><br> If the number of ICT experts in Europe in employment, the number needed and the number unemployed can be measured then an estimate of the overall gap can be achieved. This chapter brings together some of the available data on employment in Europe, builds a concept of the 8e-skills gap 9 and gives some of the current 8gap 9 estimates that are available. Although unemployment figures will also have a bearing on the skills gap, there are no figures available for unemployment in ICT-related jobs across Europe.<br><br> 1.2.1 Employment and unemployment of ICT professionals: the statistical picture Eurostat figures for 2001 estimate that over 4 million persons are employed in the ICT sector in the European Union. The numbers, however, only relate to occupations within the ICT sector. As many ICT experts work outside the sector, these statistics are much lower than the actual figure.<br><br> Career-Space 20 used IBM data in 2000 which suggested that there were nearly 6.5 million ICT jobs in Western Europe out of a total of nearly 167 million jobs, or just under four per cent of aggregate employment. The EITO 2002 report also provides another estimate of roughly 10 million people employed as ICT staff in Europe, a much larger number, and even this is considered to be an underestimate since they draw only on big companies for their information and ignore the many thousands of SMEs. 20 http://www.career-space.com 10 There are no figures at the European level that estimate the number of unemployed ICT experts.<br><br> However, the recent report on Employment in Europe 2002 21 gives an estimate of layoffs in the telecommunications and ICT industry between May 2001 and July 2002 of around 250,000 in Western Europe. At the Member State level, an example of unemployment figures can be found in the German IAB Study by the Bundesanstalt für Arbeit 22 . In Germany, unemployment figures for ICT professionals in 2001 are not only increasing, but are increasing at a higher rate than any other sector in the economy.<br><br> There is also evidence to suggest that ICT workers need to have a broader range of skills than just ICT expertise and this is hampering employment opportunities. The survey also shows that although demand for ICT professionals has fallen, it is still high. Figures from the UK 23 show projections for employment within ICT firms and suggest growth in the industry workforce of around 7.0% over the 3 years from June 2002.<br><br> Growth will concentrate in ICT firms (9.1%) whilst employment within telecommunications businesses will increase by just 2.5% over the period 2002-2005. Overall employment within ICT manufacturing companies is predicted to decline over the next 3 years by around 2.7% compared to an increase of 8.0% in the ICT services sector. This probably reflects the move from the manufacture and supply of equipment to its use in businesses.<br><br> During the second quarter of 2002 around 18,000 people were made redundant from ICT industries and around 14,000 ICT staff from all industries. The unemployment rate during the same period was at around 5.7% for the ICT industry and 4.1% for ICT staff across all industries, higher than the national average. In Spain, a country not so badly affected by the ICT skills shortage, the Enterprise association ANIEL reports that over 20,000 employees within the ICT sector have been made redundant since January 2002 24 .<br><br> This figure accounted for approximately 20% of all ICT industry employees. However, as well as these redundancies, figures from the PAFET study 25 state that approximately 12,100 8ICT qualified staff d are needed in the market to cover shortages until 2003. This figure is already practically covered with the graduates coming out of the education system (14,000 will graduate in 2003, with university degrees related to ICT).<br><br> SEDISI 26 another Spanish Enterprise Association, reports a 9.2% growth rate in ICT employment in Spain in 2002. In conclusion, the lack of coherent employment and unemployment statistics in the European Union means that concrete figures cannot be put forward to indicate the demand for e-skills. However, the rate of unemployment of ICT professionals in the ICT sector seems to be increasing, whilst the demand from user industries is also increasing.<br><br> This displacement suggests a growing skills gap between the needs of user businesses (business skills allied with ICT experience) and the available labour pool 21 Directorate-General for Employment July 2002 22 IABKurzbericht Ausgabe Nr 19 / 21.8.2002 23 E-Skills UK Bulletin June 2002 24 Report July 2002 25 The PAFET study 2001 forecasting skills needs in Spain was developed by the Department of Telematic Engineering Systems at the Polytechnical University of Madrid, directed by Professor Gonzalo Leon. 26 SEDISI is a Spanish Enterprise Association 11 (ICT sector skills). This further suggests that there is a need to develop more business-related skills which are not currently present in the available labour pool.