Brussels, 28 July 2022
Today the European Commission published the results of the 2022 Digital Economy and Society Index (DESI), which tracks the progress made in EU Member States in digital. During the Covid pandemic, Member States have been advancing in their digitalisation efforts but still struggle to close the gaps in digital skills, the digital transformation of SMEs, and the roll-out of advanced 5G networks. The Recovery and Resilience Facility, with about €127 billion dedicated to reforms and investments in the area of digital, offers an unprecedented opportunity to accelerate the digital transformation, which the EU and its Member States cannot afford to miss.
The findings show that while most of the Member States are making progress in their digital transformation, the adoption of key digital technologies by businesses, such as Artificial Intelligence (AI) and Big Data remains low. Efforts need to be stepped up to ensure the full deployment of connectivity infrastructure (notably 5G) that is required for highly innovative services and applications. Digital skills is another important area where Member States need to make bigger progress.
Executive Vice-President for a Europe Fit for the Digital Age, Margrethe Vestager, said:
“Digital transition is accelerating. Most Member States are progressing in building resilient digital societies and economies. Since the start of the pandemic we have made significant efforts to support Member States in the transition. Be that through the Recovery and Resilience Plans, EU Budget or, more recently also through the Structured Dialogue on Digital Education and Skills. Because we need to make the most of the investments and reforms necessary to meet the Digital Decade targets in 2030. So change must happen already now.”
Commissioner for the Internal Market, Thierry Breton, added:
“We are making progress in the EU towards our digital targets, and we must continue our efforts to make the EU a global leader in the technology race. The DESI shows where we need to further strengthen our work, for example in spurring digitisation of our industry, including SMEs. We need to step up the efforts to make sure that every SME, business, and industry in the EU have the best digital solutions available to them and have access to a world-class digital connectivity infrastructure.”
The Commission’s proposal on the Path to the Digital Decade, agreed upon by the European Parliament and EU Member States, will facilitate deeper collaboration between Member States and the EU to advance in all dimensions covered by the DESI. It provides a framework for Member States to undertake joint commitments and establish multi-country projects that will reinforce their collective strength and resilience in the global context.
Finland, Denmark, the Netherlands and Sweden remain the EU frontrunners. However, even they are faced with gaps in key areas: the uptake of advanced digital technologies such as AI and Big Data, remains below 30% and very far from the 2030 Digital Decade target of 75%; the widespread skill shortages, which are slowing down overall progress and lead to digital exclusion.
There is an overall positive convergence trend: the EU continues to improve its level of digitalisation, and Member States that started from lower levels are gradually catching up, by growing at a faster rate. In particular, Italy, Poland and Greece substantially improved their DESI scores over the past five years, implementing sustained investments with a reinforced political focus on digital, also supported by European funding.
As digital tools become an integral part of everyday life and participation in society, people without appropriate digital skills risk being left behind. Only 54% of Europeans aged between 16 -74 have at least basic digital skills. The target of the Digital Decade is at least 80% by 2030. In addition, although 500.000 ICT specialists entered the labour market between 2020 and 2021, the EU’s 9 million ICT specialists fall far short of the EU target of 20 million specialists by 2030 and are not enough to bridge the skills shortages businesses currently face. During 2020, more than half of the EU enterprises (55%) reported difficulties in filling ICT specialist vacancies. These shortages represent a significant obstacle for the recovery and competitiveness of EU enterprises. Lack of specialised skills is also holding the EU back in its efforts to achieve the Green Deal targets. Massive efforts are therefore required for the reskilling and upskilling of the workforce.
Regarding the uptake of key technologies, during the Covid pandemic, businesses have pushed the use of digital solutions. The use of cloud computing, for example, reached 34%. However, AI and Big Data use by business stand only at 8% and 14% respectively (target 75% by 2030). These key technologies bring a huge potential for significant innovation and efficiency gains, particularly among SMEs. For their part, only 55% of EU SMEs have at least a basic level in digitalisation (target: at least 90% by 2030), indicating that almost half of SMEs are not availing of the opportunities created by digital. The Commission has today published a survey of enterprises on the data economy.
In 2021, Gigabit connectivity increased further in Europe. The coverage of networks connecting buildings with fibre reached 50% of households, driving overall fixed very high capacity network coverage up to 70% (100% target by 2030). 5G coverage also went up last year to 66% of populated areas in the EU. Nonetheless, spectrum assignment, an important precondition for the commercial launch of 5G, is still not complete: only 56% of the total 5G harmonized spectrum has been assigned, in the vast majority of Member States (Estonia and Poland are the exceptions). Moreover, some of the very high coverage figures rely on spectrum sharing of 4G frequencies or low band 5G spectrum, which does not yet allow for the full deployment of advanced applications. Closing these gaps is essential to unleash the potential of 5G and enable new services with a high economic and societal value, such as connected and automated mobility, advanced manufacturing, smart energy systems or eHealth. The Commission has also today published studies on mobile and fixed broadband prices in Europe in 2021 and broadband coverage in Europe.
