This country report has been prepared in the framework of the project ‘Social partners together for digital transformation of the world of work. New dimensions of social dialogue deriving from the Autonomous Framework Agreement on Digitalisation’ (TransFormWork VS/2021/0014).
Table of Contents
1. Historical Trends and Development of Digital transformation in partner country. 2
1.1. The structure of economy in Estonia. 2
1.2. Recent developments. 3
1.3. Forecasts and the future developments. 4
2. National framework of digitalization and collective bargaining. 8
3. The role or social partners. 10
3.1. State of play on the main issues, arranged by the FAA on Digitalisation. 10
3.2. Challenges and opportunities faced by social dialogue deriving from the digital transformation of the world of work. 11
3.3. Examples of good practice. 12
1. Historical trends and the development of digital transformation in the partner country
- What is the national structure of the economy?
- Development of digital transformation in recent years
- What are the forecasts for the future?
1.1. The structure of the economy in Estonia
Estonia is a small, advanced economy, mostly influenced by EU and Scandinavian trade partners. GDP was EUR 27 billion in 2020, and will reach EUR 30 billion in 2021, which is around EUR 22,600 per capita. Estonia has only 1.3 million inhabitants, and the exporting of goods and services accounted for around 70% of GDP in 2020.
Estonia had the second highest activity rate in the EU in 2019 among the population aged 20-64, with unemployment being less than 5%, despite the work ability reform in 2018 that made an assessment of ability to work by the Unemployment Insurance Fund mandatory in order to receive support for reduced work ability. Active labour market measures are focused on career advice, upskilling and reskilling. A major emphasis is placed on language and basic IT skills.
Structure of enterprise. There are 137,000 companies in Estonia. Only about 40,000 of them have more than 1 employee, and only 7000 have 10 or more employees. In Q1 2021, the 5% of companies with 10 or more employees paid 75% of taxes and employed around 65% of the work force.
There has been a strong focus on ICT in Estonia since the restoration of independence. The impact of digitalisation has been stronger in public services and lags a bit in the private sector, especially in SMEs.
Some facts about digitalisation:
- High-technology and the knowledge-based service sector account for 4.8% of employment, which is 6th highest in the EU.
- ICT sector value added was 5.4% of GDP in 2018, which was 5th highest in the EU.
- ICT specialists accounted for 4.3% of total employment in 2018, which was 3rd highest in the EU. The share of all ICT sector employees reached 7.1% of the labour force in Q1 2021.
- A total of 62% of the population has basic or above basic ICT skills, which matches the average EU level.
- Only 26% of Estonian enterprises use an ERP system in communication between different departments and business lines, whereas the EU average in businesses is 36%.
- A total of 80% of individuals have used the Internet in past 12 months for communicating with public authorities.
- There are 31 start-ups per 100,000 inhabitants (3rd in the EU).
Overall, the manufacturing industry accounts for the largest part of the economy. The manufacturing industry employs 18% of the labour force and accounts for 14–15% of GDP (see Table 1). Labour productivity in manufacturing is lower than the European average and the issue is being tackled largely through innovation and digitalisation. According to a survey conducted by Enterprise Estonia in 2020, 64% of industrial enterprises surveyed had computer-controlled machines, while 36% did not. A third of the respondents said that their company collects and analyses data. Sensor technology was used by 22% of the companies surveyed. Drones are used by 15% of the industrial enterprises surveyed. Digitalisation and automation of production processes is more prevalent in large companies.
The second largest sector, retail and wholesale trade, accounts for 13.5% of value added and 13% of the labour force. Today, most retailers have launched their own online shops and have adopted self-service checkouts. Information flows are largely digitised and integrated (ERP systems, etc.).
The ICT sector itself accounts for 8.6% of GDP and nearly 5% of the labour force. The greatest challenge for the sector is finding new people to recruit. For this reason, ICT companies often expand to other Eastern European countries and elsewhere.
Table 1. Economic structure by industrial breakdowns of GDP and employment (Eurostat 2020)
||% of GDP
||% of employment
|Total – all NACE activities
|Agriculture, forestry and fishing
|Industry (except construction)
|Wholesale and retail trade, transport, accommodation and food service activities
|Information and communication
|Financial and insurance activities
|Real estate activities
|Professional, scientific and technical activities; administrative and support service activities
|Public administration, defence, education, human health and social work activities
|Arts, entertainment and recreation, etc.
1.2. Recent developments
The COVID-19 pandemic has had an impact on economies and lives around the world. Fortunately, the negative impact on the economy is not as uniform as in the financial crisis of 2008-2010. As in many other countries, the ICT sector has actually seen strong growth during the pandemic. Exports of digital services have experienced strong growth in recent years, accounting for around 12-13% of total exports in 2020. The share of people employed in the ICT sector has increased from 4.8% in 2015 to 7.1% in the first quarter of 2021.
In addition, digital technology also suddenly became even more important for people working in other sectors. Nearly 200,000 employees, or about a third of the labour force, transferred to telework in Estonia in the second quarter of 2020, while the usual level is approximately 7%. Nearly 90% of employees would like to see a permanent increase in the share of telework.
Data from the Labour Force Survey, collected during the emergency situation, shows that professionals (67.9%) and managers (57.2%) made the most use of teleworking, while the use was significantly lower among mid-level specialists (41.5%) and office workers (25.8%).
In a comparison of activities, teleworking was used the most by those working in information and communication (82.4%), finance and insurance (75.5%) and professional, scientific and technical fields (68.7%).
The biggest increase in the share of people working remotely was in education: 19.5% in the previous year compared to 56% during the first wave of the coronavirus.
1.3. Forecasts and future developments
Estonia’s economy is projected to recover rapidly in 2022 and beyond (see Table 2), with unemployment expected to fall. Previous structural problems, such as a significant labour shortage, ageing society and inadequate funding for social services, will once again become more prominent than the health crisis.
Table 2. The general economic forecast (European Commission in March 2021))
|GDP growth (%, YoY)
|Inflation (%, YoY)
|General government balance (% of GDP)
|Gross public debt (% of GDP)
|Current account balance (% of GDP)
Currently, the emphasis has been placed on acceleration of digitalisation, both in the private and public sectors. Digitalisation is one of the priorities of all national strategies, European funding (ESF RRF, etc.) and Estonian government budgets. According to the Council of the European Union, country-based recommendations should focus on investment in the green and digital transition, in particular on the digitalisation of companies in Estonia in 2020–2021.
Education Strategy 2021-2035 targets:
- The plan is to provide 100% of basic school graduates with basic ICT skills, up from 83% today.
- A total of 60% of the population aged 16-74 should acquire digital skills above the basic level, up from 35% today.
- Digitalisation of methodology of teaching and learning (target levels to be developed)
There are no specific digitalisation targets in the Research and Development, Innovation and Entrepreneurship Strategy; however, the whole strategy is horizontally based on or supporting digitalisation and contains specific activities, such as:
- fostering automation in enterprises through the development of a roadmap for digitalisation and the financing of the investments included in this roadmap, including support for digitalisation and the adoption of AI and robotics technologies to improve the efficiency of enterprises’ processes and supply chains, and to increase the added value of products and services;
- reducing administrative burdens on businesses, including by providing public services to businesses through a single digital gateway, as proactively as possible and in line with their business developments, and by encouraging the development and implementation of the real economy;
- fostering digital commerce (e-commerce, platform economy, sharing economy) and the circular economy to improve the competitiveness of Estonian micro, small and medium-sized enterprises in international trade;
- developing and expanding the e-Residency programme to invite new undertakings to do business in and through Estonia;
- continuing the implementation of the Work in Estonia programme to attract professionals needed by Estonian businesses, and developing an efficient inter-professional talent policy;
- supporting the use of the best available technologies in industrial enterprises and encouraging the adoption of business models based on modern technologies, including the diagnosis and auditing of bottlenecks and the involvement of internationally experienced experts and professionals from abroad;
- fostering the growth of exports of existing RDI-intensive products and technologies developed in Estonia and creating the conditions for the development and sale of new products and services in higher added value sectors and markets, supporting companies through quality infrastructure services and helping them to obtain the necessary certificates and marketing authorisations in the target market, encouraging cooperation and joint activities between companies to increase export volumes.
Most important digitalisation projects in the member state:
- Leveraging reuse in digital governance is a reality. A common digiriik.eesti.ee information space has been created, providing a clear overview of the development principles of digital governance and a systematically managed collection of problems and solutions for digital governance, and platforms for the reuse of ICT components have been implemented: the software selection available in the digital governance code repository has been expanded, and a repository has been created for the sharing of AI toolkits and other reusable technical components.
- The aim for 2021 is to draw up a new national AI/machine learning plan and to continue implementing the plan in the coming years.