<br><br> 1.2.2 The concept of an e-skills gap Employment and unemployment statistics, where available, only go part way to explaining the shortage of e-skills within Europe. Firstly, there are differing concepts and survey samples that tend to distort measurements, and national unemployment figures are subject to national rules and administrative procedures. Secondly, the way that unemployment and employment figures are calculated does not take into consideration the growing number of workers who use ICTs in the workforce but are not classified at 8computer workers 9 or working in the ICT sector.<br><br> Because of the rapid expansion in use of ICT these figures are also out of date as soon as they are published, something that is a particular problem for the ICT and ICT user industries when attempting to track trends. Another type of measurement that is being used to measure the e-skills 8gap 9 is the discrepancy between the demand for, and the supply of, ICT skilled people in various business sectors in both user and professional skills. This gap is usually quantitative in nature, rather than qualitative.<br><br> A similar concept which is also frequently referred to is the e-skills 8mismatch 9 , the differences between the skills being acquired by people and the skills actually required by employers. The 8mismatch 9 is of a more qualitative nature than 8gap 9 measurements. The available statistics on the measurement of the e-skills 8gap 9 focus on professional e-skills, representing only a small segment of the e-skills needed by European enterprises.<br><br> As there is an absence of more general data, in particular relating to user skills in non-ICT sectors and also digital literacy gaps, the data presented in this report is necessarily focused on skilled professionals within the ICT sector. The intention is not to show any prioritisation of problems and data in the ICT industry, it is simply the result of a lack of data. The ICT professional skills gap is being measured by a number of different stakeholders including, the ICT industry, industry organisations (with support from the European Commission) and by some Member State Governments at their National level.<br><br> There are a number of different methodologies being used by the stakeholders who are measuring the gap. These differences start with the skills definitions outlined in the previous section and include a range of sophisticated methods of economic modelling. These methods sometimes show confusion, as already stated, between the concept of an e-skills 8gap 9 and a 8mismatch 9.<br><br> The gap is generally defined as a lack of balance and can be represented as: Size Gap = Demand 3 Supply Where: Size Gap represents the size of the gap, Demand represents the number of demanded people with the relevant skills, Supply is the number of people having the relevant skills. 12 In order to reduce the size of a gap, actions can therefore either target a reduction of the demand and/or an increase in the supply. In the particular case of ICT and e- business skills, policies necessarily focus on increasing the supply, since ICT diffusion (which implies an increasing demand) is considered to be an important success factor in taking Europe to the top in global competitiveness.<br><br> The issue at hand comprises two dimensions: demand and supply. The current main challenges encompass: on the demand side, to clearly define what e-business and ICT skills are, thereafter enabling forecasting exercises. On the supply side, the current challenges lie in the provision of a sufficient volume of skilled labour, with accurate and up-to-date knowledge that matches the demand requirements.<br><br> Last but not least, the supply needs to be sustainable over time. 1.2.3 Quantitative estimates of the e-skills gap One of the most cited studies showing evidence of an ICT and e-business skills gap and mismatch is a study published by IDC in 2000 27 . This study forecasts that the size of the ICT skills gap and mismatch will reach 1.7 million ICT professionals and 2 million e-business workers in Western Europe by 2003 .<br><br> These figures have largely influenced the political debate on e-skills since then. The IDC study identified as the main drivers of future demand the growing importance of Internet technology, telecommunications devices and infrastructure as well as the increasing use of Internet technology as a foundation for business processes. The main industrial growth sectors in Europe in these respects were expected to be services and distribution.<br><br> However, during the second half of 2001, the global economy experienced a serious economic slowdown with slower economic growth in all Member States and increased unemployment also in the ICT sector. The question is therefore, to what extent has the situation changed since then and how can it be measured effectively? A new IDC study 28 published in July 2002 provides updated figures.