Strategic study on anticipation of changes in the European ... · With the financial support of the European Commission Strategic study on anticipation of changes in the European

With the financial support of the European Commission

Strategic study on anticipation of

changes in the European ICT sector

September 2016

IndustriAll project "Strategic study on anticipation of changes in the European ICT sector”

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Foreword

Dear Reader,

IndustriAll European Trade Union is proud to present you with the result of two years’ work, to anticipate the changes in the European Information & Communications Technologies (ICT) sector, and to propose a trade union strategy to overcome its challenges.

The ICT sector is pervasive across the economy, and present in our everyday lives. Electronic equipment and software exist as stand-alone devices, in the form of mobile telephones and tablets, computers, telecommunications equipment or home entertainment systems. They are also hidden, embedded in an increasing number of industrial products and providing them with their unique features: navigators and anti-collision systems in cars, landing systems and radars in planes, computer-assisted interpretation for medical imaging, real-time power management for "smart" electric grids, direct connections between drawing boards and industrial machines in factories (the "industry 4.0" concept), cryptographic chips in credit cards, remote surveillance of homes and of domestic appliances, even remote monitoring of the human body with wearable electronics. In many of our industries, ICT has become an essential factor for companies to survive and to thrive.

This pervasive nature of ICT illustrates the relevance of the value chain approach that was at the core of industriAll Europe’s foundation in 2012. It is therefore logical that industriAll Europe has dedicated one of its first in-depth sectoral projects to a sector that is relevant to so many.

The opening chapter of this report presents an overview of the ICT sector in Europe currently, based upon a statistical approach.

The second chapter deepens the investigation, using direct field research performed in each of the sub-sectors (microelectronics, telecommunications equipment, smart cards, connectors and cables, industrial electronics), and results in a strategic analysis of the sector, using the Strengths, Weaknesses, Opportunities and Threats (SWOT) framework.

In the third chapter, we present the existing policy responses that national governments in the EU have given to the challenges that were identified for the sector, in the fields of education and skills, of taxation and of support for innovation.

The fourth chapter contains recommendations for a trade union strategy, resulting from the project (based on the strategic SWOT analysis and on the experiences of the individual Member States), and from a dedicated workshop organised in Frankfurt am Main in January 2016. These recommendations cover both industrial and social policy, with the aim of increasing the competitiveness of the European ICT sector, whilst fully incorporating the social dimension.


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The fifth chapter presents recommendations for the internal work of trade unions themselves, in the ICT sector, and in those sectors where ICT technologies pervade.

Finally, the sixth chapter is an attempt to quantify the effect of the industrial and social policy recommendations in terms of employment at EU level. With a current total of 2.2 million workers being employed in the sector, the recommendations are expected to create an additional 212,000 jobs in ICT.

We wish you a fruitful and interesting read. But above all, we hope that the positive dynamics that were created by this project will lead to effective action being taken by industrial trade unions across Europe, and to making the ICT sector, and the ICT-enabled sectors in industry, thriving and decent places to work.

Luc Triangle, General Secretary Laurent Zibell, Policy Adviser, ICT

industriAll European Trade Union industriAll European Trade Union

This report can be downloaded from the following URL:

http://www.industriall-europe.eu/proj/ICTstrat/

This study was performed with the help of the consultancies Syndex and wmp consult - Wilke Maack GmbH, and with the financial support of the European Commission, under the budget line VP/ 2014/002 "Information and training measures for workers' organisations".

http://www.industriall-europe.eu/proj/ICTstrat/


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Table of contents

SUMMARY OF THE STATISTICAL SECTORAL OUTLINE .............................................................. 7

SUMMARY OF THE SUB-SECTORAL ANALYSIS ....................................................................... 17

MIGHT THE TIDE TURN? .............................................................................................................. 19

THE SITUATION BY SECTOR ......................................................................................................... 20

SUMMARY OF THE COUNTRY REPORTS ................................................................................ 27

KEY ELEMENTS REGARDING EDUCATION POLICIES FOR ICT .......................................................... 27

KEY ELEMENTS REGARDING TAX POLICIES ................................................................................... 28

KEY ELEMENTS REGARDING INNOVATION POLICIES ..................................................................... 30

OUR TRADE UNION RECOMMENDATIONS FOR A MORE COMPETITIVE EUROPEAN ICT SECTOR, WITH THE SOCIAL DIMENSION FULLY INCLUDED ............................................................ 32

EXECUTIVE SUMMARY ................................................................................................................ 32

1 RECOMMENDATIONS ADDRESS INDUSTRIAL AND SOCIAL POLICIES ...................................... 35

2 INDUSTRIAL POLICY: LEVERAGE THE OPPORTUNITY OFFERED BY THE “INTERNET OF THINGS” IN “LOCOMOTIVE” APPLICATION MARKETS ................................................................... 35

3 SOCIAL POLICY: FOR BETTER WORK IN A DIGITAL ENVIRONMENT ........................................ 52

RECOMMENDATIONS FOR INTERNAL ACTION BY TRADE UNIONS ......................................... 60

WHAT CAN BE EXPECTED FROM THE IMPLEMENTATION OF THESE RECOMMENDATIONS? A FIRST QUANTITATIVE ASSESSMENT FOR THE YEAR 2022 ........................ 63


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Summary of the statistical sectoral outline 7

Summary of the statistical sectoral

outline This chapter is based on the detailed information present in the Appendix 1 of the report, available at the following URL:

The European ICT economy is losing ground against the US and Asia

The global value of the ICT market was estimated at €3,625 bn in 2014 by IDATE and has been growing for the last four years. It should continue doing so in the years to come, exceeding €4,000 bn by 2017.

However, the European ICT market has been declining since the crisis of 2008-2009, though it did rebound slightly in 2014. The European trend is clearly in the opposite direction to the significant growth experienced in the US and especially Asia. As a consequence, since 2011, the EU’s weight in the global market has been shrinking by almost 3 percentage points, and 5 percentage points for the consumer electronics sub-sector. The main contributing factors include the growth of huge consumer markets (China, India, etc.), increased outsourcing to Asia due to cost competitiveness, and the rise of Asian electronic champions (TSMC, Huawei, Samsung, etc.). Likewise, the EU share in computer, electronic and optical product exports was only 18% in 2013, down from 24% in 2007.

0

200

400

600

800

1000

1200

1400

NorthAmerica

Europe Asia/Pacific ROW

ICT market by region (€ bn, source: Digiworld)

2011

2012

2013

2014

2017

13,0%

18,0%

23,0%

28,0%

2011 2012 2013 2014 2017

Weight of Europe (% of sales, source: Eurostat)

Telecom services

Telecom equipment

IT Software &computer services

IT Computerhardware

TV/video services

Consumer elctronics

Total


8 Summary of the statistical sectoral outline

Both employment and value added have been affected by the weakening of Europe

According to Eurostat, the EU’s full ICT sector (including software development services dedicated to industry) saw a steep fall in its value added in 2009 (to €147 bn), followed by a slow recovery, resulting in an overall increase of 3% between 2008 and 2013 (from €169 bn to €174 bn). Employment followed a similar pattern (a sharp fall in 2009 to 2.5 M persons employed, followed by recovery), but the overall result is a decrease in employment of 3% during the same period (from 2.7 M employed persons to 2.6 M).

Narrowing the perimeter, value added in the ICT manufacturing sector excluding software development services dedicated to industry slightly decreased over the period (-1%), whereas employment decreased more sharply (-8%, from 2.2 M to 2.0 M), but has remained stable since 2009.

0

500 000

1 000 000

1 500 000

2 000 000

2 500 000

3 000 000

2008 2009 2010 2011 2012 2013

Employment in the EU - ICT sector

Software development for industry (part of 62)

Embedded electronics in aeronautics, rail, ships (part of 30.1 to 30.3)

Automotive electronics (29.31)

Medical electronics (26.6)

Smart grids (27.12)

Industrial automation (26.51 + part of 28.4 & 28.9)

Pure Electronics (26.1 to 26.4)



Methodological note: The ICT sector is poorly taken into account by the existing statistical categories (the NACE codes). In this report, we have assembled a statistical overview of the ICT sector from existing categories, as follows.

Existing statistical categories (NACE codes) Fraction of the category deemed to belong to the ICT sector*

26.1: Manufacture of electronic components and boards 100%

26.2: Manufacture of computers and peripheral equipment 100%

26.3: Manufacture of communication equipment 100%

26.4: Manufacture of consumer electronics 100%

26.51: Manufacture of instruments and appliances for measuring, testing and navigation

100%

26.6: Manufacture of irradiation, electro-medical and electrotherapeutic equipment

100%

27.12: Manufacture of electricity distribution and control apparatus 100%

28.4: Manufacture of metal forming machinery and machine tools 25%

28.9: Manufacture of other special-purpose machinery 15%

29.31: Manufacture of electrical and electronic equipment for motor vehicles

100%

30.1: Building of ships and boats 5%

30.2: Manufacture of railway locomotives and rolling stock 10%

30.3: Manufacture of air and spacecraft and related machinery 40%

62: Computer programming, consultancy and related activities 20%

(*) These fractions were estimated by the project team, and attempt to capture:

the fraction of the value added of the final product made of electronics and software (the case of transport equipment and machinery), or

the fraction of the total activity dedicated to industry, based on the fraction of industry in the whole economy (the case of software development).



The main countries for ICT employment are Germany with 630,000 employees, i.e. three times as many employees as the second country within the EU, which is France, followed by the UK and Italy. The Member States with the highest share of industrial ICT workers in their industrial workforce are Ireland (20.4%), Hungary (11.0%) and Finland (10.7%), followed by Germany, Romania, Sweden, Estonia, the United Kingdom and France.

62

9

21

0

20

8

18

7

10

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10

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73

59

53

52

36

36

34

33

33

26

22

16

16

12

8 6 5 5 2

8,8

%

6,9

% 8,4

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4,9

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4,6

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8,8

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3,4

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8,1

%

4,3

% 5,8

%

5,2

% 7,8

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10

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20

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7,2

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4,3

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3,1

%

2,5

%

6,3

% 8,0

%

2,4

%

1,7

%

2,4

%

1,8

%

0%

5%

10%

15%

20%

25%

0

100

200

300

400

500

600

700

Ger

man

y

Fran

ce

Un

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Ital

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Ro

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Hu

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Spai

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Swed

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Cze

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epu

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Au

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Number of persons employed (thousand), 2013

Industrial ICT sector Share of industrial ICT sector in "Total manufacturing"



There are sharp contrasts in the situation between sub-sectors

Value added at factor cost

(€ bn)

2008 2009 2010 2011 2012 2013 Evolution 2008-2013

Pure electronics (26.1 to 26.4) 52.4 43.3 45.4 41.1 38.7 38.5 -27%


33.8 28.1 33.7 37.3 38.1 38.9 15%

Smart grids (27.12) 23.2 22.5 26.2 25.4 26.8 27.9 20%

Medical electronics (26.6) 4.0 4.3 4.5 4.7 4.9 4.8 20%

Automotive electronics (29.31) 6.8 4.8 5.5 5.9 5.8 6.5 -4%


12.6 11.4 12.1 12.7 14.2 15.3 22%

TOTAL MANUFACTURING 132.8 114.3 127.5 127.2 128.4 132.0 -1%


36.0 33.0 34.9 37.6 40.4 42.0 17%

TOTAL 168.8 147.3 162.4 164.8 168.8 174.0 3%

The “pure” electronics industry (NACE codes 26.1 to 26.4: components, computers, telecommunications equipment, consumer electronics) experienced a very sharp economic decline between 2008 and 2013 (value added -27%). At a lesser scale, automotive electronics also declined (-4% over the same period).

All other sub-sectors (industrial automation and electronics embedded in vehicles or machines; software programming for industry), on the other hand, experienced vigorous growth after the 2009 crisis, reaching value added levels in 2013 which are 15 to 22% above their 2008 level.

These contrasting evolutions compensate for one another: in terms of value added, the ICT sector (including software programming for industry) grew slightly over the period 2008-20013 (+3%), while the industrial part declined only marginally (-1%).



Number of persons employed (thousand)

2008 2009 2010 2011 2012 2013 Evolution 2008-2013

Pure electronics (26.1 to 26.4) 822 705 684 672 644 612 -25%


524 515 514 522 545 556 6%

Smart grids (27.12) 379 373 385 386 393 402 6%

Medical electronics (26.6) 50.1 48.6 53.3 53.0 53.6 54.1 8%

Automotive electronics (29.31) 236 198 195 201 201 207 -12%


160 163 157 157 161 164 3%

TOTAL MANUFACTURING 2,170 2,004 1,988 1,990 1,996 1,996 -8%


506 498 523 540 560 600 19%

TOTAL 2,676 2,501 2,511 2,530 2,556 2,596 -3%

The evolution of employment is not as favourable as that of value added. The “pure” electronics industry experienced a sharp decline (-25%) over the 2008-2013 period.

In the other sectors, the recovery following the 2008 crisis started later (in 2010). In the automotive electronics sector, this recovery does not compensate for the early losses, and results in an overall employment loss over the period (-12%). In the other industrial sectors of ICT, it results in only modest gains (+3% to +8%). Only software development for industry experiences robust employment growth over the period (+19%).

And this is also the case for some European countries where the dynamic is nevertheless slightly better

Most EU countries were strongly hit by the crisis in 2009 and recovered slightly until 2013. The countries most affected since 2008 have been Croatia (employment in the ICT sector -48% between 2008 and 2013), Greece (-43%), the Czech Republic (-37%), Belgium (-34%), Finland (-32%), Hungary (-32%), Slovakia (-28%), Spain (-25%) and Sweden (-24%). The main Member State in the sector, Germany, has experienced modest job gains (+4%) thanks to very dynamic user sectors, while the other European heavyweights lost jobs: France (-4%), United Kingdom (-7%), Italy (-11%). Finally, a few countries have seen strong job growth over the period, such as Romania (+13%), Ireland (+7%), the Netherlands (+6%) and Denmark (+5%).



The structure of industrial fabric and innovation capabilities are key elements for a dynamic ICT market

Among the several possible explanations, sector specialisation and the dynamism of certain MNCs (multinational companies) appear to be significant. This is the case for Finland, where a strong focus on the telecommunications equipment sector around the Nokia group (experiencing major difficulties in the last few years) explains the majority of job cuts in the country over the last five years.

An analysis of the distribution of the decrease in employment according to company size shows that the bulk of job cuts are concentrated within companies with more than 250 employees, whereas SMEs have generally maintained their level of employment in most countries.

The presence of ICT MNCs in Europe is often thought to be a competitive advantage and to offer protection for employment; however, this does not seem to be the case, with France being a good example of the contradiction. France has the most ICT MNCs, but was nevertheless severely hit in terms of employment between 2008 and 2012.

