GENEVA (ILO News) - The "skills gap" in Europe's information and communications technology (ICT) workforce risks becoming "a critical bottleneck to the expansion of ICT industries" according to a report ¹ prepared for the ILO's Sixth European Regional Meeting , which meets in Geneva from 12 to 15 December.

The report predicts that while job growth in European ICT industries will increase by more than 8 per cent annually in coming years, the number of unfilled vacancies in ICT risks tripling from a half million in 1998 to 1.6 million in 2002 due to skills shortages and an ageing workforce. The report cites one estimate that "the skills gap has cost US$106 billion in lost gross domestic product since 1998 and will continue to do so in the absence of skills."

It predicts that the ICT revolution will present opportunities for many, but not all of Europe's 15 million unemployed workers because, "the skills required for the new jobs typically differ quite substantially from those of workers made redundant." The report highlights the challenge of retraining as "an especially important policy area to address."

However, because training is an investment that pays off in the long term, the report notes, short-term demand for skilled ICT workers means that "there is pressure from employers for immigration laws to be eased," a development that might assist receiving countries, but result in "brain drain" from sending countries. The spread of new technologies will also have significant implications for the organization of work and production: the report says that "ICT erodes the logic of how work came to be organized in the industrial world."

The ILO Director-General, Mr Juan Somavia, noted that "Enterprises across the continent are facing the challenge. But this is not an economy in which anyone can afford to sit on their laurels."

He added that "the information revolution is changing both the problems and the solutions; responses will vary, but the underlying issue is the same for all: social and economic progress depends heavily on successful participation in the knowledge economy."

The ILO report warns that if skills shortages persist, industry relocation may increase as firms gravitate to labour markets where systems analysts, programmers and technicians are abundant, further widening the digital divide between the technologically rich and poor regions in Europe.

The problems associated with the skills shortfall in ICT "are even more critical in Central and Eastern Europe," where, "a likely scenario is that widening gaps will accompany the gains from ICT diffusion."

In spite of the difficulties, European "connectivity" and e-commerce look set to increase dramatically. According to the report, Europe counts roughly 50 million Internet users, approximately one-third of the level in the United States, with Internet usage in Europe now growing "more rapidly than in any other region of the world."

The number of Internet users in the European workplace is expected to grow from an estimated 29 million (28 per cent of the workforce) to 77 million (70 per cent of the workforce) by the year 2004.

In the wealthiest countries "over half the workforce is already employed in work that consists primarily of information handling." Even in the production of physical products, such as machinery or automobiles, there is much more knowledge embedded in the processes than ever before. "Machinists", the report says, "are now likely to be computer specialists."

European electronic commerce, which was scarcely heard of just a few years ago, generated $17 billion in revenues at the end of 1999, a figure that is forecast to double this year and again in 2001.

"Connectivity" varies widely across the European continent. Within the European Union, the report notes: "As measured by the number of PCs connected to the Internet per 100 population, Finland has the highest degree of connectivity (30 per cent), while Greece (2.2 per cent) has the lowest." Other countries with high levels of Internet connectivity include Iceland (32 per cent), Norway (30.4 per cent) and Sweden (29 per cent).

Some of the countries of Central and Eastern Europe, notably Slovenia, have connectivity levels on par with or even superior to EU countries. However in other East European and Central Asian countries "connectivity is exceedingly low." Poor access to telecommunications is a particularly important factor in explaining the low levels of connectivity in some countries, the report notes, along with regulatory barriers and low levels of computer ownership.

Socio-economic factors also explain barriers to Internet usage, which, the report finds "is stratified according to population group," and "concentrated among younger, more educated, higher income males." At the end of 1998, "women accounted for only 25 per cent of Internet users in Europe," although women are increasing their participation rates, notably in Eastern and Central European countries.

Strategies for closing Europe's "digital divide" are expected to figure largely on the agenda of the ILO Regional Meeting, which brings together worker, employer and government representatives from 50 countries in Europe and Central Asia. The current meeting is likely to be attended by the Federal Republic of Yugoslavia following that country's admission to the ILO on November 24.

Other topics to be considered include employment and social policy, social protection, and social dialogue. (One of the major concerns of past European regional meetings, the economic transition from centrally planned to free-market economies, will also come under scrutiny.)

The regional meetings, which convene every four years, are designed to examine ILO activities in the concerned region and identify strategies for improving the economic, social and employment conditions in the countries concerned.

The geographical distribution of the participants is vast, extending as it does from Ireland in the West to Kyrgyzstan in the East. In terms of per capita GDP, the spectrum is also vast, ranging from US$ 33,505 for Luxembourg to $1,041 for Tajikistan.

The report (volume II) shows that the division of Europe into East and West is increasingly yielding to a more diverse pattern in which economic and social progress in a number of countries, mostly in Central Europe, is moving them nearer to the terms of accession to the EU and narrowing the East-West divide. However, the progress in economic and social transition is far from homogenous.

A second group of non-EU participants includes the member States of the Confederation of Independent States in which the development gap between them and the candidates for EU accession has further widened since 1995.

A third group consists mainly of the countries of the Balkan region where the gap between per capita income vis-a-vis the EU has widened considerably in recent years, pushing EU accession prospects further out on the horizon.

The meeting comes at a time of improving labour market performance in Europe, where unemployment is dropping in the West from average highs of 10.5 per cent in 1997 to around 8 per cent today. However, the ILO report points out that "the persistence of high rates of unemployment in many Western European countries continues to be a fundamental economic and social problem and is still an important source of poverty." In particular, the ILO notes that "long-term unemployment remains stubbornly high, leaving a significant number of individuals effectively excluded from the labour market." Levels of youth unemployment have also remained high in some countries.

1Report of the Director-General,Vol. I, " Globalizing Europe"; Report of the Director-General, Vol. II, " Decent Work in Europe and Central Asia", Sixth European Regional Meeting, International Labour Office, Geneva.