<br><br> The estimated size of the gap in the supply of skilled ICT professionals stood at 1.1 million in 2001 and is not now expected to reach 1.7 million until 2005. Exhibit 3 shows the projected development of supply and demand for the period between 2002 and 2005. Following this study, a consistent unbalance of supply over demand of 12% may be expected.<br><br> Exhibit 3 Western European Total ICT Skills Shortage, 2002-2005 2002 2003 2004 2005 Demand 11,837,533 12,874,484 13,614,357 14,302,430 Supply 10,580,954 11,288,395 11,974,980 12,634,371 Shortage 1,256,579 1,586,089 1,639,377 1,668,058 % Shortage 11% 12% 12% 12% Source: IDC, 2002 27 The Economic Impact of an IT Skills Gap in Western Europe IDC 2000 28 "Despite Weak Economy, Skilled ICT Staff Still Needed in Europe: An IDC White Paper, Sponsored by CompTIA and VUE", 2002. 13 A decreasing, but still substantial skills gap and mismatch is also predicted by other sources. The Council of European Professional Informatics Societies (CEPIS) 29 , recently published a report cInformation Technology Practitioner Skills in Europe d.<br><br> The future development of the size of the ICT practitioner workforce is explored, using differing employment growth scenarios ranging between 2% and 15%. The resulting predictions (initially based on data for Germany, Ireland, Sweden and the UK, then extrapolated for the EU) have led to a set of cumulative demand figures that are generally lower than the IDC estimates when viewed from the basis of comparable growth rates. Exhibit 4 CEPIS Demand Figures for the EU for the Four Years 2001-2005 Underlying Growth 2% 583,000 5% 912,000 10% 1,505,000 15% 2,592,000 From these studies and sets of figures, it is obvious that, as already outlined, a commonly agreed framework is missing in order to reliably and predictably measure and forecast the perceived ICT and e-business skills gap and mismatch.<br><br> This lack of agreed methodology makes it difficult to assess the impact of the initiatives that are taken by the various stakeholders. It is also interesting to note that these figures do not give a full picture of the challenges faced by Europe. Indeed, professional skills 30 are the focus of the cited studies, while user skills and digital literacy are omitted.<br><br> 1.2.4 Difficulties in recruiting ICT specialists: a sectoral analysis On the basis of work published as part of the European e-Business Survey, a component of the monitoring activities of the e-Business W@tch , one can attempt to discern which sectors have so far reported the greatest difficulties in recruiting ICT specialists. The findings are based on the results of sectoral reports published as part of e-Business W@tch , which were primarily concerned with the benchmarking of progress of e-business development across sectors and Member States. Where possible, the findings relate to the EU-4 countries (Germany, France, Italy and the UK), which represent more than 60% of the market volume in all the sectors analysed (in most sectors more than 70%).<br><br> Obviously using this data to analyse e-skills issues across the various sectors has certain limitations as the raw data is primarily concerned with issues relating to e- business rather than an assessment of the (more general) ICT skills base in particular sectors. In addition the data set on sectors is not complete and the sectoral data are not uniform in format. However, some interesting initial conclusions can be drawn from this work.<br><br> 29 cInformation Technology Practitioner Skills in Europe: Study of the Labour Market position, in particular for Germany, Ireland, Sweden and the UK", CEPIS, May 2002. 30 Around 80% of ICT staff work in user industries according to Uni-Europa paper cEmployment in the European ICT sector and Green-Cards d, 5 September 2000. 14 Considerable differences can be found across sectors both in terms of demand for IT professionals and regarding difficulties in satisfying demand: " The ICT services sector (telecommunications, computer services) and the financial sector (credit and leasing institutes and insurance companies) report the highest demand for ICT professionals (more than half of companies having recruited or tried to recruit in the past 12 months).<br><br> This is despite heavy lay-offs in the ICT sector. Other sectors with a strong demand are the financial sector, the electrical machinery and electronics, and the transport equipment manufacturing. This suggests that the demand for ICT and e-business skills is spread across the whole of industry 3 manufacturing as well as services 3 and not only dominant in the ICT sector.<br><br> " However, these are not the sectors reporting the most difficulties in finding ICT staff. The machinery manufacturing sectors report the greatest difficulties. In general it seems that sectors less traditionally associated with ICT skills needs have some of the greatest difficulties in recruitment.