ICT Strategic study. Recommendations – DRAFT v.2.1
Laurent ZIBELL, 08-Feb-2016
ICT Strategic study. Recommendations – DRAFT v.2.1
Executive Summary
The ICT Strategic study by industriAll European trade union leads to recommendations for:
- public policy, in the fields of industrial policy and of social policy
- action to be performed directly by trade unions, to support these public policies, but also to address concerns that are specific to trade unions.
Industrial policy recommendations rely upon the SWOT analysis performed during the study. They are structured around the idea to leverage the opportunity brought by the Internet of Things in a limited number of "locomotive" application markets, whose demand has a capacity to pull the whole ICT sector. The “locomotive” application markets should be chosen by a broad debate between stakeholders in industry, among those where European industry is already strong.
In order to support the development of such an integrated industrial approach, 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 international competition for taxes, and for social and environmental rules.
These recommendations all aim at assuring 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 would generate an additional ##(to be completed by Syndex and WMP) more jobs in the year 2022.
Social policy recommendations aim at anticipating and preventing the social disruptions in industry caused by digital technologies. They aim at a just transition for all workers in the ICT sector and in the sectors impacted by the digital transformation.
Actions by trade unions that we recommend aim at lobbying to support the public policies outlined above, but also at conquering new rights in terms of Information & Consultation, and of social rights in the digitally-transformed work place. We also recommend that trade unions adapt their internal practice to the digital environment.
Contents
International Trade Union House (ITUH) - Boulevard du Roi Albert II 5 (bte 10) - B-1210 Brussels
Tel: +32 (0)2/227 10 10
1
ICT Strategic study. Recommendations – DRAFT v.2.1
Laurent ZIBELL, 08-Feb-2016
Executive Summary
Contents
Recommendations for public policy
Rationale for the proposed industrial policy recommendations: the SWOT analysis
Leverage the opportunity of the Internet of Things in a limited number of "locomotive" application markets: an integrated industrial strategy
Public policy tools to be mobilised to support this integrated industrial strategy
Public-private investment in industrial digital platforms
Specific recommendations for industrial policy in selected sub-domains of the European ICT sector
Telecommunications infrastructure equipment – make spectrum available to support the deployment of 5G
Standards
Interoperable communication standards
Ensure end-to-end interoperability: standards for addresses and semantics
Standards for the security and confidentiality of data
Ensuring the fast development of standards
Promote innovative start-ups
Support technology developments with innovative public procurement along the Darpa model
Structural support for seed capital funds
A patient, professional, tightly regulated, Europe-wide stock market to finance high-growth innovative firms
Ensure fairness to support cooperation and innovation in the digital economy
Regulating the rights attached to data
Regulating the Intellectual Property Rights attached to software
Fair competition: no to fiscal or social dumping
Fair competition within the European Union
Fair competition between the European Union and third countries......
The proposed social policy recommendations should anticipate and prevent the social disruptions in industry caused by digital technologies: for a just transition
Skills policy
Liability and Health & Safety rules
What can be expected from the implementation of these recommendations? A first quantitative assessment for the year 2022
Trade union action
Lobby public authorities to support the adoption of industrial and social policies
Adapt trade union recruitment strategy and tools to the digitally-transformed work place
Organise the workers in the digitally-transformed work place
International digital coordination platforms for trade unions and workers
More Information & Consultation rights, specifically for European Works Councils (EWCs)
A dedicated space for workers' representatives and trade unions in corporate Intranets
Right for Works Councils to access custom-made indicators from the corporate management data repository (ERP)
Extend Information & Consultation rights to innovation
Social rights for the digital workplace
Fight for the principle “equal work = equal pay, equal benefits, equal working conditions”
Protect worker-related data with a specific regime
Right to disconnect from the digital work environment
Right to privacy at work
e-Inclusion
Reflect on working time
International Trade Union House (ITUH) - Boulevard du Roi Albert II 5 (bte 10) - B-1210 Brussels
Tel: +32 (0)2/227 10 10
1
ICT Strategic study. Recommendations – DRAFT v.2.1
Laurent ZIBELL, 08-Feb-2016
Recommendations for public policy
Trade unions should target industrial and social policies. The recommendations for industrial policy are essentially grounded on the strategic analysis performed in the Phases1 and 2 of the project, by the consultants team. The recommendations for social policy emerged from the workshop organised during the Phase3 of the study, 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 their offering (e.g. in the metalworking sector – mechanical and electrical engineering, automotive, aeronautics, rail equipment, healthcare instruments, domestic appliances – but also in the textile & clothing sector). Indeed, the competitive position of these sectors on the market, and thus their capacity to generate value added to be shared with workers, increasingly depends upon the features and functionalities brought to their offering by embedded electronics and software.
