Digitalisation is a key challenge for SMEs

The benefits of digitalisation for small and medium-sized enterprises (SMEs) are multiple, allowing them to boost competitiveness, expand market access and improve customer relations. The European Economic and Social Committee (EESC) considers it necessary to support the digital transformation of SMEs with measures adapted to the specific needs of different types of companies.

The information report Digitalisation and SMEs in the Mediterranean region adopted by the EESC sets out to analyse the current state of play of digitalisation in northern, southern and eastern Mediterranean countries and highlight specific challenges. One of the main conclusions of the report is the need to establish a “broad policy agenda aimed at strengthening the decisive role of SMEs in the socioeconomic development of the Euro-Mediterranean countries and, most importantly, in the fight against unemployment”.

According to María Helena De Felipe Lehtonen, rapporteur of the report, SMEs’ digitalisation in the EuroMed region is of the utmost importance if they are to increase their competitiveness in the global market.

The availability of digital infrastructure does not automatically lead to the adoption of digital business models and technologies. According to the 2019 Digital Economy and Society Index (DESI) of the European Commission, more than 50% of firms in Mediterranean EU Member States such as Greece, Spain, Italy or France have very low levels of digital intensity, compared to less than 20% in leading countries such as Finland, Denmark or the Netherlands.

The DESI report reveals that SMEs lag behind large companies when it comes to adopting digital business models and technologies, including the most basic ones, such as electronic information sharing (adopted by 30% of SMEs as against 80% of large firms) or social media marketing (47% compared to 75%). The DESI report also shows that only a minority of SMEs have adopted a cybersecurity strategy or taken measures to protect themselves from cyber-attacks.

In addition, substantial disparities in broadband coverage still exist both between and within countries, and particularly between urban and rural areas, especially for fast broadband or ultra-fast broadband.

Raising awareness

Considering this, the EESC underlines the importance of raising awareness of the importance of this issue. One of the proposals put forward in the report is to prioritise investments in digital infrastructure, but also in the educational reforms needed to mainstream digital skills among teachers and students when revising the European Neighbourhood Policy and bilateral Association Agreements in the future.

The EESC also recommends investing in awareness-raising campaigns to inform SMEs about the costs of non-digitalisation and supports the development of online self-assessment tools to help them get started with the development of a digitalisation strategy. We have to raise awareness among SMEs that non-digitalisation is not an option, said María Helena De Felipe. These campaigns should also inform workers and, where possible, include them in the development of digitalisation strategies.

Another important topic addressed in the EESC’s information report is the gender gap in labour force participation in most Euro-Mediterranean countries. Digitalisation can help reconcile work and family life by allowing for flexible working arrangements and teleworking. Therefore, the EESC considers that national digital strategies should promote women’s participation in the labour market and include incentive schemes for SMEs to take on women.

Boosting connectivity in rural areas, and between rural and urban areas, is also essential to their revitalisation from an economic, social and demographic point of view. The urban-rural digital divide must be tackled to make rural areas more attractive for young people and reduce the trend towards depopulation. The adoption of smart farming technologies is a major opportunity to increase productivity and improve working conditions.

Prevention of drawbacks

Although the benefits of digitalisation are well-known, it can also present some drawbacks. The adoption of innovative working arrangements can lead to new forms of alienation and undermine worker satisfaction and working environments within SMEs. The EESC has already called in previous opinions for the adoption of a human-centred approach to digitalisation and for the promotion of dialogue with workers before the introduction of digital technologies.

In order to ease the transition towards a digital economy it is essential that workers have the necessary skills. The use of digital technologies often requires additional staff to be hired, and most SMEs must decide either to replace or to retrain their workforce. Retraining remains the most viable option and the least detrimental to adult workers, who face the risk of marginalisation in increasingly digitalised labour markets.

In this context, the EESC proposes the replication in other Mediterranean countries of the paid training leave introduced by some EU Member States. “Digital skills are essential for a successful digital transformation. We need to incentivise and facilitate the reskilling of workers”, said María Helena De Felipe.

  • Adopted on 11/12/2019

  • Reference: REX/519-EESC-2019

  • Plenary session:  548 – Dec 11, 2019 Dec 12, 2019

At the 2018 Euromed Summit, it was agreed that the next Information Report to be presented to the 2019 Summit of ESCs and Similar institutions will deal with the topic of the impact of digitalisation on SMEs in the Mediterranean area.

The integration of millions of young graduates into the job market each year constitutes a major challenge for the countries of the Southern Mediterranean. Small and medium-sized companies (SMEs) play a decisive role in the fight against youth unemployment as they are important drivers of job creation and provide 80% of employment in the region.

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