<br><br> Exhibit 5 Recruitment difficulties by sector 31 0 10 20 30 40 50 60 70 Food, beverages and tobacco Media & printing Chemical industries Metal products Machinery and equipment Electrical machinery and electronics Transport equipment manufacturing Retail Tourism Credit institutions Insurance and pension funding Real estate activities Business services Telecom. and computer services Health and social services Total (EU-4) Companies having recruited or tried to recruit staff with special IT skills Have experienced great difficulties Have experienced some difficulties There are also some differences depending on the size of the enterprises, with a majority of large companies (250+ employees) more or less constantly recruiting ICT professionals, but only a smaller percentage of SMEs. However, there is hardly any difference across the size classes in terms of difficulties experienced in recruiting ICT professionals.<br><br> About half of the enterprises which recruited or wanted to recruit report great or some difficulties in doing so. 31 Computational base: (1) all enterprises, (2 and 3) enterprises having recruited or tried to recruit specialists Data are employment weighted, i.e. should be read as "enterprises representing &% of employees" 15 IT skills gap 32 EU-4 (D, F, I, UK) Companies having recruited or tried to recruit staff with special IT skills (1) Have experienced great difficulties (2) Have experienced some difficulties (2) 0 3 49 employees 11.6 21.8 23.4 50 3 249 employees 27.5 13.5 32.1 250+ employees 50.2 12.4 37.0 Total (EU-4) 29.3 14.4 34.3 The available sectoral data from the e-Business W@tch clearly suggests that the importance of the e-skills gap varies from sector to sector.<br><br> Therefore, a more detailed analysis of the different sectoral needs and constraints is necessary before drawing policy conclusions on how to assist enterprises in closing the gap. This is illustrated by the following examples: Media and printing The media and printing sector shows generally high levels of IT equipment usage (above EU-4 average), with large and small businesses providing 100% and 74.3% support of ICT and networking skills development respectively. Results indicate that ICT skills training in this field is in hand since formal training in this sector is not considered to be very important, particularly amongst small firms who may be prevented from engaging in this form of training due to the need for extensive and continual investment requirements.<br><br> On-the-job learning is the most favoured training strategy particularly by large firms, followed by self-learning activities. Although the proportion of companies trying to recruit was similar to the mean, the level of difficulties expressed (some or great difficulties) was slightly higher. Business Services This sector shows comparatively high IT usage rates with 99.6% and 77.2% of large and small firms providing support of IT and networking skills development respectively.<br><br> On-the-job learning is considered to be the most important mode of training, followed by self-learning and formal training schemes, where 65.1%, 35.2% and 20% of firms rated them as being very important respectively. These findings are fairly consistent with increasing firm size, though self-learning activities for large firms are found to be lower than average. Again, although the proportion of companies trying to recruit was similar to the mean, the level of difficulties expressed (some or great difficulties) was slightly higher.<br><br> Metals Metal product firms in Europe consider the support of ICT skills an important issue with 74.6%, 89.5%, 68.4% and 78.4% of German, French, Italian and UK firms supporting IT and networking skills development respectively. Firms in this sector favour training by third parties, with the exception of Italy, which prefers in-house training. In addition, on-the-job learning is the most favoured mode of training (especially in the UK) with 42.6%, 44.5%, 63.8% and 68.6% of firms in Germany, France, Italy and the UK rating this to be very important.<br><br> Self-learning activities were the second most preferred mode of training, followed by formal training, the least popular, especially in Italy. 32 As above 16 Interestingly, self-learning was found to be only marginally less important than on- the-job training for all countries with the exception of the UK where almost twice as many firms preferred on-the-job learning to self-learning. The share of firms that have recruited (or tried) to recruit ICT specialists in the last twelve months is relatively small (increasing with firm size with the exception of France where small and large firm recruitment stands at almost three times the recruitment for medium sized firms).<br><br> However, German and UK small firms have been relatively reluctant recruiters or have found it hard to recruit. At an aggregate level of firm size however, only 1.55% and 1.3% of German and UK firms claim to have great difficulties in recruiting compared to 49% and 33.2% for France and Italy respectively. Machinery and equipment Firms in this sector consider the support of ICT skills to be an important issue with a total of 94.4% and 74.4% of large and small firms supporting skill development and enhancement respectively, half of which were undertaken in-house (less preferred by small firms.