What will the Digital Revolution bring?

Summary:

On 10 November 2020, the Rafael del Pino Foundation organised a dialogue between Carme Artigas, Secretary of State for Digitalisation and Artificial Intelligence; Elena Pisonero, Executive President of Taldig and former President of Hispasat; Javier Andrés, Professor of Fundamentals of Economic Analysis at the University of Valencia, and Rafael Doménech, Head of Economic Analysis at BBVA Research and Professor of Fundamentals of Economic Analysis at the University of Valencia, on the occasion of the presentation of the book "La era de la disrupción digital. Employment, inequality and social welfare in the face of new global technologies", authored by Andrés and Doménech.

Carme Artigas pointed out that all technological revolutions eventually generate more jobs than they destroy, but the question is how much time has to pass before this happens. This is why active employment policies are needed. The speed of change is much faster and society's capacity to absorb it is the key to success. Many current jobs are going to disappear. Many of the skills we need have not yet been incorporated into educational content, with content based more on skills than description. Digital skills need to be included throughout all levels of education, because the jobs that are coming will be higher-skilled. The key lies in a major national digital skills plan, with reinforcement of vocational training, and in harnessing the existing workforce and transforming it. One of the risks is the digital skills gap. Our big challenge is to equip the market with these digital skills so that there is no digital skills gap for a long time to come.

For Elena Pisonero, the focus on training is fundamental. Throughout the technological revolutions, technology has not been synonymous with unemployment and everything indicates that it will not be so now. The acceleration of change is exponential, which makes it more difficult to manage, difficult to understand and difficult to explain to others. This is the great challenge we face. But technological change is not associated with unemployment, it is associated with economic growth and progress. It all depends on how it is managed, how technology is used and how it is organised. The other part is that income distribution goes in several stages. That is why we need to focus on the upstream stages of education and health and, in a second stage, allow organisations to adapt to this changing environment. What is at the heart of the debate is that traditional organisations are focused on working in a reality that no longer exists. Market policies should not be a hindrance, but facilitate the transition so that people are not left out. People should be protected, not jobs. Help them to be able to function in this disruptive environment.

Javier Andrés pointed out that the risks of technological change do not minimise the importance of its successes. The problem is that we have educated people to be very specialised, to do one specific thing. Now we are going back to educating people in transversal knowledge, because they will have to know how to manage their time, their finances, their relations with social security, ... something very similar to the old craftsmanship. This is complicated. We now know that what used to require a certain qualification can now be done by a robot, which generates confusion for those who lose their jobs and for those who are being trained as to what to train in. This polarisation is being felt because employment is growing in the more skilled part of the workforce, but also in the less skilled part of the workforce that requires personal contact.

Rafael Doménech warned that, although the balance is positive, technology does not have neutral effects on employment and inequality. There are very important changes. Some occupations are disappearing, others are being radically transformed, which has an impact on workers, companies and society as a whole, even if the balance is positive. For years, this disruption has been replacing workers with robots, rewarding the best-trained workers to the detriment of others. Despite all these changes, the balance sheet today seems positive and, therefore, we cannot anticipate a negative balance that would lead to a situation of mass unemployment. The countries that are leading this change are those with lower unemployment rates and lower levels of inequality. If these countries have very high levels of productivity and employment, thanks to new technologies, and very low levels of inequality, those of us who are still far from this frontier can be optimistic that technological unemployment and inequality are not inexorable.

Elena Pisonero added that the administration has an obligation to set an example. In this case, it has an enormous capacity to manage change and society as a whole. It is important to make a truly digital administration; education is also important. The administration can do this because it has the capacity to mobilise resources. The effort must be made on the basis of public-private collaboration. All organisations must transform themselves. Companies must internalise these models and transform themselves. Market regulatory policies have to facilitate that transformation rather than impede it. For example, we tend to take a shot at technology platforms because they are outside what we are used to seeing. Businesses have to be involved in the transition, but they have to do it hand in hand with government, with a government that is more agile and able to use the technologies.

Carme Artigas commented that the first thing the administration should do is not to bother. This has a knock-on effect on the modernisation of the country. Technology proposes exponential changes, but organisations are only capable of absorbing linear changes. In the pandemic we have multiplied online procedures by 500 times, and this has been done with 200,000 civil servants working from home when they had never worked remotely before. The administration must be a catalyst and reduce administrative barriers. The key in public policies are employment policies, to help the economy transform itself into a data economy, to increase employability, to eliminate gender gaps. SMEs are a big challenge in this respect, but success can be achieved by helping them to access the digital world. The difference between an SME and a start-up is not the size but the mindset, the leadership. Regulation should not inhibit the development of sectors, but ensure competition and consumer rights. We also need fairer taxation adapted to the 21st century. Digital is cross-cutting. This means that vertical industries will disappear. In this transition, the country's companies must be accompanied by this data economy. Industrial and digital have merged. There must also be territorial digital plans, so that broadband reaches all parts of the territory, so that 5G reaches the villages. Innovation is a country's infrastructure that must be developed with policies to transform supply chains, invest in disruption, in data platforms. All of this generates a risk of cybersecurity and of seeing certain citizens' rights diminished. This is why it is necessary to transfer rights from the analogue to the digital world and also to generate new rights.