- By the end of 2022, the KrattAI strategy will be adopted in at least five government authorities.
- Implementation of activities in accordance with the established Open Data Action Plan 2021–2022 and Data Management Action Plan 2021–2022.
- To ensure the sustainability of digital governance, we coordinate the use of the state budget as well as EU funds (SF and RRF) to secure funding for the IT developments that are important for the state and to provide a boost for digital transformation. A major focus in 2022–2023 will be on developing implementation schemes for EU funds (SF 2021–2027; RRF until 2026) and on establishing coordination routines. A number of state-wide reforms will be launched, including a new level of public digital services (making services holistic and proactive) and a new level of digital infrastructure, including a secure digital cloud.
- We will update the national concepts for cyber security management and for resolving cyber incidents. Based on these concepts, we will supplement the Cybersecurity Act and other legislation and regulatory documents setting out the roles, responsibilities, tasks and cooperative relationships of authorities and organisations.
- We will raise situational awareness of cyber security trends, threats and impacts and develop the capacity to create adequate cyber security measures. To this end, we will systematise the R&D processes on cyber security and will commission the necessary analyses and studies.
- We will adopt a new cyber and information security standard and improve our capacity to implement security measures. We will create a system of metrics to monitor and measure the level of national cybersecurity.
- One of the outcomes of smart development of existing and new information systems should be increased satisfaction with public services among citizens and businesses. This is to be achieved, among other things, through the introduction of proactive government services, which will also include the development of eesti.ee and integrations of the State Budget Strategy 2022–2025 and the 2021 Stability Programme. Seventy-five integrations with the rest of the government’s databases and services. In addition, support will continue to be provided for the development of public services and basic infrastructure, and for the interoperability of public services.
- Active development of proactive government services will be launched, based on the roadmap for the development of proactive government services agreed in September 2020, with the first developments planned to start in the fourth quarter of 2021. A total of 14 proactive government services have been agreed under the roadmap and 9 of these services will be developed in the period 2021–2025.
- The introduction of better public service management, including measurement and monitoring, will continue. This will be done by developing a common service standard for the design, development, management and measurement of services, by further developing the knowledge and skills of service managers and owners, and by creating and providing tools for service owners to manage the services, including by improving user-friendliness of the national central directory of services.
- The support measure for passive broadband infrastructure for access networks concluded with Elektrilevi in 2018 will be completed, which should provide 40,016 addresses in rural areas with access to a high-speed access network (EUR 11.6 million) by the end of 2023.
- State support will be used to establish the first continuous 5G transport corridors and 5G areas in residential and industrial areas.
- Additional support measures will be launched to support the establishment of access networks in the failing areas of the market.
2. National framework of digitalisation and collective bargaining
- Legislation, strategic documents, institutional framework, opinions of national social partners, collective labour agreements, etc.
Generally, collective bargaining on the company or sectoral level is quite rare in Estonia and most work life issues and related matters are regulated in law. Only around 4% of employees are members of trade unions and the coverage is concentrated in specific public sector jobs (teachers and medical workers) and transport. There is a trade union for the service employees of two big telecom companies, but no trade union in the ICT sector representing ICT specific jobs. There is a collective agreement at the confederation level to adopt the European Social Partners Framework Agreement on Digitalisation. The members of the Estonian Employers’ Confederation have also responded in the survey that they would prefer most of the social dialogue to take place at the level of central unions and the government.
Collective bargaining is mainly regulated by the Collective Agreements Act.
The most important strategies on digitalisation at the national level are ‘Estonia 2035’, ‘Estonian Digital Society 2030’ (to be approved in 2021), the Research and Development, Innovation and Entrepreneurship Strategy 2035 (TAIE), and the Education Strategy 2021–2035. The general targets partially related to digitalisation in these strategies include:
- Labour productivity is 110% of the average of the 27 European Union Member States.
- R&D expenditure in the private sector is 2% and in the public sector 1% of GDP.
Estonian digital society 2030 targets:
- Based on the vision, the main objective of digital society development in the next decade is increasing Estonia’s ‘digital power’: gaining the best experience for digital governance, providing ultra-fast internet for everyone, and ensuring safety and credibility of our cyberspace.
As a result, satisfaction with public digital services among individuals and businesses is expected to rise from 69% in 2020 to 90% in 2030, availability of high-speed internet from 47% to 90%, cybersecurity rating from 58% to 100%, and credibility should be maintained at 96%.
- Satisfaction with public digital services should rise from 47% among businesses and from 69% among private individuals in 2020 to 90% in both groups by 2030.
- The share of households and businesses in Estonia with access to at least 100 Mbps internet, which can be upgraded to 1 Gbit/s, is expected rise from 58% in 2021 to 100% by 2030.
- Cybersecurity: minimising the proportion of 16-74-year-olds who have not interacted online with public authorities or service providers in the last 12 months due to security risks.
National strategies and development plans are generally reflected in government action plans, but do not always necessarily deliver results. Business organisations therefore have an important role to play in both designing development plans and ensuring their implementation.
The most visible manifestations of digitalisation in the context of employment are probably the expansion of teleworking opportunities and the increasing need for digital skills. Teleworking is regulated in the Employment Contracts Act and the employer-employee liability for teleworking is specified in the social partners’ agreement on teleworking, on the basis of which the Ministry of Social Affairs has also drawn up a guide on teleworking.
In Estonia, several studies have been carried out on forms of work facilitated by digitalisation (platform work, telework, etc.):
- Heejung Chung. Future of work and flexible working in Estonia. The case of employee-friendly flexibility, 2018.
- Johanna Vallistu jt. Analüüs ‘Tuleviku töö – uued suunad ja lahendused’ [Analysis. ‘Work in the future – new trends and solutions’], 2017.
- The Foresight Centre has carried out a series of studies, with a focus on the future of work:
- Platvormitöö Eestis 2021 [Platform Work in Estonia 2021].
- Understanding Virtual Work. Prospects for Estonia in the Digital Economy, 2018.
- Tööturg 2035. Tööturu tulevikusuunad ja -stsenaariumid [Labour Market 2035. Future Labour Market Trends and Scenarios], 2018 .
A good overview of digitalisation can be found in:
- European Digital Economy and Society Index (DESI)
- IMD Digital Competitiveness Ranking
3. The role of social partners
- State of play on the main issues, arranged by the FAA on Digitalisation
- Challenges and opportunities faced by social dialogue deriving from the digital transformation of the world of work
- Examples of good practice
3.1. State of play on the main issues, arranged by the FAA on Digitalisation
On 29 March 2021, the social partners agreed on an Estonian social partners’ action plan for the implementation of the European Social Partners Framework Agreement on Digitalisation. According to the agreement, the Estonian Confederation of Trade Unions and the Estonian Employers’ Confederation recognise the European ‘Framework Agreement on Digitalisation’ and consider it applicable in Estonian conditions. The social partners will discuss the implementation of the action plan at bilateral meetings and, if necessary, supplement it with new actions. The partners will report to the European Social Dialogue Committee on the implementation of the agreement on the Framework Agreement on Digitalisation.
The social partners discussed the possibilities for implementing the Framework Agreement at a bilateral meeting on 4 February 2021, and decided to draw up the following action plan:
- Joint activities:
- Adaptation of the 2017 telework agreement.
- The partners will collect and discuss members’ opinions in September 2021.
- Setting up of a joint working group in September 2021.
- Discussion/agreement on the right to disconnect in October 2021.
- Funding/promotion of digital training in the Unemployment Insurance Fund in April 2021.
- Participation in the working groups on national policy development (ongoing activity):
- Council for Adult Education;
- Supervisory Board of the Unemployment Insurance Fund;
- OSKA Coordination Council.
- Estonian Trade Union Confederation
- Google project: helping employees adapt to digitalisation and process management – 2021-2022.
- Discussion of the Framework Agreement on Digitalisation at the annual autumn conference of the ETUC to identify possible implementation actions in sectoral and company level collective agreements – September 2021.
- Estonian Employers’ Confederation
- Mapping the needs, opportunities and impact of the digital transformation, and making relevant recommendations for 2022 to employers and the government.
- Digital transformation activities in working groups.
As of June 2021, the Estonian Employers’ Confederation, for example, together with the Estonian Association of Information Technology and Telecommunications, has organised a 4-part series of workshops on the ‘Practical Digital Journey of a Company’ for business leaders who want to take their production or service provision to the next level with the help of digital technologies. We also contributed to the design of a national support measure for the creation of a digitalisation roadmap for businesses. Previously, we carried out a project to provide business leaders with basic digitalisation skills.
The Estonian Employers’ Confederation has spent a great deal of energy on the adequate design of the national mitigation measures for the COVID19 crisis and the REACT-EU, Recovery and Resilience Facility (RRF), as well as other European measures with a similarly strong emphasis on digitalisation.