<br><br> Support of IT and networking skills development stands at 91.2%, 87.4%, 83.2% and 86.6% of firms in Germany, France, Italy and the UK respectively. The share of firms that have recruited (or tried) to recruit ICT specialists in the last twelve months is fairly consistent across countries 3 36.9%, 26.7%, 24.0% and 25.8% for Germany, France, Italy and the UK respectively with only Italian firms claiming to have major difficulties in recruitment (42.9%) compared to Germany, Italy and the UK (20.9%, 20.6% and 24.5% respectively). Electrical Machinery and Electronics Firms in the electronics sector consider the support of ICT skills and important issue with 89.4%, 80.3%, 75.8% and 88.6% of firms supporting ICT and networking skills development for Germany, France, Italy and the UK respectively.<br><br> German and UK firms seem to prefer to offer third party training rather than in-house training which is preferred by France and Italy. UK enterprises are heavily engaged in providing ICT training to employees, however a significantly short supply of qualified ICT- personnel still exists, suggesting that enterprise training efforts cannot fully offset other factors that negatively impact the availability of ICT-specialists in the UK. However, on-the-job learning is the most favoured mode of training (especially in the UK) with 49.7 %, 55.9%, 65.8% and 79.4% of firms in Germany, France, Italy and the UK rating this to be very important.<br><br> Self-learning activities were the second most preferred mode of training, followed by formal training. Interestingly French firms rated formal training schemes as less important (3.4%) than Germany, Italy and the UK (11.2%, 29.7%, 30.3% respectively). This may be linked to the French view of self-learning as a much more appropriate learning strategy (48% considered self- learning to be very important).<br><br> Similar results are found in Italy, though to a lesser degree. With respect to recruitment, German and French firms have recruited (or tried to recruit) almost twice as many ICT specialists than Italian and UK firms (reflecting demand). However, most recruitment difficulties are found in France and the UK with 24.1% and 23% of firms reporting great difficulties with recruiting ICT specialists.<br><br> Interestingly, larger firms in this sector appear to have the most problems 17 with ICT recruitment owing to the increased complexity and sophistication of IT infrastructure. Tourism Companies in the tourism sector seem to consider the support of ICT skills and important issue with 67%, 77.4%, 67.4% and 82.8% of firms in Germany, France, Italy and the UK respectively offering some computer or ICT training methods. In- house training is preferred by France and the UK, whilst third party training is favoured by Germany and Italy.<br><br> Collectively however, firms do not allocate dedicated resources for training but prefer to allow their own employees to use some of their working time for PC and IT training rather than providing overt support. The UK is found to show the highest concern for staff training. From this short analysis, it appears clearly that grasping the very nature of the e-skills gap is very complex.<br><br> This phenomenon can indeed take different forms depending on parameters such as business sector, company size, and country. There are also obvious differences at the national level in the way to approach the challenges set by the e-skills gap. This applies in particular to the training mode preferred to raise and adapt the e-skills level of employees: in-house training versus third party training and self-learning versus formal training.<br><br> 18 2 The policy challenge: Why is the e-skills gap a policy issue? The changing world of work and the global shifts in economic development demand constant attention to the creation of new skills to replace those that are no longer needed. Many of the European Member States have policies linked to these changes, often supported by industry sectors or individual businesses who arguably are the ultimate beneficiaries of skill improvements in the workforce.<br><br> The e-skills gap differs substantially from these sectoral, or 8vertical 9 policy priorities. The wide ranging 8horizontal 9 effect of ICT and e-skills gaps are being felt across all sectors; without separate and significant policy actions being taken across the European Union, all sectors in all countries will ultimately be affected. For these reasons, the Lisbon summit recognised the importance of taking co-ordinated action above and beyond individual company and member state level as the issue will influence the prosperity and quality of life of European citizens for many decades to come.