Some other “structural” factors have a significant impact on ICT dynamism, such as:

Public/private R&D efforts, which are key to ICT development. In this regard, the EU is lagging behind some Asian countries and the US, despite high investments recorded in northern European countries;

Concentration of ICT companies is another way to promote ICT innovation - through positive externalities - and then strengthen the industry’s competitiveness. An analysis of ICT dynamism in terms of patents filed indicates that EU clusters seem to have lost ground compared to South Korea, Japan and the United States;

A dynamic SME industrial fabric (even outside the ICT perimeter) seems to be a material advantage that is at least as important as concentration of ICT specialists (see clusters), Germany probably being the most obvious example with its dynamic industrial SMEs;

Transmission conditions as well as ownership structure may influence SME development, thanks to a longer-term vision in family-owned businesses.

-6%

-10%

-7%

-6%

-14%

-120 000

-100 000

-80 000

-60 000

-40 000

-20 000

0

0 to 9 10 to 19 20 to 49 50 to 249 more than 250

Employment evolution between 2008 and 2012 according to company size (EU 27) -NACE 26 (source: Eurostat)

in absolute

in %



Beyond the poor state of the ICT economy, Europe still ranks fairly high in terms of ICT use and access

Despite this rather negative picture, one should nevertheless keep in mind that European countries are well placed as regards ICT use and access. While ICT development relies on public/private network investment, it also depends heavily on the ICT skills and usage of every stakeholder (individuals, governments and companies). The European Union seems well placed in most international comparisons.

Networks Readiness Index 2014 (World Economic Forum, source: Global information technology report)



However, major geographical fractures appear within the European Union

The issue of ICT use and access also encompasses huge discrepancies across the EU between northern countries with advanced ICT development and southern/eastern countries, which are lagging behind on most indicators. This “digital divide” is relevant for most ICT issues, including ICT importance (% of GDP; % of total employment) and ICT skills, and goes hand in hand with the discrepancies seen in social and economic development.

This is even more relevant and worrisome when it comes to analysing the level of ICT skills of the European population

As a whole, the EU is still an important region in the world in terms of ICT development, innovation and market size, but this observation does not give any guarantee on the location of both ICT production and employment, which has clearly been following a downward trend.

One of the main levers to strengthen competitiveness remains ICT skills, and in this field, Europe seems again to lag behind “world top class” states. As an example, in 2012, most EU countries (excluding northern Europe) fell below the OECD average for spending on higher education (as a percentage of GDP) and were lagging behind most advanced countries (mainly Asian countries) in terms of the scientific proficiency of 15-year-old pupils in 2009.

In particular, the number of computer science graduates has been stagnating since the 2000s, while industry’s needs have been growing significantly. This has led to a paradoxical situation where a large number of jobs have been cut over the last five years, but ICT specialists have become more scarce and will probably continue to be so (with a shortage of 274,000 ICT specialists in 2012 rising to 913,000 in 2020, according to Empirica).

BE

BG

CAN FINEE

FRGER

GRE

HK

IREIT

JP

KO

LV

NLD

PT

SIN

SVK

SLO

SP

SWE

UK

US

420

470

520

570

440 490 540

Mat

he

mat

ic p

rofi

cie

ncy

Scientific proficiency

Scientific proficiency of 15-year-old pupils, 2012 (source: PISA by OECD)

AT

EU Non EU



This is all the more important as the increase in ICT skills and innovation in Europe might represent an opportunity to stimulate European ICT companies and employment

This ICT skills issue, jointly with the public effort in ICT R&D investments, is all the more important at present. Indeed, industry digitization offers promising prospects and could enable relocation of ICT production jobs in high-cost countries. Nevertheless, the European Union (except perhaps Germany) is already lagging behind certain Asian countries regarding robotisation (especially Japan).

Another promising element is that economic changes happen so quickly that they allow new players to emerge through innovation. The Internet of Things and other hot new technologies might be the key to a European comeback.

274

338

422

509

598

686

780 855

913

-

100

200

300

400

500

600

700

800

900

1 000

2012 2013 2014 2015 2016 2017 2018 2019 2020

ICT specialist vacancies in the EU (source: Empirica estimates)

Others

Italy

Poland

UK

France

Germany


Summary of the sub-sectoral analysis 17

Summary of the sub-sectoral analysis This chapter is based on the detailed information present in the Appendix 2 of the report, available at the following URL:

More than 200,000 jobs out of 860,000 (NACE codes 26.1 to 26.4) have been lost in the “pure electronics” sectors since 2008. Beyond this dramatic evolution, the global picture is dark:

Few or no European giants can be found in the high-tech sector (cf. GAFA).

The centre of gravity has shifted towards the US and Asia.

Very few manufacturing sites remain in Europe in either computers, telecoms or consumer electronics. A lot of headcount reductions and site closures have taken place in microelectronics. However, some manufacturing facilities remain in connectics and cable, and eastern and south-eastern Europe still host some manufacturing sites (such as domestic appliances).

0

500 000

1 000 000

1 500 000

2 000 000

2 500 000

3 000 000

2008 2009 2010 2011 2012 2013

Employment in the EU - ICT sector



Automotive electronics (29.31)

Medical electronics (26.6)

Smart grids (27.12)


Pure Electronics (26.1 to 26.4)


18 Summary of the sub-sectoral analysis

No apparent trend reversal can be seen in the mid-term, with site closures still in the pipeline and uncertainties continuing to surround large European groups.

A few promising start-ups have blossomed, albeit with a lack of volume to unlock significant job creations.

So as to lighten a dark picture, some sectors are not too devastated:

Smart cards

Connectors

Payment devices

Because of some dynamic industrial sectors (such as aerospace, automotive, energy, industrial automation and transport), European professional electronics is much stronger and professional electronics is converging with the rest of electronics. Connected cars are an obvious example. Medical electronics is another (big data, e-health, etc.).

Professional electronics has a bright future thanks to smart grids, industrial automation, medical electronics, and embedded electronics in vehicles or machines. This might be a chance for the European industry. Moreover, major ongoing technological trends could reshuffle the cards.

One of the most striking trends is softwarization. Or as Marc Andreessen puts it, “software is eating the world”. The rise of companies such as Facebook, Skype, Twitter and Zynga shows that more and more companies are being run on software. The whole ICT industry in the metal field includes a rising share of software. Although the physical layer will not disappear, semiconductors, components, telecom radio, smartphones or laptops are being made with more and more software code. The arrival of the likes of Airbnb and Uber shows that a software platform can be developed, and disrupt old established companies. In the telecoms industry, the stellar rise of VoIP and free messaging is another illustration. New technologies such as Software-Defined Networks (SDNs) and Network Functions Virtualisation (NFV) raise important changes for telecoms operators and for equipment providers, due to the arrival of new players and the commoditization of many material components which are being replaced by software.

ers.



Beyond this major phenomenon, many technological changes are underway. They are challenging established positions and allowing new competitors into the field. For the time being, these changes have been favouring American or Asian players. But nothing is carved in stone, and all these changes could be a chance for Europe to bounce back.

Might the tide turn?

Some locations in Europe can be found which offer a promising density of innovation and start-ups:

Paris, London, Stockholm and Berlin.

Start-ups are also flourishing in places such as Estonia and Romania.

Mobility

M2M/Internet of Things

Robotics

Cloud computing

Big data

Artificial intelligence

Big data

Computerization

Industry 4.0/Fab Lab



Many of them are not included in the metal industry (according to the collective bargaining definition).

The Internet of Things might be a chance for Europe to bounce back. Cisco has decided to invest heavily in this area in France and in the UK.

The connected home is another major issue that could lead to many changes.

Industry 4.0 could also lead to a new dynamic, even though there is a high risk that many jobs could disappear. Fab lab/Additive production might reshuffle the cards and favour relocation.

The situation by sector

Telecoms equipment

At global level, networks equipmentrepresent a market worth €150 bn1. Around €50 bn can be added with the enterprise networks market. The network telecoms market is no longer growing so fast due to the Network Services Providers’ (NSP) cycle of investment. Nevertheless, some segments in the market are still growing.

In the telecoms industry, technological changes continue uninterrupted. Telecoms players do invest a lot in R&D. As a whole, it is an R&D-intensive industry with an R&D/sales ratio of 12-15%.

One of the major issues of the telecoms market is the rise of Software-Defined Networks (SDN) and Network Functions Virtualisation (NFV). Because networks are supporting more and more users, data and needs, scalability and adaptability are key.

Another major trend is M2M (Machine to Machine communication). M2M is emerging right now. It will constitute one of the main drivers in the telecoms market.

Because NSPs are merging and scale is becoming a crucial issue, telecoms equipment providers are constantly merging. Many M&As took place in 2015. The takeover of Alcatel-Lucent by Nokia was the most spectacular, but other significant operations have also been completed.

Ericsson has been the leader of the telecoms industry for the last 15 years or so. In reality, it is a wireless leader that has tried to enlarge its portfolio. Because of Chinese industrial policy – Chinese NSPs procurement policy, state export subsidies, etc. – Huawei has been gaining market share in every economic zone except in the United States. Huawei has also become one of the world leaders in the smartphone industry. This successful development must be put into the context of Chinese industrial policy.

Employment in Europe has been strongly declining over the last 15 years. Many European players have given up or been bought out (these include Marconi and Siemens). Major companies have implemented many restructuring plans. Manufacturing sites, support services and R&D have been largely offshored. Even if Europe still hosts 2 major players (Ericsson and Nokia), the shift to Asia has been real as regards employment and more recently innovation. Ericsson and Nokia have announced restructuring plans.



Employment in Europe in the telecoms equipment sector (NACE 26.3) stood at 180,000 in 2013 and is likely to decline by 8% (to 165,600) in 2022, under the “business as usual” scenario.

Smart cards

Smart cards lie at the very heart of the telecommunications boom witnessed over recent years, since telecoms (cell phones) have been the main end market for smart cards. This market was worth around €2.3 bn worldwide in 2013. Financial services, public services (ID cards and national health service cards), and transport (contactless transport cards) are also important drivers.

Smart cards are one of the few sectors, if not the only one, where Europe is still clearly leading the game:

All the top players are European (French or German).

Europe is still the region concentrating the largest headcounts.

What is more, western Europe still has a strong industrial footprint, and not only in terms of R&D.

The figures, then, clearly favour Europe, but the trend is plainly less positive. European headcount has been oriented downwards in recent years. However, this is not the case for the smart card players’ global headcount. The bulk of employees and recruitments are shifting from western Europe to emerging countries in eastern Europe, South America and Asia.

The smart card sector is no exception to the general IT trends. More specifically, the movement of softwarization (with a shift of value added from hardware to software and related services), and machine-to-machine technology are currently some major issues which the players have to tackle. This also leads to more fragmentation in the market. From an oligopolistic situation, where strength is based on economies of scale for hardware production, there is a shift to a fresh paradigm with new players, IT giants or specific and smaller software companies entering the game.

Because of a likely merger between 2 of the 4 major players, combined with the recent trends, employment might decline by 20% from a level of 13,000 employees in 2013 to 10,400 in 2022 under a “business as usual” scenario.

Electronic components

The semiconductor sector evolves in close correlation with world Gross Domestic Product. Because of a highly capitalistic structure and potential pressures on plant capacities, the sector generally amplifies economic trends, with strong price changes. Moreover, the



semiconductor industry is at the very heart of several manufacturing value chains and a key vector of innovation.

Cell phones caught up a long time ago with the historical driver of the semiconductor industry, computers; they are now the biggest market for electronic components. Nevertheless, the highest growth rates are to be found on markets related to mobility and connectivity (such as the IoT and tablets).

Europe has historically been a stronghold of the sector, but this has been withering over the years. Europe has been faced with the rise of Asian players: first from Japan, then from South Korea and Taiwan, and China soon. Europe now ranks 6th in terms of total production.

The number of jobs in Europe within the semiconductor industry has been strongly decreasing for the last ten years because of the shift of production volumes towards Asia, but also because of competitive strategies based on financialisation (NXP), a choice to focus on specific segments (Infineon) or a trend towards externalisation of growing volumes to foundries (cf. fablite model).

Given the growing levels of investments required, most actors are adapting their strategies through alliances or M&A operations in order to retain financial and technological resources in the competition. The objectives of these huge M&A operations are also to gain bargaining power vis-à-vis huge clients such as Apple or Samsung, and to benefit from economies of scale while increasing R&D spending.

Public support is an essential factor in curbing rising costs, and Europe still seems to be lagging behind Asian countries or the US.

STMicrolectronics used to be the European leader, but that changed in 2015, NXP becoming the leader after the consolidation with Freescale. Infineon is the third European player in the top 20.

Our “business as usual” scenario forecasts a 15% reduction in the number of European

employees in the semiconductor sector, from 95,000 in 2013 to 80,750 in 2022.

Connectors

According to Bishop & Associates, the global connector market amounted to almost 53 billion dollars in 2014 (+ 7.8% vs 2013). Connector industry projections in the mid-run are good, with 6% CAGR (average annual growth rate) between 2015 and 2020 according to Bishop & Associates.

The worldwide connector industry was characterised by a major shift regarding regions’ share in global turnover, mainly explained by players (especially US or European groups) choosing to relocate their production to Asia. US and Japanese groups dominate the rankings.



The industry has experienced massive relocations of standard connectors towards Asia, especially in the telecoms and computers sectors or even automotive. Nevertheless, the trend is positive with regard to the remaining activities, especially in aerospace and industries with long-term growth perspectives and recognized competencies in Europe.

The main technological trends (mobility, IoT, Industry 4.0) stirring the whole ICT market will have an impact on the connector industry. The connector industry is involved in a continued concentration process.

The bulk of European connector production relates to automotive, professional electronics (with a huge number of end markets, such as industrial equipment and applications, transport, medical, etc.) and military/aerospace.

Most European players are family owned, earn the bulk of their sales in Europe and specialise in specific markets (such as military/aerospace).

Our “business as usual” scenario forecasts a 5% rise in the number of European employees in

the connector sector, from 36,000 in 2013 to 37,800 in 2022.

Consumer electronics and domestic appliances

The wide range of products, as well as their different features and classification, creates a highly fragmented market. Moreover, the sector is characterised by the existence of a large number of big companies manufacturing a broad palette of products. These companies are market leaders/top manufacturers for certain products, sometimes having competitors such as smaller and specialised companies.

The “connected home” refers to the idea that all the devices in a house can communicate with each other. This is the next big market for the coming years, and most of the consumer electronics and home appliance companies are developing products that can be integrated within this new concept.

Samsung, LG Electronics and other consumer electronics giants vying for first-mover advantage have shifted their focus from mobile devices, television and other saturated businesses, towards smart home technology devices.