3.2. Challenges and opportunities faced by social dialogue deriving from the digital transformation of the world of work
The primary challenges posed by digital technologies are likely to be the rapid growth of inequality and the digital gap, with many enjoying the benefits of digital services and skills while the rest of society lacks the ability to take advantage of them. For more qualified people and more innovative employers, digital technology creates new opportunities to earn and become more competitive. It is becoming increasingly difficult for people without basic digital skills and for companies not investing in digitalisation to stay competitive. At the same time, digital technology also creates better opportunities for lower-skilled people to participate in training, find and apply for job vacancies, work remotely, etc., if they so wish. For employers, digitalisation creates opportunities to reduce labour intensity and increase efficiency. Trade unions and employers can sometimes have different views on possible solutions to the problems. Employers believe that transfers/subsidies can only play a temporary role in reducing inequalities and increasing competitiveness. Subsidies should be channelled towards skills and innovation, including digitalisation, rather than compensating for income disparities.
The second major, and more practical, category is the set of problems associated with the rise of teleworking. Employers find it harder to maintain organisational culture, control and team spirit with remote workers. Employees complain more about communication barriers, stress and confusion regarding working and rest time. In addition to working time, there is confusion over the allocation of tools, resources and responsibilities between employee and employer.
According to a survey, the following have been identified as the disadvantages of ICT-based telework, which are also likely to be encountered by the social partners in their dialogue:
- the risk of blurring the boundaries between work and family life, and the stress this can cause;
- the risk of overwork;
- the risk of increased social isolation;
- the occasional risk of increased control by the person providing the work;
- the risk to the employees’ health, if employees do not manage their own working conditions;
- the potential for losing control over the time an employee devotes to work;
- security risks;
- a potential loss of the sense of unity within the organisation;
- management requires more energy and attention;
- the person providing the work cannot verify that health and safety requirements are being met.
The following have been identified as the key weaknesses and threats of digitalisation of industry:
- The key challenge in the Estonian economy remains the digitalisation of companies. Although most companies use automated data exchange for receiving orders from customers and use two or more social media platforms, e-commerce in companies could be improved.
- Regarding connectivity, fixed broadband coverage is very low (partially compensated by mobile coverage), as is the take-up of ultrafast broadband.
- Estonia’s performance in the supply and demand of digital skills shows significant room for improvement because of poor ICT skills among employees.
- A substantial number of companies encounter problems finding skilled employees.
- Lack of awareness and the knowledge of necessity to take up digital technologies and their benefits among managers/owners of companies.
- Lack of corporate strategic planning.
- The regulatory framework in Estonia still needs to be reviewed and adapted to the digital age.
- Many pillar-specific initiatives have been launched only within the last year. Their real impact still needs to be seen.
- Companies are slow to embrace digital technologies due to a lack of use cases, success stories and lighthouse projects.
Thus, most of the challenges related to digitalisation concern the communication of digital skills, the need and opportunities for digitalisation, and regulatory gaps. Most of these can probably also be addressed in social dialogue at the level of central unions.
3.3. Examples of good practice
This subsection highlights some good practice examples of social partners working together on digitalisation and modern industrial relations.
The first example is the drafting of a telework agreement and manual. The Occupational Health and Safety Act places the responsibility for creating and ensuring a safe working environment for health on the employer in all cases, but in practice it is almost impossible for employers to ensure safe working conditions outside their own place of business. However, working in home offices, cafés, libraries and elsewhere using digital tools is becoming more common. On 25 May 2017, the Estonian Employers’ Confederation and the Confederation of Estonian Trade Unions signed an agreement on teleworking which, among other provisions, set out the principles for ensuring occupational health and safety in the case of teleworking. On the basis of the social partners’ agreement on telework, the Ministry of Social Affairs has prepared a manual for flexible implementation of the Occupational Health and Safety Act in telework situations. The content of the manual was seen by employers as an optimal compromise until the coronavirus crisis, but the much more widespread use of telework in 2020 resulted in the resurfacing of certain questions that have perhaps not been adequately addressed in the telework manual. This includes, for instance, a reasonable division of working time, rest time and home office costs, where the current law allows for one or the other solution, but where either employers or employees have asked for more clarity.
The social partners also cooperate in the OSKA Coordination Council and the Supervisory Board of the Unemployment Insurance Fund. OSKA is a skills and labour demand forecasting system where a group of experts and analysts assesses the future demand for specific skills and specialists, and the adequacy of current training supply. As early as 2016, OSKA’s results indicated that the greatest areas of shortage in Estonia include various digital skills and ICT specialists.
The Unemployment Insurance Fund has also invested heavily in recent years in active labour market measures and in making the skills needed on the labour market more accessible. The share of clients of the Unemployment Insurance Fund participating in training or other qualification raising services was 70% in 2019 and 67% in 2020. The total number of people participating in training funded by the Unemployment Insurance Fund was 106,000 in 2019 and 111,000 in 2020. A total of 11% of all unemployed participants attended a training on digital skills.
Among other things, the social partners agreed in 2017, working in the Supervisory Board of the Unemployment Insurance Fund, on commencement of financing to prevent unemployment. The services to prevent unemployment include: 1) support for participation in formal education for a worker or a registered unemployed person who is taking up vocational training, higher vocational education or higher education in an undergraduate programme; 2) labour market training for workers who are at risk of unemployment and have a training card; 3) qualification support service for workers who have completed training using labour market training or training support facilities; 4) training support for employers to develop the knowledge and skills of workers in taking up employment and adapting to changes in the employer’s business. In order to prevent unemployment, the employee or the employer can receive financial support for attending a training course included on the list of the Unemployment Insurance Fund or for participating in formal education. A total of 4% of workers who wanted to prevent unemployment opted for digital skills training in 2020.
From 2021, the Unemployment Insurance Fund will additionally compensate up to EUR 2500 per employee, if the employer sends the employee to digital skills training.
 Statistics Estonia and Eurostat have been used as sources throughout this chapter.
 27 countries from 2020 (Eurostat 07.06.2021)
 Statistics Estonia and The Digital Economy and Society Index (DESI): https://digital-strategy.ec.europa.eu/en/policies/desi.
 https://www.stat.ee/et/uudised/koroonakriisi-tulemus-200-000-kaugtoo-tegijat, 21.06.2021
 https://www.stat.ee/et/uudised/koroonakriisi-tulemus-200-000-kaugtoo-tegijat, 21.06.2021
 https://www.stat.ee/et/uudised/koroonakriisi-tulemus-200-000-kaugtoo-tegijat, 21.06.2021
 https://www.stat.ee/et/uudised/koroonakriisi-tulemus-200-000-kaugtoo-tegijat, 21.06.2021
 https://www.hm.ee/et/kaasamine-osalemine/strateegiline-planeerimine-aastateks-2021-2035/eesti-haridusvaldkonna-arengukava, 18.06.2021
 https://www.hm.ee/et/TAIE-2035, 18.06.2021
 Inaugural survey of the Norway Grants-funded project ‘Social Partnerships and Flexible Labour Relations’, April 2021.
 https://valitsus.ee/strateegia-eesti-2035-arengukavad-ja-planeering/strateegia, 18.06.2021
 Approval of ‘the draft: ‘Estonian Digital Society Development Plan 2030’, https://eelnoud.valitsus.ee/main/mount/docList/e00fb8a2-9c4b-42b6-b424-7e320949db98, 18.06.2021
 Both the manual and the social partners’ agreement are available as of 21.06.2021 at: https://www.tooelu.ee/et/131/tooohutus-kaugtool.
 https://ec.europa.eu/newsroom/dae/document.cfm?doc_id=66911, 30.06.2021
 https://worldcompetitiveness.imd.org/countryprofile/EE/digital, 30.06.2021
 The telework agreement was concluded to clarify responsibility for health and safety in telework situations. While the employer is responsible for safety and working conditions in the workplace, the manual states that, when working remotely, the employee is responsible. The employer has a duty to inform and consult the teleworker about possible risks.
 Peep Peterson, the head of the Estonian Trade Union Confederation, was the chairman of the Unemployment Insurance Fund from May 2020 to April 2021, and Arto Aas, the CEO of the Estonian Employers’ Confederation, holds the position from May 2021.
 OSKA – a project running since 2016 for analysing the needs for labour and skills necessary for Estonia’s economic development.
