14/4/2012: Latest data on EU27 ICT skills

In a recent (April 1, 2012) article for the Sunday Times (link here) I wrote about the results of the Eurostat computer skills survey across the EU27 member states. The report this was based on is E-Skills Week 2012: Computer skills in the EU27 in figures (http://eskills-week.ec.europa.eu/).

Quoting from the article:

“One core metric we have been sliding on is sector-specific skills. This fact is best illustrated by what is defined as internationally traded services sector, but more broadly incorporates ICT services, creative industries and associated support services.

Eurostat survey of computer skills in the EU27 published this week, ranked Ireland tenth in the EU in terms of the percentage of computing graduates amongst all tertiary graduates. Both, amongst the 16-24 years olds and across the entire adult population we score below the average for the old Euro Area member states in all sub-categories of computer literacy. Only 13% of Irish 16-24 year olds have ever written a computer programme – against 21% Euro area average. Over all survey criteria, taking in the data for 16-24 year old age group, Ireland ranks fourth from the bottom just ahead of Romania, Bulgaria and Italy in terms of our ICT-related skills.”

So here are the details of my analysis of the Eurostat data. Note, ranks reference EU27, plus Norway, Iceland and 3 averages treated as countries – EA12 (old euro area states), EU27 and Small Open Economies of EU27. In other words, ranks are reported out of 29 countries and 3 averages.

In terms of the overall proportion of computer graduates amongst all graduates, Ireland performs close to the mid-range of the overall EU27 distribution. In 2005, 2.9% of graduates were in CS disciplines against the EU27 average of 4% and EA12 (old euro area) average of 4.12%. By 2009 this number rose to 3.8% for Ireland, and fallen to 3.4% for EU27 and 3.37% for EA12. However, the averages conceal rather wide dispersion of scores across both the EU27 and EA12. Ireland’s overall performance in this category ranked 12th in 2009 data, below Greece, Spain, Malta, Austria, UK and Norway.

In terms of percentage of population who have ever used a computer as percentage of all individuals, the survey identifies results for two cohorts: aged 16-24 and aged 16-74. In Ireland, 98% of the population 16-24 years of age have used computer, against 81% for those aged 16-74. This compares against: 96.25% for EA12 and 96% for EU27 for those aged 16-24, and 79.2% for EA12 and 78% for EU27 for those aged 16-74. Despite this, Ireland ranks only 19th for 16-24 year old cohort in this parameter.

Now, we should expect a generational effect of higher (statistically) percentage for those of 16-24 years of age. And the gap appears to be present in the case of Ireland – 17 percentage points spread. The gap is consistent with the EU27 and EA12 averages of 18 and 17.8 percentage points. In other words, Ireland’s population computer usage is not exactly stellar to begin with and is not improving at a faster pace than European average with generations.

The survey also assessed what percentage of relevant population used basic arithmetic formulas in a spreadsheet. For EU27 and EA12 the corresponding percentages were: for cohort aged 16-24: 66% and 67% respectively. For Ireland the percentage was 54%, assigning to us rank 30th in the sample, with only Romania and Bulgaria scoring below us. For the full population (16-74 years of age), the EU27 and EA12 averages were 43% and 45.5% respectively, while for Ireland the corresponding percentage was 44%. Again, our inter-generational gap was lower than average either for EA12 or EU27, suggesting that not only we are extremely poorly scoring in this category as a whole, but that our inter-generational change in skills is working against us in comparison to the averages.

As per percentage of those who created electronic presentations, for EU27 and EA12 the averages were 59% and 63.1% for cohort of those aged 16-24 against Ireland’s 36%, earning Ireland 30th rank, ahead of only Bulgaria and Romania. The inter-generational gap for EU27 is 28 percentage points, while for EA12 it was 28.5 percentage points and for Ireland 15 percentage points. Again, we are falling behind and doing so from the weak position to begin with.

In terms of those who have written a computer programme, Ireland’s 16-24 year olds reported 13% of population against EA12 20.5% and EU27 average of 20%. For overall population (16-74 year olds), EA 12 average was 11.6%, EU27 average 10% and Ireland’s 9%. We are ranked 27th in the table in terms 16-24 year olds who have written a computer programme.