At the same time, the smart home is a great opportunity for European companies such as BSH, Electrolux, Miele, Philips and Groupe SEB, which are market leaders: their know-how can be crucial in conquering new markets.

However, it is certain that the development centres will be kept in Europe, and most will probably increase their workforce. R&D represents an important component in a manufacturer’s internal structure and its importance will increase in the current dynamic environment.

Under a “business as usual” scenario, we expect a further 8% to 12% decrease in the number

of employees in the European home appliance industry, from 219,000 in 2013 to 197,100 in

2022.



Cables

The cables industry – a highly fragmented sector – represents the production and sale of power and telecoms cables widely used in the electric power industry, data communication, rail transit, automobiles, shipbuilding and other industries. The development of the sector depends directly on the evolution of each consumer sector. The cables market has grown at a reasonably strong rate, and growth is expected to accelerate until 2019. The cables market faces a set of challenges: wireless links, the development of Fibre to the Home (FTHH), a power market (solar panels) needing public support, and the scarcity of copper and aluminium.

Typical players in the cables market are well established, large companies. Such players are able to benefit from economies of scale, and are therefore able to increase competitiveness on price: this is the case with General Cable Corporation, Nexans, Prysmian Group, NKT Cables Group, LS Cable, Southwires, Tyco, etc.

Besides large companies, niche players (with geographical coverage/sectoral niches) such as Leoni, NKT, LS Cable, Huber & Suhner, Omerin, etc., are serious competitors.

Strong competition in the market forces players to permanently extend their portfolio in order to adapt to market demand. Some of the players choose to extend their market shares through acquisitions. The traditional players have been buying cable firms with strong potential in order to broaden their portfolio or to enter new markets.

According to Eurostat data and our estimates, the manufacture of wiring and wiring devices sector employed around 213,000 persons in 2013, compared to 252,000 persons in 2008.

Under a “business as usual” scenario, we expect a 5% decrease in the number of persons

employed in the European cable industry, from 213,000 employees in 2013 to 202,350 in 2022.

Computers The computer sector is facing a set of challenges due to a range of market trends, such as:

the decline of the PC market;

the market shift towards tablets. Some analysts have argued that the emergence of low-cost tablets such as Amazon's $50 Fire tablet represents a threat to traditional PCs1;

the rise of multi-architecture devices running competing operating systems;

the market shift to cloud-related infrastructure, software and services;

the growth of software-as-a-service business models.

None of the top 5 world players – HP, Lenovo, Dell, Acer, Apple – is European. Furthermore,

almost no manufacturing sites remain in Europe and these players have all reduced their

footprint in Europe.



Under a “business as usual” scenario, we expect a further 10% decrease in the number of employed persons in the European computer industry, from 80,000 employees in 2013 to 72,000 in 2022.

Industrial electronics

As a sub-sector of the electronics industry, industrial electronics is not defined exactly in statistical terms. In fact, it is ‘hidden’ within various segments of other manufacturing sectors, which increasingly incorporate electronic equipment and devices in their products. Electronic equipment is found in transportation systems (aeronautics, rail), in production systems, in energy and utilities networks, in medical instruments, and in consumer durables (automotive). The exact definition of “industrial electronics” used in this report to assess its size and evolution is specified in the statistical overview chapter1.

Even though most consumer electronics manufacturing has left Europe during recent decades, the European manufacturers still play a significant role in market segments such as healthcare electronics (34% in 2013), automation (28%) and energy technologies (27%).

These segments are also the key technological drivers of the digital transformation of the whole industry. Electronic technology contributes to accelerated automatization and networking, as well as to the Internet of Things. Thus, the electronics industry is facing technological innovations within itself, as well as functioning as an enabling technology for digital transformation in other sectors.

In contrast to all other ICT sectors, European producers are still playing a strong role in the industrial electronics market. This is particularly striking in the industrial automation sector, where 3 out of the top 5 global leaders are located in Europe, i.e. Siemens, ABB and Schneider-Electric.

Looking at the EU as a whole, the “business as usual” scenario would mean a slow increase of employment, at an average rate of 2% / year (the rate observed over the recovery period 2010-2013), in the industrial electronics sector over the coming years, from 1.4 million in 2013 to 1.6 million in 2022. Given the increasing competencies and competitiveness of non-European providers, as well as the strong trends of digitization and automation, this modest improvement is far from certain.

1 “Industrial electronics” in this report covers the following NACE codes:

26.51: Manufacture of instruments and appliances for measuring, testing and navigation (100%)

26.6: Manufacture of irradiation, electro-medical and electrotherapeutic equipment (100%)

27.12: Manufacture of electricity distribution and control apparatus (100%)

28.4: Manufacture of metal forming machinery and machine tools (25%)

28.9: Manufacture of other special-purpose machinery (15%)

29.31: Manufacture of electrical and electronic equipment for motor vehicles (100%)

30.1: Building of ships and boats (5%)

30.2: Manufacture of railway locomotives and rolling stock (10%)

30.3: Manufacture of air and spacecraft and related machinery (40%) The figure in brackets specifies the fraction of the NACE sector that is considered to be part of the ICT sector.



European ICT Sector SWOT analysis

STRENGTHS

- Europe still a major market

- European workforce skills

- European infrastructures

- Some strong sectors: industrial elctronics, smart cards, connectors, cables, telecoms equipment

providers, etc.- Strong industrial sectors with an increasing share of electronics

WEAKNESSES

- Few or no European digital giants

- Almost no manufacturing left in computers, telecoms equipment and consumer electronics

- No major players in mobile handsets, computers, consumer electronics

- Low public support for strategic segments

- Lack of venture capital

- EU turmoil/weakness/lack of firm governance

OPPORTUNITIES

- Global growth trend in the mid-run for most ICT markets

- Ride the tide of technological trends (IoT, Industry 4.0)

- Leverage industrial electronics through strong industrial sectors (aerospace, automotive, energy)

- Smart grid/industry/city

- Berlin, London, Paris, Stockholm: new hubs for innovation

- Connected home

THREATS

- US (innovation + industrial policy)

- Asia (growth, costs, innovation, industrial policy)

- M&A involving big European actors is a threat for most sectors

- Concerns about the future of large European groups (ST Microelectronics, Nexans)

- GAFA moving along the value chain (Google/Fiber roll out/payment, connected car; Netflix/film creation,

Amazon/book publishing)


Summary of the country reports 27

Summary of the country reports This chapter is based on the detailed information present in the Appendix 3 of the report, available at the following URL:

The main goal of these country reports was:

to provide an image of the public policies existing in Europe, directly or indirectly linked to ICT;

to identify the best practices arising from this analysis, meaning practices that actually prove to be efficient.

In terms of public policies, the emphasis was put on three areas:

Education policies regarding ICT

Tax policies addressing business and innovation

Public policies for support to innovation

The emphasis was put on 6 countries, the aim being to display diversity in terms of geographical, economic and industrial situations:

Finland

France

Germany

Italy

Romania

United Kingdom

Key elements regarding education policies for ICT

State of play in the selected EU Member States

All European countries are now aware of the importance of ICT skills development at school, and all are trying to carry out programmes to promote digital literacy. These courses aim at two very different types of skills: (1) "basic" ICT skills, i.e. being able to use digital tools such as computers or tablets; (2) the capacity to programme a computer / microcontroller-controlled device in a structured way.

There are still some obstacles, though, and the situation is heavily unbalanced across Europe. One major problem is the lack of public money. Policies such as the provision of digital devices for schools, or extra courses on ICT skills, may be cancelled, or delayed, when governments look for ways to cut spending (as was the case in Romania).

Another hurdle in the race to digital training is the fact that teachers may not be able to actually teach the ICT lessons, or, worse, to actually use the digital devices properly


28 Summary of the country reports

throughout the entire curriculum. In some countries, the ICT curriculum is not a compulsory part of teachers’ training.

Finally, another key aspect of the ICT education policies lies in higher-level education. There are growing concerns for the current, and future, shortage of ICT professionals all across Europe.

Identified best practices

Beyond basic ICT education (being able to use digital tools), it may prove relevant (as promoted in the new UK school curriculum, for instance) to include teaching of basic programming. IT thinking and programming must be “mainstreamed” in Europe.

ICT skills are becoming a mandatory part in the training of teachers in the UK.

In some Member States, programmes encourage students to learn Science, Technology, Engineering and Mathematics (STEM) topics (and more specifically computer sciences) at university. They include contests, advertising campaigns and extensive use of apprenticeships. This involves close cooperation between universities and businesses, so as to identify the future needs of the industry.

Key elements regarding tax policies

Important preliminary remark

Trade unions are legitimately concerned that companies actually pay taxes, and thereby make their contribution to the common good. However, when considering the country or region in which to invest, companies tend to place the countries or regions under consideration in a downward bidding game, where each area competes against the others by granting tax breaks and subsidies. These tax wars, as a general rule, are considered by trade unions to be deeply destructive, leading only to poorer public authorities, reduced public services for the weaker members of society, and deeper inequalities. Basically, engaging public authorities in tax wars (under the guise of "tax competition") is as destructive to society as engaging in cut-throat competition on price only between firms – with the same ultimate consequences: lower wages, worse working conditions, worse quality of products, worse environmental conditions, and survival of the most brutal. Trade unions are thus very cautious regarding policies where public authorities attempt to lure industrial investment with money only.



However, the study acknowledges the fact that such policies do exist. The description thereof does not imply that industriAll Europe, or its affiliates, endorse them in particular, or as a principle.


Tax policy is a broad topic, and at least two things have to be looked at separately.

First, the general corporate income tax regime is very different across European countries, with some engaging in tax wars more aggressively than others. The European trend has been clearly downwards with regard to the statutory tax rate. Individual countries attempt to lure businesses to invest in their country by reducing tax rates, in a downward (and ultimately self-defeating) spiral, under the discourse of not “impeding” business.

Second, most European countries have preferential tax schemes for knowledge-related expenses. Those schemes can entail significant differences between the statutory corporate tax rate and the effective one. Frequent tax relief schemes are:

Patent box, which provides businesses with lower tax rates on their profits from patented inventions (either sale or license). Such schemes have repeatedly been demonstrated as being totally ineffective in stimulating investment in R&D, and as extremely damaging by enabling multiple opportunities for tax avoidance and tax evasion.

Tax relief based on investments (investment amounts may be partly deductible).

Accelerated depreciation schemes on assets lead to a lower taxable basis, and consequently lower tax.

More importantly, R&D tax relief schemes make it possible to deduct a part of R&D expenses from the tax due or from the taxable income. Such arrangements exist in many countries and can be significant for some companies.

These schemes can be a key argument when companies allocate their resources per country. However, they can also be used as a tool for aggressive fiscal planning (aka tax avoidance).

0

10

20

30

40

50

60

19951996199719981999200020012002200320042005200620072008200920102011201220132014

Top statutory tax rate on corporate income (Eurostat)

EU 28

Germany

Finland

France

Italy

Romania

UK


30 Summary of the country reports

Moreover, they may evolve or disappear in the following years because of the OECD’s ‘BEPS’ (Base Erosion and Profit Shifting) action plan, which should be effective in 2016. Action 5 of the BEPS project tackles the issue of special tax regimes regarding intangible assets (including patent revenue taxation, R&D relief, etc.). Numerous tax schemes could be deemed illegal according to this plan. The practical application terms have still to be determined; this could be a topic in the future.

Key elements regarding innovation policies


The review of industrial and digital public policies in some European countries is not exhaustive, but can nevertheless provide some insights about what is done:

Contrary to what is done in France, for example, it is necessary to avoid the dispersion of public agencies carrying out policies. Simple and focused public schemes seem important.

SMEs seem to lag behind in terms of access to public funds, either because the procedures are not flexible enough compared to the development stage of the company, or because they do not have the resources (time or people) to seize the opportunities. It could be relevant to devote some of the resources and schemes to SMEs only, with flexible and adjusted procedures and demands.

Scheme Recipients Basis Rate / threshold Principle

Investment allowance

All companies Investment in plant,

machinery - All companies

Max amount: £500K (from 2016: down to 25K)

Deduction of the value of the items bought

for investment for the profit serving as basis for tax

Large companies (over 500 people, sales over €100M)

R&D expenses (personnel costs,

consumable materials, utilities, software)

130% For £100 of costs, reduction

of the tax basis by £30

Deduction of the value of the R&D expenses from the profit

serving as basis for tax

SMEs (fewer than 500

people, sales under €100M)

R&D expenses (personnel costs,

consumable materials, utilities, software)

230% For £100 of costs, reduction

of the tax basis by £130 AND for cash tax credit:

14.5% of R&D exp.

Deduction of the value of the R&D expenses from the profit

serving as basis for tax AND possibility to convert a tax

credit in cash if profit is negative

Patent box

Companies making profit from

exploiting patented inventions

Profit from selling or licensing patents

10%

Reduction of the corporate tax rate for the profit resulting from

patents for investment for the profit

serving as basis for tax

R&D relief

UK reliefs on corporate tax



Access to venture capital and credit is key to the development of start-ups. Public policies should make sure that they have proper access to funds and credit at each stage of their development, for instance through the existence of a State-owned development bank targeting SMEs (as in the UK and Finland).

Identified best practices

Cooperation between universities, research centres and firms seems to be a keystone for an efficient innovative process, from youth training, through the emergence of ideas, to large-scale commercialization. The promotion of some major clusters within a country (and not hundreds of them, like in France), revolving around top-level universities and a significant number of companies, both small and large, might help increase R&D expenditure.

Main public funding schemes of research (private and public) in France (2012, source: Inspection générale des finances)

Finland (one of the top European countries in terms of R&D to GDP ratio), is well-known for promoting in-depth cooperation between universities and private companies, even though the publicly-funded R&D expenditure itself is modest.

Subsidies, loans, capital Fiscal, social

capital


32Our trade union recommendations for a more competitive European ICT sector, with the social dimension fully included

Our trade union recommendations for

a more competitive European ICT

sector, with the social dimension fully

included

Executive summary

The ICT strategic study by industriAll European trade union leads to recommendations for:

industrial policy;

social policy.

Industrial policy recommendations rely upon the SWOT analysis performed during the study. They are structured around the idea of leveraging the opportunity brought by the Internet of Things in a limited number of "locomotive" application markets, whose demand has the capacity to pull the whole ICT sector. The “locomotive” application markets are those where European industry is already strong: power networks, transport systems, manufacturing technologies, security and defence.

In order to support this industrial policy, we recommend:

investment in industrial digital platforms, to perform the technical integration of the whole value chain that converges towards the “locomotive” application market,

the definition of standards, so that full interoperability is achieved between all components,

the promotion of innovation,

fair rules for the right to use data and software,

fair competition between countries and continents regarding taxes, and social and environmental rules.