 A digitalisation roadmap is a strategic document for a company to assess the impact of digitalisation, the investments needed to achieve the objectives, their cost-effectiveness, and the timeframe. The digitalisation roadmap highlights the bottlenecks in technological processes and the terms of reference for tackling at least one of those bottlenecks. https://www.eas.ee/teenus/digiteekaart/
 DigiABC project – ‘Estonian Information Society Development Plan 2014-2020’ has set the target of reducing the share of non-users of computers and the internet to 5% by 2020. The DigiABC project supports the achievement of this target and provides an opportunity to acquire digital literacy, which in turn supports people of working age becoming members of the information society and increasing their individual competitiveness and the competitiveness of sectors that are important for the Estonian economy.
 Vallistu jt. Analüüs ‘Tuleviku töö – uued suunad ja lahendused’ [Analysis. “Work in the future – new trends and solutions”], 2017: https://skytte.ut.ee/sites/default/files/skytte/tuleviku_too_lopparuanne.pdf, 21.06.2021
 Monitoring Progress in National Initiatives on Digitizing Industry. Country report. European Commission, 2019.
 Occupational Health and Safety Act, https://www.riigiteataja.ee/en/eli/522042021002/consolide, 21.06.2021
 Both the manual and the social partners’ agreement are available as of 21.06.2021 at: https://www.tooelu.ee/et/131/tooohutus-kaugtool.
 The size of the economically active population in Estonia’s labour market was 687,800 people in 2019 and 689,900 in 2020.
 https://www.tootukassa.ee/content/teenused/toota-ja-opi, 21.06.2021.
Table of Contents
1. Historical Trends and Development of Digital transformation in the partner country
1.1. The structure of the economy in Bulgaria
1.2. Recent developments
1.3. Forecasts and the future developments
2. National framework of digitalization and collective bargaining
3. The role of social partners
3.1. State of play on the main issues, arranged by the FAA on Digitalisation
3.2. Challenges and opportunities faced by social dialogue deriving from the digital transformation of the world of work3.3. Examples of good practice
1. Historical trends and development of Digital transformation in the partner country
1.1 The structure of the economy in Bulgaria?
Gross Domestic Product (GDP) at current prices for the first quarter of 2021 is 27 054 million BGN (preliminary data). GDP per person is 3 912 BGN. In Euro, GDP reaches 13 833 million EUR in total and 2 000 EUR per person. Seasonally adjusted data show a decline of 1.8% compared to the first quarter of 2020 and an increase of 2.5% compared to the fourth quarter of 2020.
The highest contribution (21.7%) to the Gross national value-added in 2020 is made by the Sectors B-E (Mining and quarrying; manufacturing; electricity, gas, steam and air conditioning supply; water supply; sewerage, waste management and remediation activities). The most contributing sectors G-I (Wholesale and retail trade; repair of motor vehicles and motorcycles; transportation and storage; accommodation and food service activities) and O-Q (Public administration and defense; compulsory social security; education; human health and social work activities), represent 19.0% and 17.1% of the Gross value added (GVA) in 2020. The Agriculture, forestry and fishing sector amounts to 3.9% of the GVA. The Information and communication sector formed 8.0% of the national GVA in 2020.
There were 419 681 non-financial enterprises in 2019. When grouped by size, the micro-enterprises (0-9 employed) dominate in number (388 980 or 92.7% of all non-financial enterprises), followed by the small enterprises (25 204 or 6.0%) and medium enterprises (4738 or 1.1%). The large enterprises represent only 0.2% of all non-financial enterprises in 2019. The small and medium-sized enterprises (SMEs) can be referred to as the backbone of the Bulgarian economy, providing a potential source for jobs and economic growth. When grouped by economic activity, the non-financial enterprises are concentrated unevenly across the economy. The NACE sections where most of the enterprises can be found include Wholesale and retail trade; repair of motor vehicles and motorcycles (34.2% of all non-financial enterprises operate in the sector); Professional, scientific and technical activities (11.5% of all non-financial enterprises); Manufacturing (7.5% of all non-financial enterprises); Accommodation and food service activities (6.5% of all non-financial enterprises); Real estate activities (6.0% of all non-financial enterprises).
The official statistics for the first quarter of 2021 reveal 3 million employed persons and 204 thousand unemployed persons. Respectively the employment rate was 51.4% Despite the low unemployment and the targeted employment policy of the government, 25.0% of the industrial enterprises pointed out the labour shortage as a factor limiting their activity (data provided by the national statistics business inquiries in June 2021). And the unemployment rate was 6.3%. The shrinking labour supply, along with the pandemic government support measures and the increase of high-qualified workers, contributed positively to the remuneration level nationwide. The total hourly labour cost rose by 4.9% compared to the first quarter of 2020. In March 2021, the average wage and salary was BGN 1 500 and rose by 4.8% compared to the previous month and by 13.6 % compared to March 2020.
Digital penetration and development are being analyzed by different stakeholders in the country. Data indicates that Bulgaria has large numbers of artificial intelligence (AI) players across the industry as well as energetic and indigenous private sector successfully competing internationally in areas such as machine-building and IT. According to the 2019 InnovationShip survey by the EDIT network of digital Bulgaria, the most crucial segments of the emerging deep tech in Bulgaria include platform building, big data analytics, machine learning and AI, cloud computing, automation systems, blockchain/API and Connectivity/IoT. According to the data of the Bulgarian Association of Software Companies (BASSCOM) the average compensation of the software sector employees remains three times higher than the national average, and when (adjusted through PPPs) remains even higher than compensation of their colleagues in the UK and Germany.
Since 2013 the ICT sector as a percentage in the national GDP has constantly been increasing and reached 6.1% in 2018. At the same time, the ICT personnel in total employment is just 2.85%. Compared with advanced EU economies, Bulgaria registers a high rate of business expenditure on Research and Experimental Development (R&D) in the ICT sector as % of total R&D expenditure.
Enterprise data indicates that almost all (95.5%) enterprises have access to the Internet. Despite the increase in the share of enterprises providing company portable devices that allow mobile internet connection, Bulgaria is still quite below the EU average rates of employees equipped with such devices. About half (48.0%) of the enterprises still do not have their own website, and even few use paid cloud computing services (10.9%) or performed big data analysis (6.3%).
The country is still below the EU average when security is concerned: enterprises with formally defined ICT security policy (19% of Bulgarian enterprises compared to 31% in EU 27 in 2015); enterprises which made persons employed aware of their obligations in ICT security-related issues (51% in Bulgaria, 61% in EU 27 in 2019); enterprises using any ICT security measure (85% in Bulgaria, 92% in EU 27 in 2019); enterprises having insurance against ICT security incidents (3% in Bulgaria, 21% in EU 27 in 2019).
About half of the Bulgarian SMEs still do not have an innovation strategy in place. About one-third of the SMEs report that personnel have no digital skills at all, and 38% report difficulties in finding employees with any digital skills. SMEs still encounter problems in finding information on digital projects/programs, applying digital marketing tools, allocating funds on the digital transformation of the business processes (BCCI data for 2019).
Official data concerning the digitalization of society indicates that 78.9% of Bulgarian households have access to the Internet at home; however, there are still significant regional disparities in terms of access. 69.2% of the Bulgarians report using the Internet regularly (every day or at least once a week), but the highest share of the indicator is within the youth group (up to 35). Still, 20.9% of the Bulgarians have never used the Internet (in contrast, the EU 27 average is 9%). Many digital skills are underdeveloped. For example, Bulgarians still find difficulties in installing and using different software products/apps.
Training initiatives related to acquiring (digital) competencies have been organized over the years by both public and private sector entities. Special attention is paid to the women, vulnerable youths and young children so that a wider audience is reached and equal access to training is guaranteed. The higher education programs have been currently paying interest in digital industrial technologies, and there are already available studying opportunities. As to public administration employees, the Bulgarian Institute of Public Administration (IPA) provides training using modern technologies, methods and programs. Data show that just in the first half of 2021, nearly 11 000 public administration servants have participated in IPA training.
Despite the active government policy related to the digital transformation of the economy, Bulgaria still occupies the bottom position within different international rankings. The 2020 IMD World Digital Competitiveness Ranking positioned Bulgaria in 45th place among 63 researched economies. According to the 2020 Digital Economy and Society Index (DESI), Bulgaria performs quite under the EU average and currently has the lowest score on the index.
- Forecasts and future developments
According to a McKinsey report, digitization can be the next big engine for sustainable growth for Bulgaria, adding 1% extra growth per year to the Gross Domestic Product (GDP) of the country by 2025.
Harnessing even more significant digital opportunities requires decisive policy interventions. To strengthen Bulgaria’s digital status, future efforts need to be channeled in the following areas:
– building skillset for the future by developing a wide-ranging reskilling strategy, updating youth education for the future and actively counteracting brain drain;
– individuals should prepare for the digital economy and invest in lifelong learning;
– investments in human capital through both primary and secondary education are a significant step towards the economy’s digitalization. Digital and soft skills for the general population need to be developed. Private and public education efforts should be coordinated and build on each other. Furthermore, training should encounter population groups prone to exclusion (such as females, ethnic minorities, etc.) and ensure the dissemination of cost-efficient technological devices;
– technology adoption in the public sector (e.g. speeding up the development of online public services and their adoption);
– technology adoption among businesses (e.g. promote digitization benefits and digital transformation).