<br><br> 2.1 E-skills in the context of the European economy At the Lisbon summit in March 2000, the Heads of States and governments of the European Union set the ambitious target for the EU to become, by 2010, ct he most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion d. According to the European Competitiveness Report 2001, the productivity gap between the EU and the US in recent years is in part a reflection of the lower levels of ICT spending in the EU. In the period 1992-99 ICT expenditure in the EU amounted to 5.6% of GDP, the corresponding US figure was 8.1%.<br><br> Significantly, ICT expenditure in the EU when compared with ICT expenditure in the USA, had fallen substantially from 90% in 1992 to 75% in 1999. Similarly, the European Competitiveness Report 2002 concluded that productivity growth had still risen in the US in 2001 despite the recession, albeit at a slower pace. The persistence of strong productivity growth in the United States during a year of recession indicates that investment in new technology and innovation assets are producing benefits for the firms that have undertaken them and for the economy as a whole.<br><br> The contrasting experience of the European Union and the United States in 2001 shows the importance of technological and other innovations in supporting productivity growth even during weak economic conditions. As a result of these notable differences, European policy-makers see ICT as crucial in stimulating productivity growth, and an important tool in meeting the challenges of environmental, social and economic sustainability. ICT are both a direct source of innovation and a means of ensuring innovative improvements in other sectors.<br><br> In this context, the shortages and mismatches of ICT and e-business skills evidenced from the limited data available is an obvious barrier to the competitiveness and productivity of European enterprises. 19 Apart from the strong economic arguments, and the consequent social improvements that they bring, the Lisbon strategy targeted social cohesion as an area that should benefit from the more widespread use of ICT. Therefore, 8e-inclusion 9 has become a central objective of the EU 9s employment and social inclusion strategies.<br><br> The European Social Agenda highlights the job potential created by the emergence of the Information Society as one of the key means of combating social exclusion and increasing digital literacy. It may be seen that the main impacts of the e-skills gaps and mismatches on the European economy are twofold. Firstly, they are in effect significant barriers to the wider, faster adoption of ICT in the workplace.<br><br> This is evidenced by the lower productivity figures attributed to the EU in comparison with the USA and the relatively stronger economies in those European countries that show a more significant presence of ICT in their industrial make-up 33 . Secondly, the skills gaps will tend to widen, rather than reduce, social divisions across and within the Member States. Although the nature and more specifically the size of the e-business and ICT skills gap and mismatch is debatable there is little doubt that such gaps exist and that there is a risk they will grow over time.<br><br> The issue of the e-skills gap clearly has many different dimensions. They encompass user, professional and basic ICT skills and are seen across all economic sectors. The current focus on the ICT professional skills is a consequence of the ICT industry being the first one to notice the pressures brought about by the ever increasing need for new skills sets and a highly trained workforce.<br><br> As this trend moves along to the ICT user industry and eventually across all business sectors, more challenges and therefore more solutions will be needed to keep Europe 9s productivity growing. 2.2 The specific nature of e-skills The productive use of ICTs calls for more skills, higher levels of skills and different kinds of skills. Whatever the exact numbers, the demand for e-skills is not just about the quantity of skilled people needed, but also their quality.<br><br> The current and future roles of ICT require not just technical skills across converging technologies, but also commercial and interpersonal skills to match service and products to customers' needs. In this respect, csoft d skills such as communication skills or even artistic skills are becoming increasingly relevant. The problem of e-skills is complex, with many distinct elements.<br><br> Some relate to all levels of e-skills, others particularly to professional skills. A normal market-driven economic model would expect that market forces will drive the need for new skills, which in turn will be developed by businesses who need to recruit/train new staff to meet with the market demands for their products. Whilst this model applies in certain sectors of ICT, such as computer hardware and software products, it only applies indirectly to the areas which will result in the greatest potential economic gain 3 the improved efficiency of businesses in non-ICT sectors.<br><br> A market failure therefore exists. Businesses need to upskill their staff and bring in new employees who can help them change the way they work to meet the challenges of the e-economy, but the benefits are not as tangible as investing in a new product or 33 Is Growth an Information Technology Story in Europe too? Daveri 2001.