These recommendations all aim at ensuring a fair distribution of the value added between all parties, for the sake of social fairness itself, and also to facilitate cooperation, and thus overall efficiency.

The effect of these recommendations on employment in the European ICT sector has been evaluated in this study. It is expected that they could generate an additional 210,000 jobs in 2022, compared to a “business as usual” scenario (see final chapter).

Social policy recommendations aim at improving working conditions in the ICT sector and in the sectors impacted by the digital transformation. They include new rights to skills, occupational health and safety, equality of rights in a digitally-transformed labour market, and workers’ rights in a digital workplace.


Our trade union recommendations for a more competitive European ICT sector, with the social dimension fully included 33

Contents of recommendations

EXECUTIVE SUMMARY ................................................................................................................ 32

1 RECOMMENDATIONS ADDRESS INDUSTRIAL AND SOCIAL POLICIES ...................................... 35

2 INDUSTRIAL POLICY: LEVERAGE THE OPPORTUNITY OFFERED BY THE “INTERNET OF THINGS” IN “LOCOMOTIVE” APPLICATION MARKETS ................................................................... 35

2.1 RATIONALE FOR THE PROPOSED INDUSTRIAL POLICY RECOMMENDATIONS. THE SWOT ANALYSIS ................ 35 2.2 GENERAL IDEA: LEVERAGE THE OPPORTUNITY OFFERED BY THE “INTERNET OF THINGS” IN

"LOCOMOTIVE" APPLICATION MARKETS ....................................................................................................... 36 2.3 PUBLIC POLICY TOOLS TO BE MOBILISED TO SUPPORT THIS INTEGRATED VALUE CHAIN STRATEGY .................. 37 2.4 MASSIVE PUBLIC/PRIVATE INVESTMENT IN INDUSTRIAL DIGITAL PLATFORMS ............................................ 38 2.5 SPECIFIC RECOMMENDATIONS FOR INDUSTRIAL POLICY IN SELECTED SUB-SECTORS OF THE EUROPEAN

ICT INDUSTRY ......................................................................................................................................... 39 2.6 STANDARDS ................................................................................................................................. 41

2.6.1 Fair, Reasonable and Non-Discriminatory (FRAND) conditions for defining and using the standards that underpin the digital integration of industrial value chains ......... 41 2.6.2 Mandate the use of a single standard in each “locomotive” application market ... 42 2.6.3 Interoperable communication standards for the industrial digital platforms in the “locomotive” application markets ................................................................................ 43 2.6.4 Ensure end-to-end interoperability: standards for addresses and semantics ..... 43 2.6.5 Standards for the security and confidentiality of data ........................................ 44 2.6.6 Ensuring the fast development of standards ...................................................... 44

2.7 PROMOTE INNOVATIVE START UPS ................................................................................................... 45 2.7.1 Structural support for seed capital funds ............................................................ 46 2.7.2 Support the developments of prototypes with innovative public procurement along the DARPA model ...................................................................................................... 46 2.7.3 A patient, professional, tightly regulated, Europe-wide stock market to finance high-growth innovative firms .............................................................................................. 46

2.8 ENSURE FAIRNESS TO SUPPORT COOPERATION AND INNOVATION IN THE DIGITAL ECONOMY ....................... 47 2.8.1 Regulating the rights attached to data ............................................................... 48 2.8.2 Regulating the Intellectual Property Rights attached to software ...................... 49

2.9 FAIR COMPETITION: “NO” TO FISCAL OR SOCIAL DUMPING.................................................................... 50 2.9.1 Fair competition within the European Union ...................................................... 50 2.9.2 Fair competition between the European Union and countries outside the EU ... 51

3 SOCIAL POLICY: FOR BETTER WORK IN A DIGITAL ENVIRONMENT ........................................ 52 3.1 INVOLVE WORKERS IN THE GOVERNANCE OF THE DIGITIZATION OF INDUSTRY ........................................... 52 3.2 SKILLS POLICY ............................................................................................................................... 53 3.3 LIABILITY AND HEALTH AND SAFETY RULES WITH AUTONOMOUS AND CONNECTED MACHINES ...................... 56 3.4 FIGHT FOR THE PRINCIPLE “EQUAL WORK = EQUAL PAY, EQUAL BENEFITS, EQUAL WORKING

CONDITIONS” IN SOFTWARE DEVELOPMENT ................................................................................................. 56 3.5 RIGHT TO DISCONNECT FROM THE DIGITAL WORK ENVIRONMENT .......................................................... 57 3.6 RIGHT TO PRIVACY AT WORK ........................................................................................................... 57 3.7 PROTECT WORKER-RELATED DATA WITH A SPECIFIC REGIME .................................................................. 57



3.8 EXTEND INFORMATION AND CONSULTATION RIGHTS TO INNOVATION ..................................................... 58 3.9 A DEDICATED SPACE FOR WORKERS' REPRESENTATIVES AND TRADE UNIONS IN CORPORATE INTRANETS ......... 59 3.10 DIGITIZATION SHOULD NOT LEAD TO EXCLUSION ................................................................................. 59 3.11 REFLECT ON WORKING TIME ........................................................................................................... 59



1 Recommendations address industrial and social policies

Trade unions should target industrial and social policies.

The recommendations for industrial policy are essentially grounded on the strategic analysis that was performed in Phase 1 and 2 of the project by the consultant team. The recommendations for social policy and internal trade union actions (detailed in the following chapter of this report) emerged from the workshop organised during Phase 3 of the study (Frankfurt / Main, 05-06 January 2016), in which trade union representatives discussed the results of the study.

The purpose of industrial policies should be to increase the number, and the quality, of industrial jobs in the European ICT sector itself. It is also to increase the number, and quality, of jobs in all industrial sectors which include electronics and software in what they make (e.g. in the metalworking sector – mechanical and electrical engineering, automotive, aeronautics, rail equipment, healthcare instruments, domestic appliances – but also in the textile and clothing sector). Indeed, the competitive position of these sectors in the market, and thus their capacity to generate value added, to be shared with workers, increasingly depends upon the features and functionalities brought to what they make by embedded electronics and software.

The purpose of social policies should be to improve working conditions in the European ICT sector, and more broadly in those sectors mobilising digital technologies.

The following recommendations address each of these two fields, in succession: industrial policy (§2) and social policy (§3)

2 Industrial policy: leverage the opportunity offered by the “Internet of Things” in “locomotive” application markets

2.1 Rationale for the proposed industrial policy recommendations. The

SWOT analysis

The industrial policy to be implemented should rely on the main strengths of the European ICT sector which have been identified in the strategic study:

tightly integrated industrial value chains in some sectors,

good infrastructure,

a highly-skilled workforce and world-class education and training facilities,

leadership in industrial automation and electric power management, in

telecommunications equipment, and in end-to-end security (specifically: smart

cards).

Industrial policies should also leverage some key opportunities that were detected, and whose effects will persist over time:



the emergence of the Internet of Things

the digitalisation of manufacturing operations (design, production, maintenance)

the transition to an environmentally sustainable economy and society: renewable

energy sources, energy efficient transport systems, circular economy for materials

the ageing of the population.

Finally, these policies should prevent the further development of some negative trends which have already been identified in the digital economy, and which threaten the very cohesiveness of European societies:

the ever greater outsourcing of work to countries outside the EU, which leaves

Europe with diminished production capacity, while internal offshoring and the

resulting downward competition within the EU regarding salaries and working

conditions is also an issue;

the concentration of power and wealth in a limited number of corporate or

personal hands, due to “winner takes all” models, which appear in the digital

economy for the following reasons:

o The marginal cost for reproducing the additional digital element of content or

software is around zero. We are in a “fixed cost” economy, aka a “zero

marginal cost” economy. The price of ensuring the sustainability of the business

model is thus equal to the fixed costs divided by the number of customers –

which gives a structural advantage to the biggest player in the market.

o The value of belonging to a network is a strongly growing function of the

number of existing members of this network. This “network effect” adds a

premium to the standard that is most widely used – whatever its intrinsic quality

– and locks whole markets into low-quality options, while giving a huge profit to

the owner of this winning standard;

the ever increasing surveillance of citizens and workers.

2.2 General idea: leverage the opportunity offered by the “Internet of

Things” in "locomotive" application markets

We recommend that European industrial players and public authorities seize the opportunities offered by the emergence of the Internet of Things. They should work together to define a limited number of "locomotive" industrial sectors, where Internet of Things networks would be deployed, and which would constitute reliable and large-scale application markets for the European ICT sector (as it is understood in this study, i.e. for the design and manufacture of semiconductors, electronic equipment and software).



Each of these “locomotive” application sectors would set up a coherent and interoperable Internet of Things network. Thereby, they would propose a complete industrial offering, combining their own, specific value added with that of dedicated electronics and software, in an integrated value chain strategy.

By generating high, predictable and profitable volumes, this strategy could warrant the construction, within Europe, of advanced manufacturing capacity, for high-volume production of digital semiconductors and also the creation of plants designing and manufacturing electronic equipment. It would enable European industry to win back strategic control over the supply of electronics and software, a key source of its non-cost competitiveness and of its (quality- and functionality-based) differentiation on industrial markets.

The "locomotive" application markets would be the following. They were identified during the strategic SWOT analysis as those of the relative “Strength” of European industry:

electric power networks, with the prospect of deep penetration of renewable

sources in the energy mix, and the smart management of decentralised supply, of

load shifting and of storage systems, aka “smart grids”;

multimodal hybrid transport systems for passenger and freight traffic, connecting

cars, buses, trains, trams, “soft” means of transport, in urban and inter-urban

settings;

digitally integrated industrial processes (which include design, production, logistics,

sales, distribution and Circular Economy functions: testing, maintenance, upgrade,

dismantling and recycling), aka “Industry 4.0”, with full traceability of items (using

“product passports”);

healthcare monitoring networks;

home appliance networks.

In addition, the sector of security and defence, including biometrics, although not considered in this strategic study, would also qualify as a potential “locomotive” application market.

2.3 Public policy tools to be mobilised to support this integrated value chain

strategy

We recommend mobilising the following public policy tools to implement the integrated value chain strategy outlined above:

massive public/private investment in industrial digital platforms (§2.4), including in

the manufacture of electronic components and systems, with clear mutual

commitments (and sanctions in case of non-compliance);



specific actions in each sub-sector of the ICT domain, which were identified during

the strategic study (§2.5);

standards, using the capacity for the Commission to mandate the use of standards

for the sake of the Internal Market (§2.6);

promote the development of start-ups, and their subsequent scale-up (§2.7);

ensure fairness to promote cooperation and innovation in the digital economy,

specifically regarding the rights attached to data and to software (§2.8);

ensure fair competition both within the EU and with countries outside it, with

neither social nor fiscal dumping (§2.9).

2.4 Massive public/private investment in industrial digital platforms

Industrial digital platforms are the technical infrastructure where the communication flows between all the elements of an industrial value chain are to be digitally integrated, tested and validated in real-life settings:

from design to production to sales to customer care and maintenance, within each

company,

from the component manufacturer to the equipment manufacturer to the systems

integrator, between companies.

Designing and operating these industrial digital platforms is a huge challenge. It is one of the pillars of the current policy project at the European Commission, DG Connect, on “Digitalising European industry”. We support this ambition, and recommend that significant public and private investment be dedicated to the development of these platforms.

We also recommend that these platforms should be developed, operated and run by open consortia, which apply Fair, Reasonable and Non-discriminatory (FRAND) economic and legal conditions to third parties wishing to use these platforms, and also to join the consortium. This will ensure that the economic benefits of the platform are fairly shared within society and European industry, with no "winner takes all" situations.

In order to secure the provision from within Europe of the components essential to the development of these industrial digital platforms, we support the objective that the European Union should double the value of electronic components and systems being produced in Europe by 2025. This is achieved by implementing the European Strategic Roadmap on Electronic Components & Systems published by the Commission, DG Connect, in June 2014, as part of its strategy on Key Enabling Technologies (KETs). This Roadmap includes massive investment both in supply (full factories) and in the demand of innovative sociotechnical systems (in the form of geographically dedicated "reference zones" for their digital integration and testing). However, despite much public relations hype around this Strategic Roadmap, the industry has so far failed to deliver on its promise. We consider this

https://ec.europa.eu/digital-agenda/en/digitising-european-industry

http://ec.europa.eu/digital-agenda/en/news/european-industrial-strategic-roadmap-micro-and-nano-electronic-components-and-systems-0

http://ec.europa.eu/digital-agenda/en/news/european-industrial-strategic-roadmap-micro-and-nano-electronic-components-and-systems-0

http://ec.europa.eu/growth/industry/key-enabling-technologies/index_en.htm



to be particularly worrying, and call upon all players in the European semiconductor industry to raise their actions to meet its stated ambitions.

2.5 Specific recommendations for industrial policy in selected sub-sectors of

the European ICT industry

2.5.1 Telecommunications infrastructure equipment

The key challenge for the years 2020 – 2025 will be the deployment of the 5th generation of mobile communications networks (5G). Public authorities have an essential role to play: in order to enable the fast and efficient roll-out of the technology throughout Europe they must make the necessary spectrum available. It is only if a uniform range of radio frequencies is made available for 5G across the whole European Union, within a tight and ambitious timescale, that operators will have the incentive to invest in the deployment of the technology. This will ensure that handsets will be usable whatever the Member State and whatever the infrastructure equipment installed. The calendar and conditions for spectrum auctions and 5G licensing auctions should thus be harmonised across the EU. The imposition of a time schedule with deadlines can be a very efficient tool to encourage Network Service Providers (NSPs) and networks equipment providers to speed up their investment and to overcome their coordination problem. It can furthermore lead these big players to attract around them a whole ecosystem of high-performance suppliers.

Telecoms infrastructures must be considered as a critical and strategic asset. Network Service Providers in Europe should adopt a more cautious policy with regard to procurement. A responsible policy should take into account not only prices but also issues such as national sovereignty and security, as is being done in the USA. Moreover, some guarantees concerning local employment and manufacturing should be included in tenders and in the award of contracts.

Europe must invest more in 5G, since the amount today is quite ridiculous. South Korea, a country of 50 million people, is able to mobilise as much money as a 500 million economic zone! The amount of money dedicated to 5G research should be tripled so as to attract to Europe a significant portion of the global ecosystem of companies designing and manufacturing wireless telecommunications equipment.

Europe must also use standardisation as a tool to promote its own manufacturers.

2.5.2 Smart cards / electronic components / connectors

Active public policies concerning security (e-identity, networks) can be used to keep major manufacturers in Europe.

Stronger cooperation between the 4 main micro/nano-electronics poles in Europe (Dresden, Grenoble, Eindhoven, Leuven) but also with clusters of related industries or even client sectors.