The private sector should embrace a pro-digital organizational culture. SMEs are exposed to high competition but do not have enough human, financial and technical capital to maintain and increase their competitiveness in the context of the digital transformation. Since SMEs still lack financial resources to integrate digital instruments into their business processes, improving the legal framework for digital and digitally-driven SMEs is a must. Measures may be aimed at funding, provision of simplified e-services and lower taxation.
– Strengthening regional cross-border digital collaboration (e.g. create a strong digital pillar within regional collaboration platforms)
– Further, stimulate the startup ecosystem through, e.g. improving entrepreneurial talent pool and increasing access to capital).
– Overcoming labour market shortages.
Companies declare that software engineers and developers are the hardest to find; talent shortage is encountered. Strengthening business-education relations can contribute to sparking interest in ICT and STEM disciplines among students. Comprehensive research on the inclusion barriers (prejudice, lack of skills, unattractiveness, etc.) may support the process.
2. National framework of digitalization and collective bargaining
2.1. Strategic framework
Bulgaria has adopted various strategies related to digital transformation. The first National Programme “DIGITAL BULGARIA 2015” was approved in 2012. It identifies seven interrelated priority areas: 1. A vibrant digital single market; 2. Interoperability and Standards; 3. Trust and Security; 4. Fast and Ultra-fast Internet Access; 5. Research and Innovation; 6. Enhancing Digital Literacy, Skills and Inclusion; 7. ICT-enabled Benefits for EU Society
Before that a number of strategic and program documents have been developed, covering partially the topic of digitalization: National Reform Programme 2012-2020 (Development of e-Health; Development of e-Government; Broadband development; Promoting investments aimed at creating new jobs in high-tech industries and knowledge-based services (education, R & D, ICT, etc.).; ICT for Energy Efficiency; ICT to improve the Education system), National Strategy for Scientific Research 2020 (the main emphasis is on supporting research and technological development in the fields of research, ICT infrastructure, e-Government, online health, smart home, digital skills, security in cyber-space), Innovation Strategy of Bulgaria, National Strategy for Broadband Access Development, Common Strategy for e-Government Development 2011-2015. In December 2019, the Council of Ministers adopted an updated National Program “Digital Bulgaria 2025”.
The situational analysis provided in National Program “Digital Bulgaria 2025” gives an overview on some main domains, related to the scope of the TransFormWork project:
The overall level of digital skills in Bulgaria is among the the lowest in the EU: the proportion of people with at least basic skills in the field of digital technologies amounts to around 29%, while on average for the EU this share is 57 %. This trend was also confirmed among young people: 54% of young people between the ages of 16 and 24 have at least basic digital skills (relative to the EU average of 81 %). People with more advanced user skills (above basic digital skills) accounted for 11% of the total number of less than one-third of the EU average. There have also been policy changes – the education system is in the process of reforms at all levels, and although the measures are not fully in line with the with the scale of the digital transformation, however, the focus on improving digital skills. In the context of higher education reform, measures have been taken to strengthen cooperation between educational institutions and businesses.
Using Internet services:
Although it has improved its performance, Bulgaria is below the average level in internet services: 64% of citizens use the internet (in the the EU average is 83%), while 27% have never used it – this is the highest value across the EU. Among EU internet users Bulgarians make the most video calls; they are well above the average level and in terms of social networking activity (79% of the total number of compared to 65%). There are significant differences for regular internet users in education – 89.6% of persons with higher education and 37.7% of persons with primary or lower education regularly use the global network. Employment status also affects the activity of the population in the global network. The most common use of it is those in education (unemployed), 98.6% of who surf regularly and in the case of workers (employed and self-employed) the relative share is 80.8%. Almost half of the unemployed (45.1%) also regularly used on the internet.
Deployment of digital technologies
The adoption of digital technologies by businesses in the Bulgaria is going slowly. In recent years, there has been a gradually evolving ecosystem of digital and technological entrepreneurs, but investment in the digitisation of the economy is still limited. These insufficient investments, together with the shortage of ICT professionals, are defined as possible reasons for slower digitisation in Bulgaria compared to other Member States.
Bulgarian businesses are facing difficulties to use the opportunities provided by online trading: 6% of the total number of SMEs sell online (compared to 17% on average in the EU), 3% of all SMEs make cross-border sales and only 2% of their turnover is from online trading.
Although Bulgarians use social media intensively for personal use, only 9% of businesses use them for personal use compared to 21% on average in the EU. Finally, the the number of enterprises with a high intensity index represent only 7.81 % of all enterprises. It is positive that 23% of companies share information online, with an average of EU 34%.
The insufficient digital, communication and entrepreneurial skills of the citizens and deepening the problem of the shortage of a highly skilled workforce in high-tech activities is barriers to the development of the digital economy. According to the government, a strategically coordinated approach involving all stakeholders is needed to ensure an update of the programmes for the digital skills at all levels and parts of the educational system, additional qualification and retraining of employees and unemployed, an increase in the number of graduates in the field of accurate science, technology, engineering and mathematics (TNTIM), inclusion of employers in vocational training, reducing the digital economy and reducing the division with a focus on disadvantaged social groups. The use of ICT in industry and services involves the deployment of ICT applications to optimise the management, production and processes, e-commerce and e-business, the provision of interactive online services, increased opportunities for flexible, flexible and remote and part-time work, etc. The low level of investment of enterprises in ICT limits Bulgaria’s ability to benefit from the benefits of the digital economy.
2.2. Social dialogue and collective bargaining
Digitalization is at the focus of social partners in recent years. In 2010 all nationally representative organisation of employers and workers concluded a national agreement, arranging telework. This agreement was based on the 2002 EU Social Partner Autonomous agreement on telework Based on the agreement and on joint request by the social partners, the Labour code was amended. With these amendments a new section was introduced to arrange telework. Despite that, according the Eurostat, for the period 2011-2019, the percentage of employed people working from home on a regular basis, varies from 0.2 to 0.6. The percentage, reported for the pandemic 2020 is 1.2 – again the lowest rate for 2020, compared to EU 27 – 12 %
In 2019 and 2020, the Economic and social council adopted three opinions, related to digital transformation – challenges faced by workers and businesses in terms of digitalization, as well as challenges and opportunities for digital transformation in Bulgaria. All three opinions were elaborated by two co-rapporteurs – from the employers’ and workers’ side. Among the main conclusions we can highlight the following:
- the digital transformation and its impact on all social processes is an issue of strategic importance for developing economic potential, improving working conditions and quality of life, especially in the context of an ageing population, but at the same time confronts society with so far unknown risks;
- with the right policies in place, the opportunities for technological development could be used in an appropriate way, thus – reducing the risks to the minimum;
- the digital transformation, expressed through the introduction and use of modern digital technologies in the field of tangible and intangible production in order to increase the overall factor productivity and competitiveness of enterprises, leads to professional transformation;
- the digital transformation will require significant investments from the private and public sectors. The more these investments slow down over time, the more difficult it is to access finance, the more money each worker will need in the future to increase his productivity, and every entrepreneur to increase his competitiveness;
- the degree of technological advancement predetermines the productivity of the workers;
- substantive changes in the rules are needed in order to establish transparent and democratic rules for interaction between people and digital technologies;
- emphasizes the importance of digital skills and competencies to increase the ability to adapt human capital to changing demands of the workplace and labour market. The educational infrastructure will play a crucial role, which must provide conditions and opportunities for their acquisition. Тhe Bulgarian government should focus more efforts on measures to stimulate digital competence and digital culture from early childhood throughout working life;
- The development of the process of “lifelong learning” (LLL) precisely because of the rapid development of technology and the need for continuous retraining of the workforce. It is important for such a policy to be aimed at the pilot creation of sectoral qualification funds, where the social partners have a key role to play. According to ESC, the state and the social partners must offer and develop alternative forms of education (digital platforms, mobile applications, online courses, etc.).
Telework and digitalization is a new topic for discussion for social partners, when it comes to collective bargaining. Only in 2020 the collective agreement in education was amended in order to reflect the new realities, posed by Covid-19 and the need to switch to mandatory telework. Here we need to underline that as described above, the Labour code was amended based on the social partners’ agreement, providing extensive regulation of telework. For that reason, clauses in the sectoral collective agreements cover mainly issues, related to pay and digital tools available for teleworking. According to data provided by the National institute for arbitration and conciliation (also responsible for analyzing the collective bargaining arrangements) for the period 31.12.2017-31.08.2021 the number of collective agreements, covering telework is constantly growing, but still remaining rather law from 11 undertakings covering 566 employees in 2017 to 74 undertakings covering 5 668 employees in 2021 (60 in the education sector). On a sectoral level, there are just 2 collective agreements – in education and constriction sector.