The online provision of key public services is widespread in most of the EU Member States. Ahead of the introduction of a European Digital Identity and Wallet, 25 Member States have at least one eID scheme in place, but only 18 of them have one or more eID schemes notified under the eIDAS Regulation, which is a key enabler for secure digital cross-border transactions. The Commission has today published the eGovernment benchmark for 2022.
The EU has put on the table significant resources to support the digital transformation. €127 billion are dedicated to digital related reforms and investments in the 25 national Recovery and Resilience Plans that have so far been approved by the Council. This an unprecedented opportunity to accelerate digitalisation, increase the Union’s resilience and reduce external dependencies with both reforms and investments. Member States dedicated on average 26% of their Recovery and Resilience Facility (RRF) allocation to the digital transformation, above the compulsory 20% threshold. Member States that chose to invest more than 30% of their RRF allocation to digital are Austria, Germany, Luxembourg, Ireland and Lithuania.
Identifying digital as a key priority, providing political support and putting in place a clear strategy, robust policies and investments are indispensable ingredients to accelerate the path towards the digital transformation and put the EU on track to achieve the vision set out with the Digital Decade.
Background, further links and Q&A for subscribers:
The annual Digital Economy and Society Index measures the progress of EU Member States towards a digital economy and society, on the basis of both Eurostat data and specialised studies and collection methods. The DESI supports EU Member States by identifying priority areas requiring targeted investment and action. The DESI is also the key tool when it comes to analysing digital aspects in the European Semester.
The Path to the Digital Decade, presented in September 2021, and expected to come into force by the end of the year, sets out a novel governance mechanism in the form of a cycle of cooperation between EU institutions and the Member States to ensure they jointly achieve the Digital Decade targets, objectives and principles. It assigns the monitoring of the Digital Decade targets to the DESI and because of this, DESI indicators are now structured around the four cardinal points of the 2030 Digital Compass.
Questions and Answers: Digital Economy and Society Index (DESI) 2022
Brussels, 28 July 2022
What is the Digital Economy and Society Index, and what does it measure?
The Digital Economy and Society Index (DESI) is an annual report published by the European Commission that monitors the progress of EU Member States on their digital development. This report includes country profiles, which help Member States identify areas for priority action, as well as thematic chapters providing an EU-level analysis in the four principal policy areas: human capital, connectivity, integration of digital technology, and digital public services. In addition, the DESI country reports provide an assessment of national digital policies and an overview of the digital investments and reforms in the Recovery and Resilience Plans.
What is the link between DESI and the Digital Decade?
The proposed Path to the Digital Decade Policy Programme will use DESI indicators to monitor progress towards the 2030 targets. The targets set out in the proposed Digital Decade Policy Programme are organised under four cardinal points: a digitally skilled population and highly skilled digital professionals, secure and sustainable digital infrastructures, the digital transformation of businesses, and the digitalisation of public services. The structure of the DESI and indicators have been adapted accordingly. After the policy programme enters into force, which is expected by the end of 2022, the data from the DESI will feed into an annual report on the ‘State of the Digital Decade’. This report will provide a comprehensive overview and assessment of the digital transformation in the EU.
What is the overall performance of EU Member States in digital according to this year’s DESI?
In terms of the overall ranking, Finland, Denmark, the Netherlands and Sweden have the most advanced digital economies in the EU, followed by Ireland, Malta and Spain. Romania, Bulgaria and Greece have the lowest DESI scores. The data indicates that Italy, Poland and Greece made the most progress over the last 5 years.
Main findings of DESI 2022 in the 4 policy areas
In the area of digital skills, only 54% of people have at least basic digital skills, while 87% of people use the internet at least once a week (1 percentage point more than the previous year). The target of the Path to the Digital Decade is that by 2030, at least 80% of citizens have at least basic digital skills. The expectation that an increased use of digital tools during the pandemic would have driven digital literacy, has not yet materialised. Evidence shows that it is not enough to have access to the internet in order to acquire the appropriate skills and fully benefit from digital tools. Finland, the Netherlands, Ireland and Sweden are the most advanced on skills, while Romania and Bulgaria are faced with notable gaps. In parallel, most jobs today require digital skills, from basic to advanced, and this shortage is a major bottleneck holding back EU enterprises from advancing in the digital economy.
The data on connectivity shows that while the EU has full coverage of basic broadband infrastructure, 70% of households can benefit from fixed very high capacity networks (VHCN) that have the potential of offering gigabit speeds, which is an increase of 10 percentage points in comparison to the year before. 50% are now covered by fibre networks (FTTP), up from 43% the previous year. Despite some overall progress in 2021, a significant urban-rural divide persists in many Member States. Whereas Malta, Luxembourg, Denmark, Spain, Latvia, the Netherlands and Portugal are the most advanced Member States on total VHCN coverage (all with more than 90% of homes covered), by contrast, in Greece, only 1 in 5 households have access to VHCN. 5G coverage of populated areas grew substantially to 66% in 2021, compared to 14% in the previous year, achieving very high levels in countries such as Italy, Denmark, the Netherlands and Germany. However, depending on spectrum bands used, performance levels vary in terms of speed and capacity. The Path to the Digital Decade sets the target that by 2030, all end-users at a fixed location (such as households and businesses) should be covered by a gigabit network and all populated areas covered by next generation-wireless high-speed networks of at least 5G equivalent performance.