The purpose of social policies should be to ensure a fair transition for workers impacted by the digitalisation of industry, and to improve working conditions.
Rationale for the proposed industrial policy recommendations: the SWOT analysis
The industrial policies should rely on those main strengths that have been identified in the study:
- tightly integrated industrial value chains in some sectors
- good infrastructure
- a highly skilled work force and world-level education & training facilities
- leadership in industrial automation and electric power management, in telecommunications equipment and in end-to-end security (specifically: smart cards).
They should also leverage some key opportunities that were detected, and whose effects will persist over time:
- the emergence of the Internet of Things
- the digitalization 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, they should prevent the further development of some negative trends that have already been identified in the digital economy, and that threaten the very cohesiveness of European societies:
- the ever-greater out-sourcing of work to third countries, which leaves Europe with diminished productive capacity
- 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:
- The marginal cost for reproducing the additional digital element of content or software is around zero. We are in a “fixed cost” economy, aka “zero marginal cost” economy. The price 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
- The value of belonging to a network is a strongly growing function of the number of existing members of this network. This “network effect” gives a premium to the standard that is most widely used – whatever its intrinsic quality – and locks whole markets in low-quality options, while giving a huge profit to the owner of this winning standard.
- the massive surveillance of citizens and workers.
Leverage the opportunity of the Internet of Things in a limited number of "locomotive" application markets: an integrated industrial strategy
We recommend that European industrial players and public authorities seize the opportunities offered by the emergence of theInternet of Things.They should work together to define a limited number of "locomotive" industrial sectors, which would constitute reliable and large-scale application markets for the European ICT sector (as understood in this study, i.e. for the design and manufacture of semiconductors, electronic equipment and software).
These “locomotive” application sectors would thus set-up a coherent and integrated industrial offering, combining their own, specific value added with that of dedicated electronics and software, in an integrated industrial strategy.
The definition of this integrated industrial strategy should include:
- the limited number of "locomotive" application markets for the Internet of Things where European industry wishes to establish its leadership. These markets should be of high volume, and should enhance the continuity and consistency of the European Union’s industrial supply chains. They would then pull the European ICT sector, and achieve an integrated and high-performance value chain from the semiconductor to the full system
- a massive public-private investment to implement it, in the form of an industrial digital platform, with clear mutual commitments (and sanctions in case of non-compliance)
- the areas in these "locomotive" application market(s) where new standards need to be established, and a timetable for their establishment and their application – this application being mandatory
- an open and transparent discussion on the principles guiding the distribution, throughout the supply chain and between EU Member States, of the added value and of the employment thus created, for the sake of fairness, of the preservation of investment and innovation capacities at every point in the supply chain and of territorial balance
- a coherent regulatory framework to support it.
By generating high, predictable and profitable volumes, this strategy could warrant the construction, within Europe, of advanced factories for high-volume production of digital semiconductors, but also of plants designing and manufacturing electronic equipment. It would enable European industry to win back its strategic control on the supply of electronics and software, and thus on a key source of its non-cost competitiveness and of its (quality- and functionality-based) differentiation on industrial markets.