The pandemic clearly had an impetus for this increase. However, the law number of bargaining on this issue can be explained to a large extent with the law use of telework in pre-Covid times as well as law level of use of flexible working arrangements. Now, as Covid imposed the mandatory use of telework, the topic is becoming more and more relevant for all companies, regardless of whether they bargain collectively or not.
3. The role of social partners
3.1State of play on the main issues, arranged by the FAA on Digitalisation
Digital skills are identified by the social partners as one of the key components in the process of the digital transformation of the economy. The social partners joined their efforts to arrange a separate scheme for the social partners to be financed by ESF managed by the Ministry of Labor and Social Policy. Under the scheme “Development of digital skills”, the social partners launched joint projects in partnership with the Ministry of Labor in Bulgaria. The projects aim to develop, test and approves unified profiles of the digital skills of the workforce in Bulgaria for key professions in 97 out of 99 economic activities. They will focus on identifying the specific levels of digital skills of the workforce at the sectoral level, the specific deficits and supporting the acquisition of digital skills needed to perform daily work tasks. The definition of digital competence levels must be in line with the European DigComp2.1 framework. Other activities that will be supported are the development, testing and testing of non-formal learning programs for the development of specific digital skills. The duration of the project is two years with the financial support of the ESF.
Modalities of Connecting and Disconnecting
There are no specific rules neither in legislation nor in collective bargaining covering the modalities of connecting and disconnecting. The general working time rules apply as it is expected that despite of new technologies entering progressively our lives in the recent decade, rights and obligations of employers and employees remain the same. The employers are obliged to respect the working time in all cases – this also covers telework. This is explicitly arranged in the Labour code.
There are no regulations on the possibility to use digital tools for private purposes during the working time. These issues are left to be regulated at a company level and might also be subject to collective bargaining. Here again the general requirement applies, that the workers need to perform the task he is assigned to during the working time.
Issues, related to overtime and its pay are also covered the the Labour code.
The other issues, covered by the Digitalisation agreement, such as culture that avoids out of hours contact, alert and support procedures. prevention of isolation at work, are to a large extent part of companies’ HR policies
AI and guaranteeing the human in control principle. Respect of human dignity and surveillance
AI is not covered neither by legislation, nor by collective bargaining. With regard to Respect of human dignity and surveillance, the only provisions we have in place are those deriving from the GDPR regulation. Both topics are to explored by the social partners in the coming years where they have a role to play in establishing jointly recognised standards and tools to support their members.
- Challenges and opportunities faced by social dialogue deriving from the digital transformation of the world of work
Collective bargaining in Bulgaria is conducted only and branch/sector or company level. Only branch/sector organisations that are members of nationally representative employers or workers organisations are entitled to conclude collective agreements (CA). According to data, provided by National Institute for conciliation and arbitration, in the end of 2020, there were 1 608 collective agreements in force, covering 411 354 employees out of 2 211 773 (in 2020). At the same time, the National statistical institute reports for 600 272 employees (2018) out of 2 038 040 covered by collective agreements (NSI, 2021; p.266).
Despite digital transformation has been in the focus of nationally representative social partners, the topic is not really a hot issue in the collective bargaining at the sectoral level. Only since the Covid-19 outbreak there we few collective agreements were amended in order to reflect pay issues, related mainly to mandatory introduced telework. To our knowledge, none of the four topics of the Framework agreement of digitalisation is specifically covered by collective agreements on sectoral level. To some extent this can be explained by the fact that for many years, collective agreements cover mainly issues, already arranged by the labour legislation and there is lack of experience or interest of the social partners to extend the scope of these agreements to broader topics. On the other hand, as already explained above, there is a low digital penetration in many sectors of the economy, thus digitalisation is not a natural issue to be discussed between social partners. An important factor is also that many sectors where there are digital transformation processes are not covered at all by collective bargaining.
It will be exactly one of the main goals of this project to discuss with sectoral level social partners the possible actions that can be taken through collective bargaining.
Some Covid-19 telework developments
As a result of the Covid pandemic in 2020 the use of telework in the public sector has significantly increased, especially in the system of higher and secondary education. This led to a reorganization of the work process and helped to maintain employment and human health. In the private sector, many of the companies in Bulgaria also had to use digital technologies to improve the organization of work in order to preserve the employment in Covid -19 situation. The Labor Code was amended immediately after the declaration of state of emergency, and new texts were introduced in it, through which telework during a declared state of emergency or emergency epidemiological situation has become a mandatory form of organization of the work process.
Telework work created challenges in home environment:
- Computers/laptops, office equipment, consumables and utilities, internet connection (often slow connection speed) are often at the expense of the employee;
- The home internet connection cannot take the heavy load when parents and children work and study at home at the same time;
- Often there is no separate room in the home as a workplace in which to work quietly (children are at home – students are distance learning, kindergartens do not work, parents are forced due to Covid infection have moved to work remotely);
- In some administrations with departmental net connection/web-based systems, access is not allowed from external computers, such as personal / home ones, and this makes remote work impossible;
- Employees do not have access to their official mail for the above reasons. At the same time, there may be a ban on sending official documents by personal mail;
- Examples of good practice of social partners
- Bulgarian Chamber of Commerce and Industry (BCCI)
The BCCI, together with six other partner organizations, participate in the CVETNET project. The project aims at building the capacity of CVET (continuous vocational education and training) provider’s networks and its members in order to better adapt their organizations and trainers in supporting SMEs to reskill and upskill their managers and employees on intergenerational learning and adaptation to digital transformation. Up to 2021, BCCI participated in the “Supporting Knowledge Capacity in ICT among SME to Engage in Growth and Innovation” (SKILLS+) project. It aimed to advance public policies promoting information and communication technologies (ICT) skills among SMEs in rural areas helping them seize fully the opportunities offered by a digital single market and benefits of a digital economy. As part of the project “DIGITAL SMEs- Promoting SME contribution in the implementation of policies on digitalization of the economy”, BCCI conducted a national survey among 550 employers. The major share of surveyed employers represented the micro, small and medium enterprises, and thus valuable insights on digitalization processes were generated for small economic players.
- Bulgarian Industrial Association (BIA)
BIA currently participates in the “Upskilling Lab 4.0” project, co-funded by the European Union’s Erasmus+ Program. Through international collaboration, the project aims to provide skills improvement opportunities to companies’ staff (managers and employees) so that modern technologies and innovation practices (related to Industry 4.0) can be successfully integrated into Bulgarian enterprises. Detailed step-by-step guidance will be developed, and the Upskilling lab 4.0 model will be introduced to national organizations and businesses interested in digital transformation. In 2018 BIA and Friedrich Ebert Stiftung Bulgaria participated in the project “Industry 4.0- Challenges and impact on the economic and social development of Bulgaria”. A list of proposals concerning Industry 4.0 was presented to the Ministry of the economy.
The National Competency Assessment System “MyCompetence” has been created as part of a project carried out by the Bulgarian Industrial Association (BIA). The “MyCompetence” System is an online platform in the field of human resource management and development. It offers competency profiles and job descriptions for key positions, lists of competencies, assessment tools, e-learning resources and other services for the assessment and development of workforce competencies.
- Bulgarian Industrial Capital Association (BICA)
In July 2021 the Sofia University started the implementation of the project “MODERN-A: MODERNIZATION in partnership through the digitalization of the academic ecosystem”. It is implemented in partnership with eight other universities in Bulgaria, three national employers’ organizations (BIA, BCCI, BICA) and over 20 associate partners from abroad. One of the main project goals is the implementation of programs with digital content, promoting distant learning and the development of electronic and cloud technologies within the learning process. The project activities envisage teacher training, specializations in foreign universities, scientists and students mobility. Student clubs for the development of entrepreneurial skills, presentation skills and digital creativity will be established within Sofia University and two other partner universities.
In 2019 BICA and the United Nations Industrial Development Organization (UNIDO) renewed their 2016 cooperation agreement and extended its application. The signed Partnership Memorandum empowers both organizations to develop projects and policies increasing SMEs competitiveness both to tackle key global challenges such as digitalization and cybersecurity and to balance knowledge and skills of the future workforce.
- Confederation of Employers and Industrialists in Bulgaria (CEIB)
CEIB actively participate in national forums dedicated to the digital transformation of the economy. In 2017 CEIB organized together with major tech companies the first national cloud summit where strategic partnership arrangements were discussed. In 2021 CEIB presented its views during a high-level conference, “The Green deal and digital transformation- opportunities for the competitiveness of the Bulgarian economy”, organized by the Deputy Chair of the Renew Europe Political Group in the European Parliament. As part of the annual awards “Mr and Mrs Economy”, CEIB rewards individual contributions to the ICT development.