Ensure that the “Airbus of chips” ambition actually takes off, by raising the public investment of the 10/100/20 initiative from €10 to 30 bn. Guarantee thereby that the group has the capacities to invest in next-generation technologies in Europe and to face Asian competition.

2.5.3 Consumer electronics and home appliances

Protect local manufacturers from cheaper products – often of poor quality – by imposing quality standards.

Set stringent regulation in regard to energy efficiency and the use of eco-friendly materials.

Attract new investments by offering incentives for companies investing in EU countries, while demanding a long-term plan for the investment.

2.5.4 Cables

Ensure that massive infrastructure projects continue in Europe: in the high-speed communications and energy efficiency field.

2.5.5 Computers

Deployment of cloud computing, big data and security solutions in Europe should be imposed so as to protect European data.

Specific actions for supporting the emergence, development and consolidation (in Europe and not outside of it) of start-ups (see below).

Investing in European companies which are developing new and innovative products and at the same time taking measures to reduce the risk of acquisition by the big players in the sector (e.g. IBM, Lenovo, Acer, etc.), a strategy used very often in order to obtain the intellectual property of newly developed products or key persons.

2.5.6 Industrial electronics

There is a need for a more proactive industrial and innovation policy that supports the transformation of the sector by dialogue fora and innovation support policies (SMEs, start-ups) as well as financing instruments.

Industrial policy has to take into account the differences in the economic situation, the potential as well as the threats in the various sub-sectors of industrial electronics. While the main objective regarding “pure” electronics should be to cushion and accompany restructuring processes in a socially responsible way, “industrial electronics” are the enablers of deep transformations of the production and consumption system: (1) digitalisation of manufacturing and automation, (2) conversion of electricity transport and distribution networks to renewable energy sources (aka. “smart grids”), (3) data-based medicine, (4) inclusion of “smart” functions in transport equipment (automotive, rail, aerospace, maritime). They are in a fundamentally different position. Here, European companies in certain segments



are globally leading actors and have increased employment in recent years. This position has to be stabilised and strengthened.

For the whole sector, initiative up-skilling, further training as well as re-training, responding to skills shortages and shortages of skilled personnel are further important tasks. Skills development should also relate to the longer-term trend that opportunities for new and additional jobs in Europe will be not so much in assembly plants but increasingly in design, engineering and software centres, laboratories, control centres of plant networks and other functions in the “driving seat” of global value chains of industrial electronics.

This, however, raises the question of the future of existing workers in the sector, in particular in lower and less highly-qualified segments of employment. Here, challenges such as re-skilling, up-skilling and professional mobility will certainly become more and more important in the future, at both company and sector level.

2.6 Standards

2.6.1 Fair, Reasonable and Non-Discriminatory (FRAND) conditions for defining and using

the standards that underpin the digital integration of industrial value chains

The Intellectual Property Rights regime of the standards for industrial digital platforms has a decisive impact on employment in European manufacturing, and on the quality of this employment. Depending on who owns the Intellectual Property in these standards, the value added derived from using them will flow in one direction or the other, to one side or the other of the Atlantic Ocean.

It is therefore vital for European industry workers that these standards be non-proprietary, and that the economic and legal conditions for using these standards be Fair, Reasonable and Non-discriminatory (FRAND). It is only then that the value added being created by these standards will be fairly shared among all industry players, and among all industrial workers in Europe.

Under such an open and FRAND regime for the Intellectual Property embedded in digital communication standards, any firm or stakeholder active in the industrial sector has the possibility to contribute to the standard. It is also freely able to use the standard, and to integrate its machine or equipment into the network provided by other suppliers, so as to build a completely integrated system – and yet preserve sufficient margin to invest, innovate and provide quality jobs to its workers. The standard must therefore be a common infrastructure (and a common good) for the whole European industrial sector, for all to use (manufacturers of equipment, integrators, users and maintenance operators). If possible, and if this provides an appropriate business model for the contributors to the standard, the standard could even be based on Free, Libre and Open Source (FLOS) principles.



The definition of such FRAND economic and legal conditions remains an open issue2. Considering the economic importance of such a definition, and the power that Intellectual Property Rights have in channelling value from one company (or continent) to another, we consider that it is a priority for the Commission to work on this definition and clarification of FRAND economic and legal conditions. One concrete means to implement FRAND licensing could be to establish an open platform for the pooling and collective licensing of Standard Essential Patents, where economic and legal terms and conditions would be made fully public.

2.6.2 Mandate the use of a single standard in each “locomotive” application market

The issue of who owns the Intellectual Property embedded in the communication standards underpinning the digital integration of industry is so important that it should not be driven by industry and market forces alone.

According to the Alliance for Internet of Things Innovation (AIOTI), there are more than 40 different and competing standardisation initiatives in the field of industrial platforms. European industry has no time to waste in waiting for the battle to be settled, nor can it take the risk that the winner is a proprietary monopolistic or duopolistic solution (specifically if it is US based).

The European institutions have a decisive role to play here, in solving the market failure known as the "coordination problem" between market players. It is by providing a clear signal regarding the date at which the standard should be available, its main functional features, its interoperability requirements, and its Intellectual Property regime that the Commission can, and should, provide a critical competitive advantage to European industry.

We recommend that the European Commission mandate the definition by European Standard Setting Organisations (ESOs) of a single standard for the digital integration of the industrial value chain, in each of the “locomotive” application sectors identified above. This mandate is justified because it contributes to the single market for industrial products3.

A further policy step could be that its application be made compulsory in the European Union4.

By doing this, the Commission will send a strong political signal to industry leaders. This political signal will not only support the interests of European workers in the European ICT sector, but also bring the additional collective benefit of speeding up the uptake of digital

2 The Joint Research Centre of the European Commission is currently working on such a definition. Cf. Yann Ménière, “Fair, Reasonable and Non-Discriminatory (FRAND) Licensing Terms – Research Analysis of a controversial concept”, JRC, upcoming. 3 See the Opinion of the European Economic and Social Committee of 4 June 2014 n°INT/731 on Industrial Products, which advocates that standards are tools of industrial policy, beyond safety and environmental issues.

4 Under Art. 17 of the Telecoms Framework Directive of 2002.

http://ec.europa.eu/digital-agenda/en/news/aioti-recommendations-future-collaborative-work-context-internet-things-focus-area-horizon-2020

https://dm.eesc.europa.eu/EESCDocumentSearch/Pages/opinionsresults.aspx?k=(adoptiondate:2014/06/01..2014/06/10)(dossiername:INT)

http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32002L0021



integration of industrial value chains, by removing the hesitation and uncertainties within the market, when this market is confronted with competing technical solutions5.

2.6.3 Interoperable communication standards for the industrial digital platforms in the

“locomotive” application markets

In our view, the standard for the communication protocol and the data formats for the digital integration of the “locomotive” application markets must ensure full interoperability between machines and devices from different vendors. This implies a very high level of detail and of quality in the standard: the meaning of each byte must be explicit and unambiguous (or explicitly left for proprietary developments).

In order for the participants from the “locomotive” application sectors to be able to contribute actively to the process for the standardisation of telecommunication protocols with which they are not familiar, a specific training plan may be necessary. This training for telecommunications novices should be included in the mandate given to the ESOs, and the costs for this should be shared with (or even borne by) industry associations within the “locomotive” application sectors.

2.6.4 Ensure end-to-end interoperability: standards for addresses and semantics

Corporate networks that were originally disconnected from one another (e.g. in the design, manufacturing and accountancy / management processes of the same company, and the networks of different companies) now tend to connect with one another to build a single, giant network connecting whole value chains, in a percolation phenomenon. This evolution, which tends to be very brutal (it is a threshold-based phenomenon), would benefit from standardising the components of end-to-end communication in these upcoming networks that emerge at the scale of whole industrial value chains. This means standardising the addressing space and the semantics of the message.

The Internet of Things needs billions of addresses, one for each of the objects to be connected to the network. Current estimates put these needs at between 25 and 50 billion addresses between 2020 and 2025. The most commonly used addressing protocol, IPv4, only provides 4.3 billion public addresses. This is simply not enough.

The next version of the Internet Protocol currently existing is IPv6. It provides an address space that is amply sufficient to meet current and future needs. Despite a very slow start (it was defined in 1996), its world-wide deployment is finally taking off (the availability of IPv6 connectivity among Google users worldwide reached levels above 11% as of February 2016, with a peak in Belgium at 39.9%), so that we may expect that IPv6, or an updated version of this protocol, should be a good candidate to provide the large number of addresses in the public internet that the Internet of Things requires.

The EU should mandate that all network equipment in Europe must be compatible with the IPv6 protocol (or with an updated version of this protocol) by a given deadline (e.g. 2022).

5 This is a frequent situation in the case of competing standards: classic examples include the war of video formats in the 1970s (VHS / Betamax / V2000), and cordless telephony in the 1990s (DECT / CT2), etc.

http://en.wikipedia.org/wiki/IPv6

https://www.google.com/intl/en/ipv6/statistics.html#tab=ipv6-adoption&tab=ipv6-adoption

https://www.google.com/intl/en/ipv6/statistics.html#tab=ipv6-adoption&tab=ipv6-adoption

https://www.google.com/intl/en/ipv6/statistics.html#tab=per-country-ipv6-adoption&tab=per-country-ipv6-adoption



This initiative should be open to any other interested party in third countries. In this way, the Commission, as the Europe-wide public authority, would play a key coordinating role, as the Member States did for the transition from analogue to digital terrestrial television. This disruption of the market would also open a strategic window of opportunity for European network equipment manufacturers to increase their market share in routers, a key infrastructure element from which they have been very markedly absent.

The same rationale would apply for the application of a common semantics taxonomy, aka “ontology”, in order to enable end-to-end automated interpretation of the meaning of data. It is indeed only when each computing machine in the system can interpret the meaning of a given element of data that it can process it automatically. E.g. “Price VAT included” must be understood along the whole value chain, and be designated with the same code, to be understood by all devices. This ontology would benefit from being specific to a given vertical value chain, as is already being illustrated in the automotive industry with the Odette standard for the exchange of data along the European car manufacturing industry value chain. It could also reuse the legacy work of the United Nations Edifact.

2.6.5 Standards for the security and confidentiality of data

We recommend the development of a compulsory standard, defined in functional terms, ensuring the security and confidentiality of the transmission, storage and processing of online data (including in the “cloud” and in corporate networks): this will confirm the preservation of fundamental rights to privacy and confidentiality. This standard should be implemented in software, in microelectronic components and in complete systems. It could even mandate the existence of a hard “on-off” switch on electronic devices, in order to prevent the undesired collection of data.

The establishment of a demanding, rigorous standard for data security and confidentiality in Europe would have two positive outcomes:

1. It would leverage the current European stronghold in smart cards and biometrics,

so that developments in these fields would benefit EU industrial players;

2. It would support specific European values, such as the preservation of privacy.

2.6.6 Ensuring the fast development of standards

In the strategic debate about industrial digital platforms, and their use to support European industry, a leitmotiv is:

1. We need open, interoperable standards to ensure end-to-end communications and

interactions along the value chain;

2. We need these standards to be implemented quickly.

This is an absolutely strategic requirement if Europe wants to have its fair share of the benefits of the Internet of Things.

https://www.odette.org/about-us/

http://www.unece.org/trade/untdid/welcome.html



In order to achieve this goal, we request that the European Commission mandate the ESOs to develop such an open communication protocol and data format for the “locomotive” application sectors, by a given date (e.g. 2020).

In a further step, the Commission could support the activities of an Open Source community to develop the protocol stacks (i.e. the software that performs the communication) and the application software exploiting the data formats. This work would be performed in parallel to the definition of the standard (the legally binding text of which can remain proprietary under FRAND conditions for access, although a Free, Libre and Open Source regime would also be legitimate). This software development would be part of the mission of the “Future Internet” PPP or of a sequel programme.

The open standard and the underlying software would be simultaneously available at the end of the process, in an agile and parallel engineering process. The participation of this Open Source community in the standardisation process should also be financially supported by the Commission.

Another, bolder, option that could also achieve this challenging, and apparently contradictory, objective would require the Commission to:

1. ask the industry users (and only them) to agree on a specification of technical

requirements;

2. issue a call for tender to deliver a fully interoperable standard for communication

and interaction along industrial value chains (and an open source software

reference design), under the following conditions:

a) the tender process is open to all suppliers, large or small, firms or consortia

or standardisation bodies, in Europe or elsewhere;

b) the winner is awarded a (very significant) prize;

c) the selected winner transmits the full ownership of all Intellectual Property

Rights incorporated in the standard and in the reference design (or a

worldwide, permanent licence with a right to sublicense) to the European

Commission;

3. mandate the use of this standard for all companies operating in Europe, based on

the Telecommunications Framework Directive, and for the sake of achieving a key

public policy objective (as argued above).

2.7 Promote innovative start-ups

The entrepreneurial innovation model, based on venture capital financing of start-ups, is currently the almost exclusive focus of European policies aimed at supporting innovation. Despite this long-standing position, two significant gaps in financing persist: at the seed stage, and much later, when the company becomes international.

https://www.fi-ppp.eu/



2.7.1 Structural support for seed capital funds

Within the venture capital financing chain, the seed capital stage is widely recognised as the critical "valley of death" in the development of innovative firms. This stage lies between the availability of the firm's business plan and the production of the first commercially viable prototype. The profitability of seed capital investment firms – and their long-term survival – is hampered by high structural costs.

Seed capital funds generate high running costs because the people working in such institutions need to be numerous and highly competent, which therefore makes them expensive. They need to be numerous because they need to examine, select and later manage a large number of applicants for their funding, and they need to be competent because they must take investment decisions based on highly incomplete technical information and market data, with no industrial, commercial or financial track record to rely on.

We recommend that public structural support be allocated selectively to investment firms active at the seed capital stage, in order to create a sustainable economic model for seed capital fund management teams.

2.7.2 Support the developments of prototypes with innovative public procurement along

the DARPA model

The Defence Advanced Research Projects Agency (DARPA) in the United States funds the purchasing of advanced prototypes that embody breakthrough technologies, in a tender process. It is a small agency, with 140 technical project managers in charge of a USD 3 bn budget. It may be described as a form of “innovative public procurement”, typical of the “Entrepreneurial State”6.

The DARPA model should be used to leverage and promote new programmes in order to establish Europe at the forefront in many fields, and specifically to build prototypes or to set up pilots of digital platforms. Its calls for tender should be open to all applicants: firms large and small, universities, Research & Technology Organisations (RTOs), and consortia of all kinds. In order to avoid the appropriation of the funding by a single Member State, a rule could be set up that consortia should include entities from at least two Member States, with no capital ties between them.