In terms of overall score for the younger cohort of 16-24 year olds (summing up percentages for all categories, plus third level CS education proportion multiplied by factor 10), Ireland total score comes in at 321, well below the total score for EA12 (368.5) and EU27 (365). Ireland ranks 28th in the league table in terms of overall computer literacy score, ahead of only Bulgaria, Italy, and Romania. In summing up all ranks, Ireland’s combined rank is 148 against 120 for EA12 and for EU27.

In the last chart above, higher gap signals more advanced skills for the younger cohort compared to general population: Ireland has low rank and low gap, implying that younger cohort skills are advancing at a slower speed than in other countries from already low skills base. In contrast, Finland has relatively low gap combined with high overall rank, implying that Finland's younger cohorts have faster than in Ireland rate of growth in skills compared to much higher overall level of skills already in place for the general population. Slovenia and Latvia are examples of countries where skills are relatively high for the younger cohorts compared to other countries and are growing fast compared to older cohorts.

20/06/2011: Two good news from Minister Bruton

It's not all doom and gloom, folks, so when good news do arrive, or at least there is a hint at such news..., time to share. (A major HT to the fellow twitterati: @BriMcS).

The first piece comes from Minister Richard Bruton (see full release here). Let me focus on few points of interest:

"The Minister held individual meetings with 22 companies across a number of targeted sectors, including five of the top ten technology companies in the USA. The companies he met include several top internet companies with household names. The 22 companies employ a total of over 350,000 people worldwide, with combined revenues of over $230billion."

This suggests that the Minister was meeting with large MNCs, which is good. But importantly, he also met with "several rapidly growing “new technology” companies which are characteristic of the new Silicon Valley boom". This suggests that the Minister has met with some younger and faster growing internet companies, especially companies past the first/second round of fundrasing and only starting their operations outside the US. The domain of such companies is a new territory for IDA and they represent hige untapped potential for Irish market.

Also encouraging is the fact that the Minister also met a number of "companies in international services, entertainment and aviation" - areas outside the traditional focus on ICT and life sciences.

Also crucially, the Minister explicitly recognized one of the core problems faced by Irish companies and MNCs in the ICT sector today - the problem of skills shortages. "... it is estimated that there are currently approximately 3,500 vacancies in the ICT sector in Ireland. The Minister for Education and Skills has recently announced over 2,000 one-year ICT training places as part of the Springboard programme from this September. However we must also go beyond immediate needs, and I together with Minister Quinn will shortly start an ambitious process of examining measures we can take to respond to the future requirements of the ICT sector."

I recently spoke at the Irish Internet Association annual conference where the issue of specialist skills shortages in ICT and the lack of incentives for entrepreneurs in the sector were raised repeatedly. It is clear from my sources that:

1. We are currently experiencing net outflow of high end skills in ICT due to absolutely regressive, skills- and entrepreneurship-penalizing changes in personal income taxation in the Budgets 2010 and 2011. In particular, high upper marginal tax rate and absurd USC rates and penalty for self-employed workers and entrepreneurs are having dramatic effect of pushing the younger and most skilled high-end ICT specialists out of the country.
2. Skills base of indigenous workforce in the area of high-end ICT specialists cannot be improved significantly within reasonable time frame (less than 4-5 years) as such skills require a combination of education (beyond 3rd level) plus on-the-job training.

Another excellent change comes also courtesy of Minister Bruton (details here). Minister Bruton will legislation facilitate formation of co-operative societies to further facilitate formation of new enterprises. The move is aligned with the publication of the new Companies Bill and is designed to reduce red tape (which, is welcome, but incidentally, is not as important to the entrepreneurs and companies operating in Ireland, despite FG's excessive focus on 'red tape'). But the value of the new changes to co-operative societies regulations is of great value in itself.

Co-operative ownership represents one of the oldest forms of alternative enterprises and having more streamlined, easier regulatory environment for co-ops can be a net positive for entrepreneurship. Co-operative ownership is also rather efficient in the conditions of constrained credit availability for SMEs because it allows for better anchoring of household savings into investment.