- Confederation of Independent Trade Unions in Bulgaria (CITUB)
CITUB has started in 2021 a project dedicated to the development of unified digital profiles where a detailed list of competencies and skills will be elaborated. The project encompasses 17 economic sectors and foresees employee training on digital competence development. The project will be implemented in partnership with BIA, BICA, BCCI and the Ministry of Labor and Social Policy.
- Confederation of Labour “Podkrepa” (CL “Podkrepa”)
The sector structures of CL “Podkrepa” actively analyze the digital penetration within the sectors and pay specific attention to the development of digital skills through collectively agreed initiatives.
- Union for Private Economic Enterprise (UPEE)
UPEE pays specific attention to the cyber security issue, and since June 2021, a UPPE representative has joined the European Cyber Security Organisation (ECSO). Seeking to communicate the business needs to the government representatives, at the beginning of 2021, UPEE, together with a leading Bulgarian university, organized an online event called “Talking about policy, digitalization and sustainability: youth questions”. During the event, discussions focused on the cyber security and education-business dimensions.
- In the “Education” sector
- In Bulgaria for 2020 and 2021, the social partners agreed with the Sectoral employment contract in the system of school and pre-school education additional payments for teachers who work in the conditions of the online learning process (work from a distance in real-time).
- Example in the field of pre-school and school education after the introduction of the state of emergency in Bulgaria due to the spread of the COVID-19 virus and the adoption of the Law on Pre-school and School Education changes in a number of normative acts were adopted, incl. and of the LC. With the provision of art. 20 of the Law on the Protection of Human Rights and Freedoms stipulates that by the end of the 2019-2020 academic year, students’ education, as well as support for personal development, shall be carried out as far as possible from a distance in an electronic environment using ICT tools. The training includes distance learning hours, self-preparation, ongoing feedback on learning outcomes and assessment.
 National Statistics Institute of Bulgaria and Eurostat have been used as sources throughout this chapter.
 10-49 employed
 The employment rate of persons aged 15 years or more.
 The Economic and social council of the Republic of Bulgaria is comprised of three groups – Group 1 Employers, Group 2 Workers and Group 3 – Various interests
The world of work is experiencing the Fourth Industrial Revolution (4IR), a term to describe the chancing world of technology, its impact on work and life and the facilitation of globalisation in trade and services. It was first used by Klaus M Schwab, the founder and executive director of the World Economic Forum (WEF), in an article to contribute to debates of this topic during the 2016 Annual Meeting in Davos. 
In his book, Mark Carney, the former Governor of the Bank of England, defines this era as resulting from the:
Applications of artificial intelligence are spreading due to advances in robotics, nanotechnology and quantum computing. Our economies are reorganising into distributed peer-to-peer connections across powerful networks – revolutionising how we consume, work and communicate. Enormous possibilities are being created by the confluence of advances in genetic engineering, artificial intelligence, nanotechnology, materials science, energy storage and quantum computing. 
Carney suggests that 4IR will run from 2018 to, possibly, 2030 or beyond.  He points to how these ideas are in line with previous analysis of the impact of technology on work through the various industrial revolutions, including those of Adam Smith, Karl Marx, JM Keynes. Numerous Nobel Laureates, such as Joseph Stiglitz,  Paul Kruger,  and Amartya Sen  have also focused on the impact of technologies on employment, the growth of globalisation and the inter-connection of global economies.
The Fourth Industrial Revolution can summed up as the continuum from steam power, electrical power, through electronics and information technology to digitalisation, robotics, communications technology and artificial intelligence.
2. Ireland and the Fourth Industrial Revolution
Ireland was an early participant in the Fourth Industrial Revolution. It was an early location for computer manufacturing, providing high level employment in an emerging sector. The manufacture and assembly of hardware equipment led to the emergence of indigenous software enterprises and a key business sector which has become a world leader in software design. In more recent years the major social media companies have selected Ireland as their headquarters for the European, Middle East and Africa (EMEA).
Most of the major tech companies in the world, such as Apple, Microsoft, Dell, Intel, IBM, SAP, Facebook, LinkedIn, Twitter, HubSpot, eBay and PayPal are all located in Ireland. It is estimated by the Industrial Development Authority (IDA) that there are almost 1,000 tech companies in Ireland ranging from the global superpowers to embryonic start-ups. The sector contributed an estimated €44 billion to the Irish economy in 2020. Incomes in the sector are approximately 50% higher than in the rest of the economy, with some 105,000 employees,  while it is estimated that the percentage of the Irish population using the internet on a daily basis in January, 2021 was 91%. 
The IDA was set up by the Government in 1949 to attract Foreign Direct Investment (FDI) into the economy. It was established in 1969 as a non-commercial semi-State enterprise and this status was under-pinned by the Industrial Development Acts, 1986-2019. The IDA continues to be the major agency attracting multi-national companies to establish offices and subsidiaries in Ireland.  The Authority made a conscious decision in the 1960s to target newly emerging technology companies, in particular US based companies. However, some of these companies were already showing interest in Ireland as a country for investment, with IBM becoming the first US technology company to set up in Ireland, when it opened its Dublin sales office in 1956. Since then there has been a steady flow of FDI by technology enterprises. Some key examples of these include:
The opening by Digital Equipment Corporation (DEC) of its mini-computer manufacturing site in Galway in 1971. At its peak, this facility employed 1,200. However, as laptop computers became more affordable and accessible, the demand for mini-computers declined and the factory closed in 1993. However, DEC continued to operate its software centre. The company was eventually taken over by Hewlett Packard (HP) in 2002 and this software centre has continued to grow and is now the HP European hub for its cybersecurity operations.
HP has had a presence in Ireland since the mid-1970s and it continued to grow during the following thirty years to a workforce of 4,000 in four locations across the country. Its largest campus is in Leixlip, Co Kildare, just west of Dublin, where the company invested some €21 million into an inkjet technology development centre in 2004. Hundreds more jobs were added to this campus in 2006 when HP expanded its financial services unit there for its EMEA operations.
Another major hardware investment was by Apple, which opened its manufacturing centre to assemble its laptop computers in Cork in 1980, initially employing 60 high-skilled workers.  Ten years later the workforce had grown to 1,000, along with another 500 sub-contracting jobs. In 2020 there were 6,000 employees on its extensive campus. The original manufacturing facility has expanded and is now just one part of a range of activities and services that include AppleCare, Operations, Logistics and its European Headquarters. Employees from over 90 nationalities now work on the campus.
Dell Computers set up a manufacturing plant in Limerick in 1990, employing 1,900. However, with the growing global competition in laptop computers, Dell moved part of its manufacturing jobs to Poland in 2009, but continues to have a presence in Ireland, with its ‘global hub’ for Services, Sales, Operations, Software, Finance and Marketing and manufacturing , employing 2,000 in three locations.
It is estimated that there are some 900 software companies, from the major transnational to small indigenous enterprises, employing approximately 24,000 people and generating €16 billion of exports annually. Nine out of the ten top global software companies are based in Ireland, which is now one the major research and development global centres in the financial technology sector – much of the financial, banking and insurance software used globally was or is been developed in Ireland. 
Some of the major success stories of Irish software development are:
- Iona Technologies was a spin-off from a technology campus research project in Trinity College, University of Dublin. Iona designed and marketed software that allowed for the connecting of systems and applications by creating a network of services using existing in-house technologies. It was at one point one of the world’s ten largest software-only companies and some thirty new ‘spin-off’ ventures resulted from its work. Iona was sold to Progress Software in 2008 for €139 million. 
- Cubix is a leading mobile app, games and enterprise software development company, with an expertise in development and integrating complex enterprise-level solutions, business intelligence analytics, advanced web and mobile solutions. With over 8 years of experience, the company, employing about 900 workers in Ireland, UK and India, has worked for a range of global clients, including individuals, start-ups and other organisations. 
- SynergySuite, founded in 2011, provides totally integrated solutions for restaurant and hospitality management, bringing together inventory and procurement, recipe management, food safety, staff scheduling and other personnel needs, and accounting into one software platform. This company is now providing its software to clients in Europe and the US. 
- Payslip, a company based in the west of Ireland (Westport, Co Mayo) provides technology for global payroll management to multinational companies around the world. Their software systems automate payroll processes and standardise payroll data, helping transnational companies to centrally manage and control their global payroll operations. 