2.7.3 A patient, professional, tightly regulated, Europe-wide stock market to finance high-

growth innovative firms

In order to scale up their operations beyond that which European venture capitalists provide (a few tens of million €), innovative firms need to find additional sources of financing, for example to fully industrialise a manufacturing process or to set up global sales networks. In the United States, such high-volume financing is provided by the NASDAQ. In Europe, such a market does not exist, despite repeated attempts (Easdaq,

6 M. Mazzucato “The Entrepreneurial State”, Anthem Press, 2013. http://marianamazzucato.com/the-entrepreneurial-state/



Nouveau Marché, Neuer Markt, Alternext7, Alternative Investment Market8). The reason why all European attempts to create stock markets for high-growth companies fail is in our view due to a flawed strategic option of low (or even zero) regulation favouring casino-like greed and leading to investors losing confidence.

We support the creation of a radically different, tightly regulated stock market to finance high-growth, innovative firms, on a European scale, in which the priority is on quality, patience and professionalism – not liquidity and fast money. More details on the nature of the proposed market regulation can be found in industriAll Europe’s Policy Brief n°2015/08 “Innovation by all and for all”, Part II, §8.b.

2.8 Ensure fairness to support cooperation and innovation in the digital

economy

“Winner takes all” models prevalent in the digital economy are a strong incentive for individual economic operators to engage in it. There are, however, also strong deterrents stopping them from cooperating. If economic operators fear that they may be stripped of their assets by engaging in a cooperation arrangement involving digital technologies, they will refrain from doing so, or be involved in endless legal discussions to attempt to protect their interests. The time spent on legal discussions on how to share the economic gains obtained from digitalisation directly translates into time lost for the technical or commercial development of innovation.

This is why legal framework conditions ensuring ex ante the fairness of the treatment of all economic operators engaging in the digital economy, whatever their size and without having to reinvent the wheel and pay the attached transaction costs at each new occurrence, are a strong contributor to the speed of development of digital technologies in Europe.

This fairness should specifically apply to:

the rights attached to data,

the rights attached to software.

7 Market capitalisation of only € 8.235 bio. in December 2013, with only 184 listed companies. 8 According to its Factsheet of 2010, the London-based Alternative Investment Market (AIM) listed a total of 3,125 firms over 15 years, of which 1,243 were still on the market, and 141 were transferred to the main London Stock Exchange – leaving 1,741 firms not being accounted for – and which most probably went bankrupt. It raised £ 67.5 bn, and its market capitalisation was £ 60.5 bn, having thus destroyed £ 7 bn, in addition to the complete value of the firms upon entering the market. Despite its announced ambition of supporting high-technology firms, these account for only 9% of the leading FTSE AIM 100 index, the rest being made up of mining, oil and gas, leisure and hotels, support services, specialty and other finance services and other unspecified activities.

https://www.euronext.com/en/markets/nyse-alternext

http://www.londonstockexchange.com/companies-and-advisors/aim/aim/aim.htm

http://www.industriall-europe.eu/Committees/IP/PolBrief/PolicyBrief2015-08-InnovationPolicy.pdf

http://www.industriall-europe.eu/Committees/IP/PolBrief/PolicyBrief2015-08-InnovationPolicy.pdf



2.8.1 Regulating the rights attached to data

We recommend engaging in a political discussion regarding the rights attached to data under a legal regime of licensing9. This regime should define who is entitled to mobilise these rights, for how long, where, and for what purpose.

Here is a list of the rights which could be attached to data, and which could each lead to the need for a specific licensing agreement:

to access,

to duplicate,

to store, and for how long,

to modify,

to erase,

to transfer – where, to whom, under which conditions (specifically with or without

the transfer of the original rights),

to aggregate – i.e. to analyse jointly with the same nature of data collected on

other machines / persons / items,

to correlate – i.e. to analyse jointly with different nature of data collected on the

same machines / persons / items,

to exploit, commercially or not, in anonymised form or not, where, when.

Thereby, the first collector of the data, i.e. the entity which has engaged in the investment to collect it, would have a specific role, that of the “data steward”, in charge of managing it properly and of concluding the licensing contracts. The “data steward” would of course be entitled to make a reasonable profit from this activity, but would have no monopoly.

The rights attached to anonymised aggregated data (which can be the purpose of statistical exploitation) could be differentiated from the rights attached to individual data (i.e. attached to a specific person, company, machine or item).

Multiple entities can legitimately claim access and rights of use over the same set of industrially generated data10. In order to avoid endless conflicts around equally legitimate

9 This means specifically that we consider the concept of data “ownership” to be fundamentally wrong. The concept of "ownership" is not neutral, it conveys the idea that once the data is "sold", the seller loses any further rights over the way it is used. In our view, the democratic discussion to take place on the rights attached to industrial data should leave open the option of maintaining a legal connection between the originator of the data (and potentially of others), and the data itself, across its whole life. This option of retaining a legal connection between the originator of the data and the data itself is made possible by the fact that data, unlike a material item, is a “non-rival” good (the concept of “non-rival” captures the fact that when one entity uses data, it does not deprive any other entity from using it as well, with no loss of benefit). 10 E.g. from an industrial machine: the manufacturer of the whole machine, in order to improve its design; the manufacturer of each specific module, for the same reason; the maintainer of the whole machine or of each specific



claims, we recommend providing a legal framework for non-exclusive rights over data, and making this feature of non-exclusivity mandatory – in order to cover the largest number of sectors. The exact list of "legitimate" claimants to data sets, and the conditions attached to accessing them, should be specified ex ante.

One way to proceed further in the direction of fairness in the use of “big data” might be the “Big data is open data” principle.

Any organisation (large or small, private or public) that gathers large amounts of data (more specifically, personal data) in the European Union would then be required to anonymise it, and to replicate it into a public, freely accessible, Europe-wide, open data repository, under a common, open standard (e.g. an XML profile) for all to use (e.g. economic, academic, public and non-governmental groups or bodies). Any "big data" in Europe would be managed as "open data". Personal (i.e. nominative, non-anonymous) data, however, would remain under the strict protection of existing European law, as would worker-related data, under a regime to be defined (see below).

The fact of “retro-identifying” personal data, i.e. of finding the identity of the person to whom data is attached, when this data had previously been anonymised (which is unfortunately often possible, when sufficient computing resource is available), should be considered a criminal offence, and punished accordingly.

2.8.2 Regulating the Intellectual Property Rights attached to software

Public authorities have encouraged innovation by legally protecting their interests, specifically against undue copying of their creative work. In the view of industriAll Europe, this is an entirely legitimate position.

Historically, two modes of protection have been attributed:

1. Authors’ rights over literary and artistic works;

2. Patents on inventions.

Authors’ rights are attributed to the physical person who created the literary or artistic work, and last in Europe for 70 years after the death of the last author (in the case of a collective work). By definition, a literary or artistic work is made public, and can be easily copied with low-tech means.

Patents are attributed to the inventor or to the firm employing the inventor. They last for 20 years after the registration of the first patent in a given country. This duration is much shorter than for authors’ rights. As a counterpart to this legal protection, the inventor must divulge his/her invention, approximately 18 months after registration, so that it can be further improved by others, thereby contributing to the common good.

module, in order to predict failures and to implement the necessary preventive measures in time; the operator, in order to measure performance and yield. This is only an example of the most obvious entities potentially interested in exploiting data. In real life, one could expect the number and variety of legitimate claimants wanting to access a given data set to increase very significantly.



In the case of software, the current European legislation11 is based on a fallacy that leads to permanent ownership of rights by corporations, with no requirement for divulgence. Software is protected like a literary or artistic work, so that there is no requirement to make the source code public (as would be the case for a patent), and technical means are used to make access to the source code de facto impossible. However, in contrast to standard literary and artistic works, the rights are owned by the company employing the developers. Since generations of developers follow one another on the same piece of software, and since all developers contribute as a collective to the software, the rights are extended over and over – and at least 70 years after the death of the last developer in the series. De facto, this means that software companies have all the rights, forever, with no obligation in exchange towards society.

This situation is not acceptable.

We recommend that the legal protection of software be limited in time to 20 years after the registration of the software code, and be conditioned by the publication of the source code.

2.9 Fair competition: “No” to fiscal or social dumping

The European ICT sector is faced with fierce international competition, from those countries outside the EU that have identified the highly strategic nature of the sector for the competitiveness of all industrial value chains (specifically: the United States of America, China, South Korea, Taiwan and Japan).

This competition takes several forms, where each potential industrial site attempts to lure investors by:

an abundance of subsidies and tax breaks, so that ever higher percentages of the

cost are borne by public budgets;

a downward spiral in social rights, working conditions and environmental

protection rules.

2.9.1 Fair competition within the European Union

Internal competition on subsidies between Member States in the European Union is prevented via the existing prohibition of State Aid in the Treaties (Art. 107, TFEU). Rules and standards for environmental protection are meant to be uniform across the EU, so that competition amongst Member States in this area is not too much of an issue (although differences in the implementation of rules may lead to de facto unfair competition).

11 Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:111:0016:0022:EN:PDF

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:111:0016:0022:EN:PDF



Internal competition on taxes should in our view be reinforced by measures such as the mandatory Common Consolidated Corporate Tax Base, which was relaunched by the European Commission in late 2015. Internal competition on social standards has made some progress (e.g. on working time, health and safety in the workplace, and social benefits such as maternity leave), but much more remains to be done. We strongly recommend that the European Union sets minimum social standards in terms of employment conditions and wages, e.g. the “living wage” concept.

2.9.2 Fair competition between the European Union and countries outside the EU

At international level, we recommend that the European Union should achieve a more balanced competition environment, by mobilising the following tools:

It should match the subsidies provided in countries outside the EU by using the

clause of Important Projects of Common European Interest (IPCEI) in the European

treaties (Art. 107 3b, TFEU). This clause allows the level of subsidies for industrial

projects to reach levels beyond those set up by internal competition rules, in cases

where EU interests are at stake. The European ICT industry should unite to promote

the EU common good in the sector, specifically in order to attract the massive

investment needed by the large-scale manufacturing of advanced digital

semiconductors;

It should set up internally the procedures preventing Base Erosion and Profit

Shifting (BEPS) of corporate taxation, as defined by the OECD, and pressure

countries outside the EU to implement them as well, by way of the new standard

regarding the prevention of tax avoidance by large multinational corporations;

It should improve the legal enforceability of "sustainable development" clauses in

Free Trade Agreements with third parties (such as the existing Free Trade

Agreement with South Korea, or those under discussion in 2016 with the United

States of America – aka TTIP, Vietnam or Japan). These "sustainable development"

clauses amalgamate all pledges regarding social and environmental rights. They

have become standard in all negotiations conducted by the European Commission

lately, but their application is not mandatory. Should the other party not comply

with these clauses, the European Union currently has no legal means, within the

framework of these treaties, to force the other party to actually fulfil its promises.

We recommend that the level of legal enforceability be raised, so that such legal

procedures become possible in the case of non-compliance by the other party, with

a threat to reconsider some or all of the improvements in terms of access to the EU

market, should this non-compliance persist.



3 Social policy: for better work in a digital environment

Social policies should improve working conditions in the European ICT sector, and in all industrial sectors experiencing a deep penetration of digital technologies in the workplace. These recommendations emerged during the workshop organised in Phase 3 of this project, on 5 and 6 January 2016 in Frankfurt / Main (Germany).

A first condition for this improvement of working conditions is the involvement of workers in the governance of the digitalisation of industry, at EU, national, sectoral and company level (§3.1).

As skills will be radically transformed by the digital transition of industry, they need to be broadly accessible to all workers, and supportive of their employability and career development (§3.2).

The specific health and safety risks for workers in a digital environment must be prevented (§3.3).

The principle of “equal work = equal pay and working conditions” must be upheld in digital workplaces (specifically in software development), where employment conditions are increasingly fragmented by international “crowdsourcing” practices by employers (§3.4).

Workers should be entitled to disconnect from their digital workplace (§3.5) and to maintain a form of privacy at work (§3.6).

Finally, in ICT companies which are increasingly dispersed geographically, and where the intranet is the locus of interaction between employees, this intranet should contain a private space for trade unions to carry out their activities (§3.9).

3.1 Involve workers in the governance of the digitalisation of industry

Digital technologies have caused, and will cause, disruptions in industrial value chains, with severe consequences on skills, employment and working conditions. For the uptake of these technologies to be socially acceptable, these changes must be anticipated early enough to be able to act, and to achieve a just transition for workers.

These changes must be discussed in existing social dialogue structures, within companies, and in each industrial sector, at national and European level.

These social dialogue structures should openly and transparently discuss:

the principles guiding the distribution, throughout the supply chain and between EU Member States, of the value added and of the employment created. This discussion is necessary for the sake of fairness, of cooperation, of the preservation of investment and innovation capacities at every point in the supply chain, and of territorial balance;

anticipation of change, and the potential prospects of sectoral restructuring;

strategies for up-skilling and re-skilling the workforce, and for professional mobility;

social conditions of work and labour relations, in a digitally transformed working environment.



In addition, but certainly not as a substitute, this discussion could take place in even broader stakeholder fora involving trade unions, employers, industry, academia and public authorities (as exemplified in Germany with the “Arbeit 4.0” initiative), along the whole value chain12, in a process of full participation of workers and of their representatives. These fora should operate at EU level, but also at national, regional, sectoral and company level.

3.2 Skills policy

European trade unions also consider e-Skills as a major field of discussion for social dialogue, and of action by public authorities. From an industrial point of view, a workforce with the right skills to use and to programme the digital tools currently being mobilised for the design or production of (material or immaterial) goods is an essential asset for the development of European industry. From a social point of view, the provision of e-Skills must foster the internal and external employability of all European workers, and thereby contribute to a more inclusive and fairer labour market.

European trade unions recommend actions regarding:

the institutional and economic arrangements for the provision of eSkills to the

existing and future workforce;

the content of the eSkills being provided;

the teaching methods for eSkills.

3.2.1 The institutional arrangements for the digital up-skilling and re-skilling of the

workforce: fairness and social dialogue

European trade unions support the following institutional and economic arrangements for the provision of eSkills to the existing workforce.

12 Stakeholders to be included in the discussion could include:

designers of tools for the development of logic and analogue circuits, as well as MEMS (if consistent with the application market chosen), potentially as Free, Libre and Open Source (FLOS) software

designers of IP (intellectual property) blocks integrated into semiconductors, potentially also under a FLOS legal regime

bodies involved in conducting technological research into semiconductors, i.e. suppliers of design and manufacturing technologies

designers of complete semiconductors, i.e. integrators of externally-sourced and internally-sourced IP blocks

manufacturers of semiconductors, whether integrated or externalised in foundries

manufacturers of connectors and packages

designers of electronic equipment, including those of smart card systems, i.e. integrators of semiconductors and passive components

developers of on-board software in such equipment or cards, potentially as FLOS software

industrial players in the application market(s) chosen, which integrate such equipment, electronic modules, smart cards and software in their commercial offering

public authorities in the regions and Member States concerned, as well as at EU level, which would then play their full role by coordinating the efforts and facilitating industrial development, when the markets fail to do so

the trade unions in the companies and sectors concerned, at national and European levels.