The "locomotive" application market(s) should be chosen among the following:
- electric power networks, with the prospect of a deep penetration of renewable sources in the energy mix, and thus the smart management of decentralised supply, of load shifting and of storage systems, aka “smart grids”,
- multi-modal hybrid transport systems for passenger and freight traffic, connecting cars, buses, trains, trams, “soft” transport means, in urban and inter-urban settings
- digitally-integrated industrial processes (which include design, production, sales, distribution and maintenance), aka “Industry 4.0”
- the Circular Economy, with full traceability of items (“product passports”), and industrialised testing, maintenance, upgrade, dismantling and recycling
- healthcare monitoring networks
- home appliance networks.
Whatever the "locomotive" application market chosen, the industrial digital platform being developed should bear a high level of:
- openness and interoperability, with Fair, Reasonable and Non-Discriminatory (FRAND) economic & legal conditions to use the technology
- end-to-end security of data (specifically using smart card technologies), in order to make sure that only those persons and organisations that are legitimate can access, modify or erase the data
- confidentiality of personal data, but also of worker-related data (e.g. related to his/her performance or behaviour).
The definition of this strategy would bring together a very broad range of industrial and societal stakeholders, including firms, trade unions and public authorities[1]. This variety in stakeholders opens the way for a fair distribution of the value added by this strategy.
Public policy tools to be mobilised to support this integrated industrial strategy
We recommend to mobilise the following public policy tools to implement the integrated industrial strategy outlined above:
- public-private investment in industrialdigital platforms, including in the manufacture of electronic components and systems
- standards, using the capacity for the Commission to mandate the use of standards for the sake of the Internal Market
- promote the development of start-ups, and their subsequent scale up
- ensure fairness to promote cooperation and innovationin the digital economy, specifically regarding the rights attached to data and to software
- ensure a fair competition with third countries, with neither social nor fiscal dumping.
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 the 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 of the European Commission, DG Connect, on “Digitalising European industry”. We support this ambition, and recommend that significant public and private investment be dedicated to their development.
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 to use the platform, and also to join the consortium. Thereby, the economic benefits of the platform are fairly shared within society and European industry, with no "winner takes all" situation.
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, 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 both massive investment in supply (full factories) and in the demand of innovative socio-technical systems (in the form of geographically dedicated "reference zones" for their digital integration and testing). However, despite much public relations around this Strategic Roadmap, the industry has so far failed to deliver to its promise. We consider this as particularly worrying, and call all players in the European semiconductor industry to raise its deeds to its proclaimed ambitions.
Specific recommendations for industrial policy in selected sub-domains of the European ICT sector
## TO BE COMPLETED BY SYNDEX AND WMP
Telecommunications infrastructure equipment – make spectrum available to support the deployment of 5G
The key challenge for the years 2020 – 2025 will be the deployment of the 5th Generation of mobile communications (5G). Public authorities have an essential role to play, in order to enable the fast and efficient roll-out of the technology throughout Europe: make the necessary spectrum available. Indeed, 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 calendar, that operators will have the incentive to invest in the deployment of the technology, being sure that handsets will be usable whatever the Member State and whatever the infrastructure equipment installed.
Standards
The Intellectual Property Rights regime of the standards for industrial digital platforms has a determinant impact on employment in European manufacturing, and on the quality of this employment. Indeed, according to 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.
It is thus vital for European industry workers that these standards be non-proprietary, and that the economic & 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.
The definition of such FRAND economic & legal conditions remains an open issue[2]. 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 the next, we consider that it is a priority for the Commission to work on this definition and clarification of FRAND economic & legal conditions.
This issue 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 40different and competing standardisation initiatives in the field of industrial platforms. We have no time to waste in waiting for the battle to be settled, nor can we take the risk that the winner be a proprietary monopolistic or duopolistic solution (specifically if it is US-based).