<br><br> 20 manufacturing equipment. Free market philosophies would say that such businesses will eventually change, or fail, as others seize the opportunity, but action taken now will avert the potentially massive economic implications of simply letting this process happen across Europe. E-skills have a number of specific features that prevent the supply reacting sufficiently fast and efficiently to imbalances in the market.<br><br> This is because e-skills are: " Generic 3 e-skills are now mainstream and affect all industry sectors. As the ESDIS figures show over 50% of the workforce use a PC in their job and this number is expected to grow significantly. Therefore the acquisition of at least basic digital literacy is of critical importance for the competitiveness of all sectors and will help to fight against social exclusion.<br><br> User skills are also becoming more and more important and are being coupled to managerial and professional jobs that were traditionally outside the ICT sector. " A relatively new phenomenon 3 the use of ICT within jobs has exploded in the last few years and it is used across all industry sectors to a greater or lesser degree. The fact that these types of skills are still new means that companies, particularly SMEs still need some convincing of their relevance and what positive impacts will be seen as a consequence of introducing these skills or upgrading their existing workforce.<br><br> An essential feature of exposing employees to the 8e-revolution 9 is to allow them the widest possible access to e-based solutions, such as on-line training and distance learning. Many enterprises are very restrictive in this respect, for example, the Eurostat survey 2001 on 8E-Commerce in Europe 9 reports with respect to Germany that 8fears of lost working time due to irrelevant surfing (47%) came higher in the ranking than in most other countries, notably before associated cost concerns 9. It should also be noted that many of the European Member States show high levels of internet access in homes.<br><br> SMEs should capitalise on this level of interest and support, rather than deter, employee interest. " Highly technical 3 A number of new skills required in the workforce in Europe are highly technical and require specialist or high-level education or training courses in order to deliver them. This issue affects new workforce entrants and the way in which supply and demand are measured.<br><br> A high level of unemployment in Europe does not guarantee that the demand for ICT jobs can be satisfied due to the time it would take to deliver some of the technical skills necessary. To deliver these types of skills relies on long-term strategies. " Highly competitive 3 Jobs involving a high level of e-skills generally require other sets of skills to accompany them including managerial, communication and language skills, particularly English.<br><br> People need to be adaptable, mobile and take on board new skills at a fast pace. There is also a high turnover of staff in the ICT sector and a negative image of job security in the current economic climate. Employers are more likely to dismiss current staff and hire new people than train existing staff to take on new skills required.<br><br> Therefore employees need to keep up 21 with the pace of change in the absence of clear 8on the job 9 training strategies in order to sustain their jobs. " Highly changeable 3 The types of jobs and skills that are in demand constantly change as market forces dictate business trends. In many cases, these skills have to be complemented with other changes: different attitudes to work, new occupational categories, new work relationships and new management systems.<br><br> None of these changes happen just once: skills are subject to constant change and they impact on the potential competitiveness of the ICT industry. " Subject to international mobility 3 As a result of the specific factors outlined above (its generic nature, high technical content, high competition, high turn- over) e-skills are subject to international mobility. For example a McKinsey study shows that foreign-born workers now account for 20% of all employees in the US information technology sector 34 .<br><br> In conclusion, the development of e-skills takes time, involves a number of different actors and requires a new approach to the development of skills. Changes are happening in the formal education sector, in vocational training, on the job training and new work paths. There is a need for short-term solutions as well as long term strategies to create a sustainable skills base across the European economy.<br><br> 2.3 Promoting e-skills: The conceptual framework There are a number of different reasons for the e-skills gap. They represent not only policy challenges but also a challenge for enterprises themselves. And this is not only a problem for the ICT sector but for all sectors, both in manufacturing and in services.