1. The acquisition of eSkills can require a long up-skilling or re-skilling process, for

whole populations of workers. Like any demographic phenomenon, the needs with

regard to the acquisition of eSkills must therefore be anticipated early enough, in a

strategic skills planning exercise, at company or sector level, in a national

framework, e.g. along the lines of the agreement signed in 2016 in Germany by IG

Metall and Gesamtmetall adapting VET curricula to the needs of “Industry 4.0”.

2. All workers should have equal access to eSkills at all levels, regardless of their age,

gender, employment status or nationality, and particularly groups with low

participation, such as the low-skilled, older workers and workers on temporary or

part-time contracts. Those that need training the most should not be the least likely

to obtain it13. It should be an obligation (and not an option) for the employer to

offer training courses to acquire eSkills, underpinned by an individual right to

training, preferably guaranteed by collective agreements14. This Life Long Learning

(LLL) concept is particularly relevant for eSkills, which tend to become obsolete

after approximately 5 years.

3. Social dialogue and collective agreements should define essential aspects of

training and Life-Long Learning measures at company, sector or national level, such

as access to training, its financing and the use of working time for training15. Social

dialogue should also define the way its outcomes are validated and recognised in

national qualification frameworks, in a way which ensures cross-border

comparability (e.g. using the European Qualifications Framework for Lifelong

Learning – EQF).

4. The digital competence centres that the Commission plans to implement in each EU

Region in the framework of its 2016 strategy to “Digitise European industry” could

be used as training centres to dispense eSkills.

We also welcome the efforts by the European Commission to support the mobility of workers in Europe. However, we reiterate that, in the view of the trade unions, mobility must be a voluntary process, and that the mobility of workplaces and of investment, instead of that of workers, would also be a very welcome means to achieve a geographic match between supply and demand of ICT skills in Europe.

13 ETUC, 2010: “Resolution: More investment in lifelong learning for quality jobs”, downloadable at: https://www.etuc.org/sites/www.etuc.org/files/Final_12-EN-LLL-for-quality-jobs_2010_2__2.pdf 14 industriAll Europe, 2015: “Strengthening our capacity to anticipate and deal with change in national and multinational companies in the EU”, downloadable at: http://www.industriall-europe.eu/committees/IP/PolPaper/AdoptedECDec15-Restructuring-EN.pdf 15 ETUC, 2009: “Resolution on initial and continuous vocational training for a European employment strategy”, downloadable at: https://www.etuc.org/sites/www.etuc.org/files/Resolution_LLL_17-18032009_EN_2.pdf

https://ec.europa.eu/ploteus/sites/eac-eqf/files/broch_en.pdf

https://ec.europa.eu/ploteus/sites/eac-eqf/files/broch_en.pdf

http://ec.europa.eu/newsroom/dae/document.cfm?doc_id=15267

https://www.etuc.org/sites/www.etuc.org/files/Final_12-EN-LLL-for-quality-jobs_2010_2__2.pdf

http://www.industriall-europe.eu/committees/IP/PolPaper/AdoptedECDec15-Restructuring-EN.pdf

http://www.industriall-europe.eu/committees/IP/PolPaper/AdoptedECDec15-Restructuring-EN.pdf

https://www.etuc.org/sites/www.etuc.org/files/Resolution_LLL_17-18032009_EN_2.pdf



3.2.2 The content of digital skills: long-term, vendor-neutral, focused on programming

European trade unions appreciate the initiatives by the Commission regarding eSkills, such as the Grand Coalition for digital jobs (DG Connect) or the e-Leadership initiative (DG Grow). However, we believe that training should not be a tool for dominant vendors of ICT technologies to pursue their lock-in strategy. On the contrary, training and Life Long Learning must be a means for users, both employers and workers, to achieve their goals. This is why we believe that social partners in user sectors, in the framework of social dialogue at all levels (industrial site, company, sector, Member State, European Union), should take the lead in defining the precise content of eSkills courses, curricula and certificates.

The eSkills transmitted to the workforce should ensure their long-term, internal and external employability, for workers to be able to reuse them throughout their whole career, in the whole labour market. This means that these eSkills being taught must be vendor-neutral, and based on general scientific and technical principles and open standards, which are permanent and transposable in all working environments.

Skills for the digital workplace should not be confused with the ability to surf the internet, to send tweets or to post on a social network. The fundamental change brought about by digital technologies is programming, i.e. instructing a perfectly dumb, perfectly obedient, but very fast machine to perform computational and material tasks. This requires an extremely rigorous and structured mind-set, with a good capacity for abstraction, and is the purpose of significant learning – which cannot be performed overnight, and needs some Science, Engineering, Technology or Mathematics (STEM) background. Teaching methods for eSkills should acknowledge, and be adapted to, the fact that not all workers, and specifically not all workers in manufacturing, have this background of abstract thinking.

3.2.3 Teaching methods for digital skills: technology is not a magic wand

The workplaces themselves need to be transformed in order to maintain and improve the capacities of workers to learn in the demanding environment of digitalised industry. Workplaces must be designed to be enhance and stimulate skills, by providing opportunities to exercise and improve all forms of intelligence, professional competence, and participation and initiative.

Digital technologies also provide new methods for distance learning, such as Massive Open Online Courses (MOOCs). These courses are quick, easy and cheap to produce (by placing a video camera in a classroom) and to disseminate (on a streaming website). However, we recommend ensuring that digitally enhanced distance learning tools made available to workers be effective and efficient, with measurable outcomes.

Specifically, we are aware that distance learning suffers from massive drop-out rates, and its digital avatar is no exception16. Simply watching a video, with no interaction with the teacher, and a teacher who has no feedback on the level of understanding by his/her

16 Gütl, Christian (et al.): “Attrition in MOOC: Lessons Learned from Drop-Out Students”, in Uden, L., Sinclair, J., Tao, Y.-H., Liberona, D. (Eds.), “Learning Technology for Education in Cloud - MOOC and Big Data; Third International Workshop, LTEC 2014, Santiago, Chile, September 2-5, 2014. Proceedings”, Springer, 2014.

https://ec.europa.eu/digital-agenda/en/grand-coalition-digital-jobs

http://www.eskills-scale.eu/home/



audience, is a very inefficient means of learning. In addition, issues regarding security and the verification of the identity of participants affect its credibility. We believe that these digital learning tools should be complemented with a lively interaction with a teacher or tutor, with active exercises, and with final certification of the acquired competence.

The full potential of existing training methods, such as apprenticeships, should be fully leveraged and generalised in Europe as a good practice. Apprenticeships should be of high quality, and well recognised on the labour market and in national qualification frameworks. We suggest that they correspond to at least a European Qualification Framework (EQF) level 4 or a stepping stone eventually to that level (e.g. the European Computer Driving License – ECDL – which is a Europe-wide qualification in basic computer skills).

3.3 Liability and health and safety rules with autonomous and connected

machines

The liability for accidents caused by digitally connected, autonomous vehicles, machines and robots, when they are in direct interaction with human workers, should be defined. This loss and damage compensation for the worker must be simple and straightforward: s/he cannot wait for the lawyers of all the parties involved to agree on the ultimate liability.

The "safety of machines" Directive (2006/42/EC) should be adapted to this new environment. For this purpose, the "Feedback method" that was developed by the European Trade Union Institute (ETUI) to collect the concrete experience of workers using machines, and to feed it into the legislative or normative process, should be used.

3.4 Fight for the principle “equal work = equal pay, equal benefits, equal

working conditions” in software development

Digital transformation enables unscrupulous companies to push ahead their divisive agenda of segmenting the workforce between a dwindling “core” of provisionally secure employees under open-ended contracts, and a diversified array of precarious and badly protected workers, where each layer is under threat of being dumped into the lower one, and lured into obedience by the promise of being promoted to the higher one. We are witnessing dramatic increases in the numbers of agency workers, of fixed-term contracts, and of forms of employment, such as “crowd working” and forced / bogus self-employment, which are branded as “new”, but actually revert to 19th-century contractual conditions for labour.

This evolution is particularly prevalent in the ICT sector, where software development can be performed remotely by teams that are geographically dispersed, and where workers from all continents are placed in competition with one another.

http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32006L0042

https://www.etui.org/Topics/Health-Safety/Safety-of-machinery-directives-and-standards/Standardisation/Knowledge-base-for-an-active-ETUI/The-strategy-for-improving-machinery-standards-through-users-feedback



Trade unions cannot accept these “divide and rule” tactics by companies. IndustriAll Europe will fight to include all persons working for a company in the coverage of collective bargaining agreements, whatever their legal status.

3.5 Right to disconnect from the digital work environment

Digital technologies must contribute to social progress and human emancipation. In our view, this is an issue of human rights and of basic freedom. The contractual employment relationship is an exchange between security for the employee and subordination to the employer, limited in time and framed by the labour regulations.

The worker must be given the right to disconnect from the more and more invasive digital tools. In order to make this right effective, we recommend the institution of technical procedures that make it possible to force the disconnection of workers from their digital work environment, out of working hours. Examples of such measures are:

the shutdown of access to email servers, according to the local time zone, and with

exceptions for those workers who are on alert duty;

the automatic redirection of telephone calls to a voicemail server.

3.6 Right to privacy at work

Employers have the right to ensure that their employees actually perform the work that they are paid for, and that they respect safety and security rules. Some form of monitoring of workers by their employer is thus legitimate. However, the technical means made available by digital technologies enable a level, a permanence and a frequency of surveillance that is beyond anything experienced so far.

This excessive surveillance is resented by workers. It is also an issue for employers, because it leads to demotivation and passive/aggressive behaviours. We recommend a right to privacy at work. The exact limits of legitimate monitoring, adapted to each workplace situation, should be the purpose of explicit social dialogue.

3.7 Protect worker-related data with a specific regime

Worker-related data can be defined as the data relating to professional activities or to the performance and behaviour of an individual worker or of a team. This measurement can be performed in the workplace, on the move (mobile office), or at home (home office). A typical example of worker-related data is the measurement of the time spent on each task.

With networked sensors and automated processing, the technical and economic feasibility of permanent worker surveillance has become a reality.

It has been a constant concern for trade unions, ever since the chronometers of Taylor’s “scientific organisation of work”, to discuss and regulate the surveillance of workers, and the use made of the data collected (e.g. when employers transmitted to one another their records on a given worker). Trade unions cannot accept that worker-related data be stored, processed or even transferred from one company to the next, under the general



framework of “free flow of data” applicable within the EU for “industrial data”, without the knowledge and consent of the workers involved. Neither can they accept that worker-related data be sent specifically to the EU Member State where it is the least protected, in a race to the bottom.

Worker-related data must be protected, with a specific legal regime, valid at EU level, defining minimal standards of protection. This regime should be distinct from that of personal data, and also from industrial data. It should go beyond the vague considerations of the General Data Protection Regulation, Art. 88 “Processing in the context of employment”17, adopted on 14 April 2016, which essentially refers the issue to national legislation or to collective agreements, without setting minimal standards, and without even imposing such a specific regime.

Since the protection of worker-related data is very often weaker or even non-existent outside the EU, we recommend that all worker-related data must be stored within the European Union, with no possibility to transfer it outside.

3.8 Extend information and consultation rights to innovation

Workers’ rights to information and consultation could be made more proactive than is currently foreseen (e.g. in Directive 2002/14/EC), by systematically including information and consultation on innovation-related topics, such as new work organisation, industrial processes, or commercial offerings.

Information and consultation rights could thus be made into a positive means to enable companies and workers to proactively engage in change. Adding such anticipation issues to the mandatory agenda of information and consultation discussions with workers could be the purpose of a policy which would be serious in genuinely supporting and generalising workplace innovation.

A good example of such extended information and consultation rights, including a chapter on the anticipation of change, is set by companies like Safran, Engie and Schneider Electric in their European Works Council agreements. These company agreements could be used as blueprints for further generalisation.

17 Article 88 Processing in the context of employment 1. Member States may, by law or by collective agreements, provide for more specific rules to ensure the protection of the rights and freedoms in respect of the processing of employees' personal data in the employment context, in particular for the purposes of the recruitment, the performance of the contract of employment, including discharge of obligations laid down by law or by collective agreements, management, planning and organisation of work, equality and diversity in the workplace, health and safety at work, protection of employer's or customer's property and for the purposes of the exercise and enjoyment, on an individual or collective basis, of rights and benefits related to employment, and for the purpose of the termination of the employment relationship. 2. Those rules shall include suitable and specific measures to safeguard the data subject's human dignity, legitimate interests and fundamental rights, with particular regard to the transparency of processing, the transfer of personal data within a group of undertakings, or a group of enterprises engaged in a joint economic activity and monitoring systems at the workplace. 3. Each Member State shall notify to the Commission those provisions of its law which it adopts pursuant to paragraph 1, by … [two years from the date of entry into force of this Regulation] and, without delay, any subsequent amendment affecting them.

http://data.consilium.europa.eu/doc/document/ST-5419-2016-REV-1/en/pdf


59

3.9 A dedicated space for workers' representatives and trade unions in

corporate intranets

In the physical world, workers' representatives and trade unions have the right to be allocated a dedicated, private space in the company's premises for them to hold their meetings and to organise. The equivalent right should be given to workers in the digital workplace, specifically in companies in the ICT sector which tend to spread working teams over multiple sites and time zones.

We recommend that workers' representatives and representative trade unions in a company be given a private, specific space on the corporate intranet, under conditions to be mutually agreed with the employer.

3.10 Digitalisation should not lead to exclusion

Digitalisation can leave large segments of society behind, specifically those people not able or not willing to use digital devices.

These persons should be protected against the forced adoption of digital technologies or devices. Appropriate legislation should make sure that alternative technologies remain available to customers and citizens18.

3.11 Reflect on working time

Digitalisation brings with it remarkable productivity gains. The working time needed to perform many value-adding tasks (including highly-qualified tasks in R&D&I and product design) will be dramatically reduced. Teleworking enabled by digitalisation specifically has a remarkable potential for saving time, infrastructure capacity and energy on daily commuting between home and workplace.

In our view, a broad discussion, specifically in collective bargaining and social dialogue institutions, should take place regarding the allocation and distribution of these productivity gains. The discussion should bear upon whether these productivity gains should be allocated to investments, returns to shareholders, increased consumption or increased leisure for workers.