Integration of digital technologies
Regarding the integration of digital technologies, the latest data shows that in 2021, only 55% of SMEs have at least a basic level in the adoption of digital technologies, with significant differences across Member States (from 86% in Sweden and 82% in Finland to 25% in Bulgaria and 22% in Romania). To reach the Digital Decade target, at least 90% of SMEs in the EU should have a basic level of digital intensity by 2030. Basic digital intensity means that an enterprise uses at least 4 of 12 selected digital technologies (such as using cloud, an enterprise resource planning software, AI, social media and selling online). The data indicates that businesses are becoming more and more digitalised, but the use of advanced digital technologies remains low and varies depending on the technology considered. While the use of cloud computing reached 34% of EU enterprises in 2021, the uptake of big data analytics and AI technologies remains substantially more limited: only 8% of EU enterprises used AI (in 2021) and 14% big data (in 2020). Following the political agreement on the Path to the Digital Decade, at least 75% of companies should take up either AI, cloud or big data technologies by 2030.
Digital public services
In the area of digital public services, DESI monitors the online provision of public services by scoring Member States on whether or not it is possible to complete each step of key services (such as registering or rescheduling an appointment at a hospital, appealing against a court decision, requesting an environmental permit and setting up a business) completely online, and the extent to which they are available cross-border. The scores (describing how fully the services are provided online) reached 75 out of 100 for digital public services for citizens and 82 out of 100 for businesses. Estonia, Denmark, Finland and Malta have the highest scores for digital public services in DESI, while Romania and Greece have the lowest. The Path to the Digital Decade sets the target that all key public services for citizens and businesses should be fully online by 2030. Despite the progress, there is ample room for improvement as regards the availability of cross-border digital public services, as in comparison to the provision of domestic digital public services, the scores for cross-border services are 13 points lower for citizens and 14 points lower for business services.
What are the sources of data?
The majority of DESI indicators come from Eurostat, the statistical office of the European Union. Some broadband indicators are collected by the services of the European Commission from the Member States through the Communications Committee. Other indicators, such as some e-government and broadband indicators, are based on data derived from studies prepared for the Commission. The full list of indicators, exact definitions and sources is available here.
How does the Commission attribute a Member State an individual score?
To calculate a country’s overall DESI score, the Commission gives a specific weighting to each set and subset of indicators, as well as at the individual indicator level. The majority of individual indicators within each sub-dimension were considered of equal importance and, therefore, weighted equally within the respective sub-dimension. However, indicators measuring the targets of the Path to the Digital Decade were considered to have higher importance and they therefore have double weights within their sub-dimension. The weighting has not changed compared to the last edition of the report. More details are available in the DESI methodological note. Additionally, the data visualisation tool, makes it possible to change the weights of the four dimensions of the index according to one’s own preference.
How are the national Recovery and Resilience Plans reflected in the analysis that you have published?
The DESI country reports analyse the performance of EU Member States based on the index, describe the most important digital policy initiatives per country, and then identify their key challenges. EU Member States have committed to spending at least 20% of their national endowments under their Recovery and Resilience Plans on supporting the digital transformation. To date, an aggregate of €127 billion representing 26% of the total allocation of the 25 plans approved by the Council of the European Union, supports the digital transformation. The DESI country reports include a summary of the digital aspects of the national Recovery and Resilience Plans, where these have been approved by the Council, given the scale and importance of the Recovery and Resilience Facility (RRF), and the crucial role that this funding can play in addressing these challenges.
If there is such a large gap between the current situation and the 2030 targets, what is the Commission going to do to help close this gap?
The Recovery and Resilience Plans are expected to have a major impact on the digital development plans, as EU Member States have committed to spending at least 20% of their national endowments on digital.
The governance framework under the Digital Decade Policy Programme, which was recently the subject of a political agreement between the EU co-legislators, will also help to close this gap. The Commission will first develop projected EU trajectories for each target to track progress. In turn, the Member States will submit national strategic roadmaps outlining their national trajectories and the actions they will take to achieve them, including planned regulatory measures and investments. Progress along EU and national trajectories will be assessed though the DESI, as presented in the Digital Decade Report. Additionally, multi-country projects should pool investments from EU funding resources, including from the Recovery and Resilience Facility, as well as from the Member States. Other public and private entities may invest in the projects where appropriate. The Commission will help Member States identify, set up and implement multi-country projects. Such projects may include common data infrastructure and services, blockchain, high performance computing, amongst others.
Press release – Digital Economy and Society Index 2022: overall progress but digital skills, SMEs and 5G networks lag behind