Here's some interesting literature on co-operatives:
Link 1: The study of co-operatives in modern economics: a methodological essay
Link 2: A study into co-operative enterprise for instrumenting and marketing auctions in agricultural produce and a related later study which is even broader here.
Link 3: An interesting study on co-operative's reforms in Italy (where co-operative ownership stretches from traditional agricultural and tourism sectors to banking and distribution)
Link 4: Another study from Italy focusing on the future of financial co-operatives in relation to post-crisis financial services recovery
Link 5: An excellent discourse on the issue of co-operative firms role in bridging the gap between social and market objectives, containing some best practice in regulatory frameworks to support co-operative efficiencies (which might be of help to Minister Bruton as well).

Economics 08/12/2009: Irish businesses ICT use

Per CSO release yesterday: “in 2009, 95% of all enterprises had a computer connected to the internet while 66% had a website or homepage. Access to the internet using broadband remained high in 2009 with 84% of all enterprises having a broadband connection. High-speed DSL broadband was used by 45% of enterprises compared with 41% in 2008. The use of mobile broadband reached a level of 27% in 2009 compared with 24% in 2008. As a consequence there has been a decline in the use of lower-speed DSL broadband and other fixed connections (e.g. cable, leased line etc).”

Sounds good? Well, actually… More detailed data shows the following worrisome trends:

• Use of computers has actually fallen from 98% of enterprises surveyed in 2008 to 97% in 2009. It has remained static at 98% in Manufacturing sector, fallen from 99% to 96% in Construction sector (possibly a function of inactive enterprises, or in the opposite direction – a surprising result if the survivourship bias applies to the sample). In Services sector there was a decline from 98% to 97% between 2008 and 2009. These results are rather strange. On one hand, if the sample included inactive firms, then one can expect the declines due to companies folding operations in Construction and lower value-added Services sectors. But if only actively trading firms were included, then this suggests that survivourship bias was actually selecting against the ICT-using firms for some unexplainable reason.

• Interestingly, the proportion of firms with a written ICT strategy has increase overall from 20% in 2008 to 21% in 2009, and in no sub-sector was there a decline in proportion. Construction sector firms led here with an increase from 8% in 2008 to 11% in 2009, which suggests that CSO sample incorporates survivourship bias. And this is really bizarre – on one hand, sample selection clearly favoured surviving firms that have ICT policies, but on the other hand the same sample favoured survivor firms with lower penetration of ICT… Hmmm…

• Proportion of firms using internet fell from 96% to 95% between 2008 and 2009. The declines were showing in all three broader sectors, with Construction firms registering the largest drop from 99% to 96%. This is again inconsistent with survivourship bias apparently present in the data. But even more strange were the results for the percentages of firms having their own websites. In Manufacturing, the number of firms with their own websites rose strongly from 72% a year ago to 77% in 2009. In Construction sector, surviving firms actually dramatically increased their websites presence from 48% to 58% despite having shown a decline in internet use in general. There was a decline in proportion of companies with their websites in Services sector – from 65% to 64%.

• Overall use of e-services (interfacing either with the public sector or private sector clients) has declined across the board except for Manufacturing sector.

• E-commerce is growing strongly with percentages of purchases and sales via e-commerce pathways as a share of total purchase costs and turnover, respectively, rose strongly between 2008 and 2009. But as in 2008, most of e-Commerce appears to be driven by purchases, not sales. And in volumes, e-Commerce has declined in line with overall economic activities. There is only tentative evidence that e-Commerce has taken up some of the traditional purchasing and sales activities share during this recession.

• Another interesting and surprising feature of the data shows that enterprises with access to broadband have reduced their e-Commerce-based purchases from 60% to 54%, and also reduced their e-Commerce-based sales from 28% to 23%. Enterprises with no connection to broadband have lowered their purchases via e-Commerce vehicles from 29% to 24% and their sales from 14% to 9%. This seem to show that access to broadband does not result in more resilience to the recessionary contraction in enterprise activities. But, enterprises with broadband connection have retained their propensity to employ workers who e-work at 37%, while enterprises with no broadband connection have increased this share from 9% to 10%. Rising workforce mobility and flexibility for those with no broadband connection while static workforce mobility / flexibility for those with broadband connection? Clearly this can’t be happening…