Digital industry on the upswing

The German market for IT, telecommunications and consumer electronics is expected to grow by 1.5 percent to EUR 172.2 billion this year. Following subdued expectations in the second half of 2019, the business climate has recently brightened again.

At 26.9 points, the Bitkom-ifo Digital Index climbed in December to its highest level since May 2019, the digital association Bitkom announced at the start of the year.

"Current debates on artificial intelligence, 5G networks and digital sovereignty show the enormous importance of the digital economy in Germany"says Bitkom President Achim Berg.

Digitization drives demand

Information technology continues to gain in importance as the largest segment of the industry. According to Bitkom calculations, sales in this area will rise by 2.7 percent to 95.4 billion euros in 2020.

The strongest growth will be in software, with an increase of 6.4 percent to 27.6 billion euros. The market for IT services, including project business and IT consulting, is also growing at an above-average rate of 2.4 percent to 41.9 billion euros.

Telecommunications is expected to continue the growth of the past two years. In 2020, the market is expected to grow by 0.9 percent to EUR 68.8 billion. According to Bitkom calculations, telecommunications services will generate revenue of EUR 48.8 billion, representing a moderate increase of 0.4 percent.

Business with terminal equipment grows to EUR 12.8 billion (+2.5 percent). Investments in infrastructure increase by two percent to EUR 7.2 billion.

The consumer electronics industry is continuing its downward slide. According to Bitkom forecasts, sales in 2020 will fall sharply for the third year in succession. The smallest ICT submarket is expected to shrink by seven percent to eight billion euros this year. In 2019, 42,000 additional jobs were created in the digital industry.

"Digitization creates tens of thousands of new jobs every year and is the strongest employment driver in Germany. Since 2016, the industry has created a good 200,000 additional jobs"

says Berg.

"The positive jobs picture is marred solely by the shortage of IT specialists, which continues to worsen."

According to a recent Bitkom study, 124,000 jobs for IT experts were unfilled at the end of last year. This is an increase of 51 percent compared to 2018, when there were 82,000 vacancies.

"The skilled labor problem is the drag on the digital industry and thus on the entire German economy. Every unfilled position represents less growth, value creation and innovation - which sets us back in global competition".

says Berg.

"Germany is just losing touch with the international pioneers of digitization such as Denmark, Singapore, China or the USA."

Digital measures necessary

Practical measures must be taken to counteract this. In education, for example, the federal government must be put in a position to set minimum standards nationwide and to support and oblige schools where they do not meet these minimum standards.

Irrespective of this, further training and skills acquired outside formal education must be given much greater social and financial recognition.

Germany also needs first-class digital infrastructures: high-performance fiber-optic-based and mobile data networks, intelligent transport and energy networks, and high-performance digital networks in smart cities and communities, administrations, security agencies, and healthcare and educational institutions.

As the most important player, the public sector is called upon to act decisively and invest heavily.

As the leading user of digital technologies, the state is called upon to transform its administration from the ground up. Government structures and processes must be "digital by design.

The existing analog procedures must be given an expiration date and thus terminated. This would have the side effect of addressing the worsening shortage of personnel in the public sector.

Employees who would no longer be used in administrative activities could serve as digital street workers to help those who need companionship in the online world. Mountain:

"Digitization is not a free skate, it is a compulsory program. We don't have to reinvent the wheel. Others have shown us how digitization works. Digitization is not waiting for us. Now it's time for the last call: Germany!