Rafael Doménech added that what the public sector has to do is to bring out the full innovation potential of the private sector. Education to ensure equal opportunities, so that everyone can benefit from the opportunities of the digital revolution. Working careers are going to be longer and changing, so you have to have the ability to learn all the time. The labour market has to be efficient and fair, so the role of active labour market policies is crucial. For the benefits of digital disruption to reach the whole of society, we need markets to function efficiently. By getting it right in all these areas, the policies that make up the welfare state also need to work very efficiently. Human capital has to improve so that we can put those technologies to work for the labour market. Data has to help to improve the welfare state, to make it much more efficient.

Javier Andrés pointed out that the difficulty is the change that the digital revolution is bringing about in the nature of business. There is a large fixed cost to generate an algorithm, but the cost of reproduction is zero. This is a recipe for monopoly. These monopolies are not based on legal or technological barriers, but on the superiority of some companies over others. We are witnessing a polarisation in which a few companies dominate the market and alongside them there are other small companies that survive as best they can. Therefore, putting together a narrative of anti-monopoly regulation is going to be more difficult, because market power has been accompanied by a technological development that has benefited us a lot. The process of technological transmission to SMEs is being cut off by this market dominance, which can be a risk for innovation itself. The new regulation required by the new competition is where we are a little bit on our toes, in terms of what to do to have the best of both worlds.

Elena Pisonero added that there is a very important issue, and that is that the welfare system is based on a model that is being overtaken by these new companies, which, in a polarised and concentrated manner, are generating the new growth of the 21st century. That is why we have to redefine the welfare state on an increasing, not decreasing, basis. The origin of welfare comes from the proper management of technical progress. To pretend to maintain it without nourishing and caring for what generates the basis to be able to feed this financing is nonsense.

Regarding the Covid crisis, Carme Artigas said that it has accelerated the changes because it was necessary to act quickly and that the reconstruction of the country must be digital. We have shown that we can be agile, develop applications in weeks, enable legislative changes in a very short time. There has to be a balance between guaranteeing the systems that the administration has and the use of public resources. The administration has to be more agile, for example, in the execution of public spending. We would not have been able to do anything without public-private partnerships, which must be here to stay. Without it, we will not be able to implement the necessary decisions. The other thing is that we lack data. We have lacked data on the pandemic that would be available in real time. Having data is strategic in order to be able to make the right decisions. The last thing is that there has never before been unprecedented international scientific collaboration.

At a global level, Elena Pisonero stressed, the question is how to focus on what is important. We have lived through a very difficult situation in which our fragility has become evident. Technologies must be at the service of that ultimate purpose at the service of all. Regulation cannot become an impediment to achieving that ultimate goal, which is people's health and quality of life. In the US they have used artificial intelligence to achieve something more sophisticated than having to stay at home. If regulation prevents this, we will have to do something radically different, because in 2050 we may reach the limit of planetary sustainability. Technology must be put at the service of people with all possible guarantees. This is Europe's great challenge, because this is the basis of its sustainable well-being. What digitalisation and the data economy change is that we can no longer project the past, but anticipate the future. For that, all organisations would have to incorporate artificial intelligence.

Javier Andrés pointed out that the short-term results in health and employment are very depressing. But the economy is showing signs of where to go, creating new sectors that have demonstrated the ability to do better in these situations. Not only are jobs being created in that direction, but the stock market valuation of companies that show they know how to act in situations of this kind are doing better. What they are going to ask people in job interviews is whether they know how to operate a computer, not whether they know how to drive. Digitalisation and green transition are going to be sectors with wealth and job creation potential.

Rafael Doménech concluded that one of the great lessons of this crisis is that the countries that have been able to make the best use of these new technologies, in healthcare, to sustain the activity of the economy, of the education system, of social welfare, are those that have benefited from their use in the management of the pandemic. The Covid crisis reaffirms the great messages of technological change. Spain needs to close the gap with countries that are already at the technological frontier.

The Rafael del Pino Foundation is not responsible for the comments, opinions or statements made by the people who participate in its activities and which are expressed as a result of their inalienable right to freedom of expression and under their sole responsibility. The contents included in the summary of this conference, written for the Rafael del Pino Foundation by Professor Emilio González, are the result of the debates held at the meeting held for this purpose at the Foundation and are the responsibility of the authors.

The Rafael del Pino Foundation is not responsible for any comments, opinions or statements made by third parties. In this respect, the FRP is not obliged to monitor the views expressed by such third parties who participate in its activities and which are expressed as a result of their inalienable right to freedom of expression and under their own responsibility. The contents included in the summary of this conference, written for the Rafael del Pino Foundation by Professor Emilio J. González, are the result of the discussions that took place during the conference organised for this purpose at the Foundation and are the sole responsibility of its authors.

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