18 This is proposed by the initiative “Keep me posted” http://www.keepmepostedeu.org/, supported by a wide range of MEPs and by UNI Europa.

http://www.keepmepostedeu.org/


60 Recommendations for internal action by trade unions

Recommendations for internal action

by trade unions We recommend that trade unions should lobby to support the industrial and social public policies outlined above.

In addition, trade unions should adapt their recruitment strategy and their tools to the digitally transformed workplace.

Lobby public authorities to support the adoption of industrial and social policies

Trade unions, and specifically industriAll European trade union, should mobilise the whole range of lobbying tools to support the adoption of the industrial and social policies recommended in this document. Other European trade union federations, such as UNI-Europa, or the ETUC, are also invited to join this effort. To that end, they should:

identify the policy fora where the digital transformation of industry is being

discussed, and obtain a statutory position in them, in order to be involved, and

listened to, early in the process. This is valid at all levels: regional, national,

European;

share with their peers at European level the discussions being held in these fora,

and the positions that they have developed, so as to reach unified trade union

positions on these issues. To this end, the structures of industriAll Europe should be

actively mobilised (sector activities, policy committees such as Industrial Policy or

Collective Bargaining);

perform lobbying actions vis-à-vis administrative technical staff, decision-makers

and members of Parliaments (at all levels), to support common trade union views.

This lobbying should be performed in cooperation with allies in industry (social

partners) or in civil society (NGOs), on an ad hoc basis;

mobilise the resources of institutionalised social dialogue, at European and national

level. In many European Member States, and at EU level, institutionalised social

dialogue has a privileged position in the consultation process regarding public

policies, and specifically those with an impact on employment volume and

employment conditions. This institutional toolbox should be fully mobilised to

promote our views. This implies that trade unions should widely share these

recommendations and the underlying study with employer associations.


Recommendations for internal action by trade unions 61

Adapt trade union recruitment strategy and tools to the digitally transformed workplace

Organise the workers in the digitally transformed workplace

The digital transformation of industry spawns new categories of workers, with which trade unions have little experience:

precarious workers,

crowd workers, (bogus) self-employed workers,

white-collar workers, such as highly-skilled software engineers and ICT managers,

workers in start-ups and emerging economic activities (e.g. electronic games),

home workers.

Trade unions should dedicate specific efforts to organise these workers, whose needs are very different from those of trade unions’ existing constituencies, but among whom the recruitment potential is huge. This means, among other things:

allowing all economically dependent workers (whatever their formal legal

relationship to the company allocating the tasks) to be members of trade unions,

and to be covered by collective bargaining agreements;

reassessing the pros and cons of teleworking / homeworking / co-working, including

more freedom to the worker, reduced commuting, but more isolation, increased

psychosocial risks and loss of knowledge sharing, and thus of innovation capacity;

establishing online and telephone contact points with dedicated personnel to

answer the questions and concerns of these workers, e.g. by following the example

of the FairCrowdWork web site of IG Metall;

getting information when possible in worker representation structures at local,

national or European level, on the employment of contract workers, freelance

workers or other dependent workers;

promoting trade union discussions on company and sector strategies, specifically

regarding innovation (in products or in processes) in order to develop credible

alternatives to those proposed by management, and to create attractive

opportunities for white-collar workers.

Organising this broader range of workers, with the aim of achieving the same set of rights for all, will prevent the development of hierarchical castes of workers in Europe.

http://www.faircrowdwork.org/en/watch


62 Recommendations for internal action by trade unions

International digital coordination platforms for trade unions and workers

Company management coordinates worldwide, and exploits, this unity of decision-making to put workers in competition against each other internationally. This central management and control is made more efficient by digital means.

In order to combat this central control in corporations, employees have traditionally built coordination networks. Most of these networks, however, are based on physical means, and do not yet fully exploit the resources that digital technologies might supply to support workers' movement.

In the digital age, trade unions should make full use of the resources offered by digital technologies. They should build up digital platforms and networks dedicated to European and worldwide democratic coordination of their action, as a complement to existing or future "physical" coordination structures, in order to:

1. disseminate and share information about working conditions and wages, company

or sector specific events and mobilisations (as was achieved with the platform

Future@HP, set up and managed by IG Metall);

2. collectively and democratically define common demands and policies vis-à-vis

company management, national and European authorities.

We recommend the development of (preferably open source) dedicated software to support this international, cross-lingual democratic coordination of workers. The development of such a tool could be the purpose of a project by industriAll Europe and potentially by other European trade union federations, provided that the necessary financing is covered by external means.

In order to address the language barrier within the EU, trade unions could request access to the Machine translation facility of the European Commission, which is currently open only to public administrations.

https://future-at-hp.net/

http://ec.europa.eu/dgs/translation/translationresources/machine_translation/index_en.htm


What can be expected from the implementation of these recommendations? A first quantitative assessment for the year 2022 63

What can be expected from the

implementation of these

recommendations? A first quantitative

assessment for the year 2022

Syndex and Wilke, Maack & Partners have estimated the quantitative impact, in terms of employment volume and quality, of the implementation of these recommendations. The date at which the impact should be evaluated is 2022, i.e. five years after the publication of the present report. The study gives global figures in terms of employment loss under a “business as usual” scenario, and estimates the achievable gains if the proposed recommendations are implemented.

Methodology for the construction of the scenarios

A multi-step approach was used in order to build each sub-sector scenario, both “business as usual” and “desired state” scenarios.

The first step was to look at and rely on the recent trends regarding employment in Europe:

Has it been downwards/upwards, or is it steady?

On a European scale vs global scale?

Are the major companies European or not? Are the decision-makers located in Europe? Do governments have their say in the decision-making process?

The second step was to include the most recent decisions and trends that may not have impacted the headcount numbers yet, but certainly will:

Recent M&As (which always come with targets in terms of “synergies”);

Restructuring plans already announced;

The third step was to infer future trends and to devise hypotheses about corporate strategies, taking into account:

The global economic context;

Hot technological issues;

The potential public support to foster local employment (China, Taiwan);

The possibilities (or lack of possibilities) for relocating manufacturing;

The presence (0r absence) of outstanding skills in Europe.


64What can be expected from the implementation of these recommendations? A first quantitative assessment for the year 2022

State after the implementation of the recommendations

Hypotheses taken into account for the desired state scenario

Telecoms

1 Under the desired state scenario, we assume:

Effective support to start-ups to help them find funds and commercialize their products

Retaining skills in Europe, at worker / technician / engineer level

Active procurement policy turning to European suppliers

Active public policies (at both national and European levels) concerning security

Given those hypotheses, our “desired state” scenario forecasts that the number of jobs in the sector would remain steady until 2022.

Smart cards


Jobs in European manufacturing do not increase but are at least maintained

R&D functions are maintained in Europe for all major players, as new issues and activities arise (NFC, M2M, software component, etc.) and offset the general movement of rationalisation

On-going restructuration programmes are completed

A merger occurs between two key players in the industry, which leads to:

restructuration of corporate functions (HR, finance, supply, IT), and job cuts in Europe (which still hosts a good part of those functions);

R&D and manufacturing are not heavily impacted by rationalisation.

Given those hypotheses, our “desired state” scenario forecasts that the number of jobs in the sector would decline by about 10% by 2022.

Electronic components


Europe takes advantage of the positive technological trends of IoT, big data or smart industry in which European actors may have competitive strengths and competencies

A massive public investment programme is put in place to unlock a significant impact on the entire value chain

Raising the public investment of the 10/100/20 initiative from € 10 to 30 bn. Guarantee thereby that the group has the capacities to invest in next-generation technologies in Europe and to face Asian competition



Reinforcing the chain collaboration, insisting, for example, on stronger cooperation between the 4 main micro/nano-electronics poles (Dresden, Grenoble, Eindhoven, Leuven) but also with clusters of related industries or even client sectors

Facilitating business cooperation or combination between European actors (even concerning M&A), which was the initial idea of the “Airbus of chips” programme

=> Such initiatives could help in relocating production volumes and jobs within Europe

Given those hypotheses, our “desired state” scenario forecasts that the number of jobs in the sector would decrease by 5 % by 2022.

Connectors

Under the desired state scenario, we assume:

Europe takes advantage of the positive technological trends of IoT, big data or smart industry in which European actors may have competitive strengths and competencies

Manufacturing jobs increase and capacity investments are located in Europe, while most of R&D competencies stay in Europe

End markets for specific connectors keep on growing (aerospace, industries, automotive)

There is no major M&A involving an important European actor

The initiative 10/20/100 is fully completed and promotes the entire value chain including the connectors industry

Given those hypotheses, our “desired state” scenario forecasts that the number of jobs in the sector would increase by 10% by 2022.

Consumer electronics and home appliances


R&D competencies stay in Europe

Europe develops its own standards for connected appliances and smart homes

Higher demand in Europe

No more major M&A involving European actors

New investments in production sites from non-EU companies (Turkey and/or China)

A quicker completion of cost-cutting programmes

Given those hypotheses, our “desired state” scenario forecasts that the number of jobs in the sector would decrease by 2% or even remain unchanged by 2022.

Cables


Manufacturing jobs are maintained



R&D functions increase in new technologies

On-going restructurings are completed and no new restructurings follow

Minor mergers between niche players

The economic situation recovers and infrastructure projects continue in both western and eastern Europe

Given those hypotheses, our “desired state” scenario forecasts that the number of jobs in the sector would stay stable until 2022.

Computers and industry-related IT services

Under a desired state scenario, we expect that the conditions for a further revival of the sector could be created, given the fact that the workforce in the sector has already reached a low level that could prove to be the “ground level” – as most of the manufacturing has already disappeared and most of the jobs are related to infrastructure, service, projects and other high-end technologies.


Deployment of cloud computing, big data and security solutions in Europe

Higher demand for local content (servers) due to security reasons

Emergence of smaller actors in cloud and security business

Development of R&D competencies in Europe

Cooperation between companies and formal education institutions

Establishment and consolidation of Global Competence Centres in Europe

Given those hypotheses, our “desired state” scenario forecasts that the number of jobs in the sector would stay stable until 2022.

Industrial electronics

This would be a scenario where the potential and strengths of European industrial electronics manufacturers and providers of integrated solutions are strongly backed by an active industrial policy, and by significant investment in infrastructure (specifically in power and transport networks).

Europe's governments can play an important part in helping European industry to become more competitive. In many areas, companies on the old continent already lag a long way behind rivals in the U.S. and Asia, to some extent because their governments have resolutely promoted many elements of the digital future.

It is not advocated that Europe follow suit and build up central structures; however, companies and governments must find a European solution. A regulatory framework is needed that allows Europe's diversity and its industrial capabilities to be translated into competitive advantages. It is also important to coordinate European activities and speak with one voice when representing Europe's common interests on the international stage. This is particularly important with a view to defining industrial and other standards.



Rather than chasing the unrealistic goal of boosting manufacturing's share within GDP in Europe from its current 15% to 20% by 2020, the EU should focus on providing a supportive and enabling framework for the manufacturing sector. Reaching the 20% goal in Europe would mean that countries such as the UK, Italy, Spain or France, which for decades have been shutting down their industries and are now between the 10-15% marks, would have to re-establish manufacturing on a huge scale in less than five years, a scenario which is totally unrealistic.

If the 20% objective is to be achieved in a mid-term perspective, it is likely instead that it will be achieved under the conditions of a digitalised manufacturing environment. Products currently manufactured in China will not return to European sites. The goal should be, however, that they will be manufactured by European robots or machines which are designed and programmed by European engineers. Opportunities for new and additional jobs in Europe will be not so much in assembly plants but perhaps – if the conditions are right – by working in design, engineering and software centres, laboratories, control centres of plant networks and other functions in the “driving seat” of global value chains of industrial electronics. However, this raises the question of the future of existing workers in the sector, in particular in less well-qualified segments of employment. Here, challenges such as re-skilling, up-skilling and professional mobility will certainly become more and more important in the future, at both company and sector levels.

This would be a desired state scenario, although one which requires much more proactive industrial policy as well as employment policy/skills development measures than is the case currently.

Given those hypotheses, our “desired state” scenario forecasts that the number of jobs in the industrial electronics sector would increase at an annual rate of 3% / year (instead of 2% / year under the “business as usual” scenario) by 2022.

No forecast is made regarding the services part of the ICT sector, i.e. the software development services for industry.

Quantitative assessment of the possible outcomes regarding the ICT European headcount19

The table below sums up the consequences on headcounts for each sector, under both the business as usual and desired state scenarios.

The total estimate regarding headcount in the European ICT sector is around 2.2 M people, of which the bulk (1.4 M) work in industrial electronics companies.

19 Please note that headcount numbers for each sector may originate from different databases and different years (between 2012 and 2015). They are estimates that should be taken as such.



The second biggest sub-sectors would be consumer electronics and home appliances (mostly home appliances, while European consumer electronics manufacturing has almost disappeared), and cables.

For the next five years, the headcount figures would increase by 9% under the business as usual scenario:

The electronics field (electronic components, smart cards) would suffer the most;

Connectors, cables and industrial electronics would be the most dynamic.

The best case scenario or “desired state scenario” anticipates an increase of 19% in the number of ICT jobs in manufacturing by 2022.

The gap between the two scenarios amounts to more than 210,000 jobs that could be protected or created in the European ICT sector, given the complete and timely implementation of the recommendations mentioned above. This estimate covers manufacturing alone, and excludes the software development services for industry.

-30%

-20%

-10%

0%

10%

20%

30%

40%

Headcount % change per sub-sector

Business as usual scenario Desired state scenario



ICT Jobs in Europe TODAY

Nb of

employees

today

% changeNb of jobs

affected

Targeted

total 2022% change

Nb of jobs

affected

Targeted

total 2022

Telecoms 180 000 -8% 14 400 - 165 600 0% - 180 000 14 400

Smart cards 13 000 -20% 2 600 - 10 400 -10% 1 300 - 11 700 1 300

Components 95 000 -15% 14 250 - 80 750 -5% 4 750 - 90 250 9 500

Connectors 36 000 5% 1 800 37 800 10% 3 600 39 600 1 800

Consumer elec/

home appl i .219 000 -10% 21 900 - 197 100 -1% 2 190 - 216 810 19 710

Cables 213 000 -5% 10 650 - 202 350 0% - 213 000 10 650

Computers 80 000 -10% 8 000 - 72 000 0% - 80 000 8 000

Industria l

electronics1 383 990 20% 275 414 1 659 404 31% 422 117 1 806 107 146 703

Total 2 219 990 9% 205 414 2 425 404 19% 417 477 2 637 467 212 063

Business as usual scenario Desired state scenarioJob gains in

desired state

Documents

Strategic study on anticipation of changes in the European ... · With the financial support of the European Commission Strategic study on anticipation of changes in the European