<br><br> This calls for new forms of governance, using all existing policy tools 3 from education and training to enterprise policy 3 in a flexible but nevertheless consistent manner. 2.3.1 The challenges for industry The general trend in the lack of appropriate e-skills has progressed from affecting mainly the ICT industry to affecting all user industries and eventually all business sectors. This phenomenon has led to a far more complicated view of the current challenges faced by industry when dealing with the e-skills gap.<br><br> 34 Brains abroad, Janamitra Devan and Parth S.Tewari, The McKinsey Quarterly, 2001 Number 4: Emerging Markets 22 Exhibit 6 ICT Skills Penetration Through Industry ICT INDUSTRY ICT USER INDUSTRY ALL INDUSTRY/ BUSINESS SECTORS time Currently, the ICT industry shows the highest degree of skills mismatch caused by the constantly changing nature of this highly technical environment. The user industry has a fundamental need for employees who are digitally literate as well as an increasing need for employees with more advanced ICT skills in order to manage and operate new business applications. The ICT user industry also has a high number of ICT professional working in ICT departments or alongside other employees in mainstream roles.<br><br> All other industry and business sectors are currently seeing an increasing need for the whole workforce to be digitally literate. As new tools and technologies are adopted by industry, this need will grow to include skills in more of the developing advanced tools and technologies, as experienced by the ICT user industries. Following the results of the survey of the e-Business W@tch , enterprises regard "learning on the job" clearly as the most important way to develop IT skills in the company.<br><br> About 60% of enterprises say "learning on the job" is "very important". Compared to "learning on the job", only about half as many companies regard formal training schemes as very important for their IT skills development. The transport equipment manufacturing sector is outstanding in this respect, with 43% of its employees working in companies which regard formal training as very important.<br><br> In other sectors, e.g. in the real estate and business services sectors, the importance of formal training is considered much lower. Self-learning activities of employees are rated as very important by about 40% of enterprises (on average), with the ICT services sector standing out (51%).<br><br> 23 Exhibit 7 Perceived importance of formal IT training and self-learning activities 0 10 20 30 40 50 60 70 80 Food, beverages and tobacco Media & printing Chemical industries Metal products Machinery and equipment Electrical machinery and electronics Transport equipment manufacturing Retail Tourism Credit institutions Insurance and pension funding Real estate activities Business services Telecom. and computer services Health and social services Learning-on-the-job very important Formal training schemes very important Self-learning activities very important The attitude of industry to training the workforce and employing new talent from the wider labour market pool is key to increasing the supply of e-skills. From the point of view of the potential labour force, there are also issues to consider when considering ICTs as a potential career choice.<br><br> Currently, the negative image of ICT is a problem and this in turn may lead to an under representation of particular sectors of the workforce within the ICT and ICT user industries. For example, young people, particularly young women are far less interested in studying mathematics and technology, the very subjects that constitute the basis for all qualified ICT jobs. Women therefore constitute an important target group.<br><br> According to a report by the Cisco Gender Initiative 35 , the percentage of women in the technical and professional workforce throughout Western Europe is only 19%. IDC recently published the report "Networking skills shortage and how women can narrow the gap" 36 showing that at the end of the year 2000 only 5.6% of Internet networking professionals in Western Europe were women. The report found that many women perceive the field as "nerdy" or "too technical".<br><br> Also, a lack of strong female role models discourages many from entering the industry. This image does not just put women off. In the UK, an image marketing plan put together by e-Skills UK Ltd 37 highlighted that school leavers, graduates and job changers also express negative opinions of the ICT industry including the culture, working conditions, and the way industry handles lay-offs.<br><br> As well as the image, industry also has problems with the skills base of students who do join the industry. According to a study carried out by the Career Space consortium 38 students are not being taught the right skills, and too many of them 35 The Networking Skills Shortage - How women can narrow the gap - http://www.cisco.com/edu/emea/women_in_networking.pdf 36 An IDC White Paper Sponsored by Cisco Sy

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