- Stripe is an online payment companies, established by two brothers from Limerick in the South-West. One of the brothers, Patrick Collison, won the Young Scientist of the Year in 2005 and they went on to develop and sell a number of software packages. In 2010 they developed Stripe, which has now become a very successful company with a value of €6.5 billion and employs some 4,000 worldwide. 
- Finally, while not based within the Irish Republic, another Irish software success story in Statsport, which is based in Newry, Northern Ireland. The company is the world leader in tracking and analytic devises for elite sports people that are used extensively by club and national teams in soccer, rugby, GAA sports, etc. Its Apex GPS trackers, which include gyroscopes and accelerometers, provide competitors and trainers with vital information on performances and is used by sports organisations worldwide. 
Another major technology investment in Ireland is the Intel microprocessor chip manufacturing plant close to the university town of Maynooth, Co Kildare. Intel opened its operations in 1989 and, since then, it has invested more than €12.5 billion in developing its campus into one of the most technologically advanced manufacturing locations in Europe. Over 4,900 highly skilled employees are employed in the facility. In July, 2021, Intel announced a further expansion with 1,500 construction jobs and, on completion, a further 1,600 permanent jobs
In 1999 the Government privatised the State-owned telecommunication company, Telecom Éireann (now Eir), which opened the Irish market up to competition from major transnational information technology companies. There are now three main service providers providing both landline and mobile networks to the Irish market. The rapid development of mobile and ‘smart’ ‘phone technology also contribute to accelerating the telecommunication sector, with 74% of adults owning a smart ‘phone. The majority of owners use their ‘phone to access e-mails and visit social media services. 
The use of social media in Ireland has shown a substantial increase in the past ten years since the major social media companies set up their EMEA offices in Dublin. Facebook established its office in 2008 and has the highest penetration rate (December, 2019) of all social media companies in the Irish population. By 2020 it is estimated that there were 3.3 million Irish users of Facebook, with the main users in the 25 to 35 years age bracket (25%) and the 35 to 44 year olds (22%).
In the percentage of users, Facebook is followed by other major social media companies, Instagram (43%), LinkedIn (35%) and Twitter (30%). The percentage of people using social media in Ireland is estimated to have increased from 40% in 2011 to 76% in January, 2021.
Artificial Intelligence and Robotics
The current focus of research and innovation in the Fourth Industrial Revolution is in artificial intelligence (AI) and robotics. According to Eurostat Ireland has recorded the highest share of enterprises (23%) that used any of the four considered AI applications in 2020.  The instillation of high-speed cyber-optic cabling and more powerful semi-conductor micro-chips are providing the tools for industrial, educational and social applications of algorithms for AI, robotic and machine learning.
In the last ten years AI and machine learning are having a huge impact on our lives. Healthcare, security, business, finance and education have experienced the most important changes. 
This article also predicts that businesses are already changing how they operate from ‘communicating with customers, through automating workflows and managing network securities’. The Covid-19 pandemic is speeding up the application of AI, as working-from-home employees need access to reliable and secure high-speed communications.
To facilitate these developments, the Government has published its national strategy which sets out a vision for Ireland as a leading centre in the use of AI through a people-centred and ethical approach to AI adoption and use.
Underpinning our Strategy are three core principles to best embrace the opportunities of AI – adopting a human-centric approach to application of AI; staying open and adaptable to new innovations; and ensuring good governance to build trust and confidence for innovation to flourish, because ultimately if AI is to be truly inclusive and have a positive impact on all of us, we need to be clear on its role in our society and ensure that trust is the ultimate marker of success. 
The Government is also backing research, including through the Centre for Applied AI (CeADAR), and Trinity College, University of Dublin, has launched a new artificial intelligence accelerator programme, while the University of Limerick is pioneering new integrated undergraduate and masters’ degrees in partnership with technology and software enterprises, including Stripe, to support new AI based start-ups. 
Top technology companies
The investment and involvement of IT companies in the Irish economy has resulted in the four top companies and seven of the top twenty are all major multi-nationals, employing 75,200 (approximately): 
Apple Ireland (6,000 employees) 2 Google (7,000)
Microsoft (2,700) 4 Facebook (6,000)
12 Dell Ireland (2,000) 13 Trane Construction Technologies (50,000)
16 Oracle (1,500)
3. Government policies
National Social Partnership Programmes
From 1987 to 2009 a series of Social Partnership programmes were agreed between successive governments, the trade unions, employers organisations and a number of civil society organisations. While, in the early national programmes, very little mention was made of technology and work, it became an increasingly important item for agreement in later programmes. For example, the Programme for Competitiveness and Work (1994-1996) set out objectives for innovations through research and development and the establishment of regional technology centres to support industries in introducing relevant technologies. The Programme for Prosperity and Fairness (2000-2003) included a major section on the Information Society. It supported the Governments strategy, as set out in its Action Plan of Implementing the Information Society in Ireland, including the importance of education and a ‘learning society’.  Finally, the last social partnership agreement – Towards 2016 (2006-2015) included a key Section 3 Strategy for Science, Technology and Innovation setting out key objectives over the ten-year framework agreement. 
Programme for Government 2020
Government policies continued to build on the progress made during the era of Social Partnership agreements and following the inconclusive outcome of the 2020 General Election, three parties, Fianna Fáil, Fine Gael and the Irish Green Party, negotiated a Programme for Government, which included a section on a National Digital Strategy, which included:
- Increasingthe level of national connectivity, particularly in rural communities,through the implementation of the National Broadband Plan, which was launched in 2019
- Continue the digital transformation of Public Services, including a greater integration of digital services.
- Further develop Ireland’s leadership in new digital technologies, including
- Internet of Things
- Artificial Intelligence.
- Direct the Office of Government Procurement to support the adoption of new technologies through the development of new public service frameworks.
- Explore how Ireland can be at the forefront of protecting citizens’ rights with respect to facial recognition technology, access to encryption tools, and net neutrality.
This National Digital Strategy builds on the work of previous governmental strategies over many decades, through the relevant State companies and agencies and through educational policies, such as:
The role of Enterprise Ireland to assist Irish based and indigenous enterprises to develop new export markets. It is a State agency, which was established by the Industrial Development (Enterprise Ireland) Act 1998. It provides funding, advise and introductions in key international markets. It funds perspective exporters to participate in trade shows and business events in key export markets. Enterprise Ireland took over the functions of thirty-five County and City Enterprise Boards, that were set up to promote economic development, to stimulate entrepreneurship and SMEs. Local Enterprise Offices (LEOs) were set up to support the work of Enterprise Ireland at local levels. There is a LEO in each local authority area with dedicated teams offering a wide range of experience, skills, services and funding. LEOs also promote enterprise and entrepreneurship and foster a culture of enterprise. These offices provide key supports for digitalisation of SMEs and up-skilling of workers. 
Indeed, for the past five years Enterprise Ireland and the IDA have collaborated on and jointly sponsored market-focused strategic research and development carried out through a network of ten technology centres that allow Irish companies and multinationals to work together on R&D projects in collaboration with national research institutions. The technology centres span a range of sectors, including pharmaceuticals, food, manufacturing, microelectronics and composite materials and have access to the expertise of highly qualified researchers based in the universities and the Institutes of Technology. 
Education – Institutes of Technology and Technology Universities
To provide the skilled workforce for this rapidly development of the digital economy, the Government, first, focused on the provision of high qualified graduates from third-level education centres. In the 1960s fourteen Institutes of Technology were established following a Government report Training of Technicians in Ireland (1964), which identified significant skill gaps, including:
…a serious difficulty in the task of raising the standards of technicians in Ireland is the lack of a nationally recognised technician diploma. The absence of such a diploma deters many parents from considering sub-professional technician careers for their children.
This was followed by the setting up of the Steering Committee on Technical Education. Its report (The Mulcahy Report (1967)), was an important milestone in framing the institutional structures and functions for technology education and the establishment of new Institutes of Technology. 
The Institutes of Technology have proved, over the past fifty years, to be extremely successful and, recognising this, within the past two years the Government has merged a number of these institutions to establish Technology Universities, with more to follow.
To support these developments and to co-ordinate third-level education across all universities and institutes, a new Government ministry was established following the 2020 general election, the Dept of Further and Higher Education, Research, Innovation and Science.
Science Foundation Ireland (SFI)
SCI was set up in 2000 to administer the Government’s €646 million Technology Foresight Fund and was put on a statutory basis in 2002. It provides awards to support scientists and engineers working in the fields of science and engineering that underpin biotechnology, information and communications technology, sustainable energy and energy-efficient technologies.
SFI invests in academic researchers and research teams who are most likely to generate new knowledge, leading edge technologies and competitive enterprises in the fields of science, technology, engineering and maths (STEM). Links are provided to grant and funding opportunities for STEM research. Proposals are evaluated in open competitions by a combination of international peer reviews and that they strategically fit with the SFI’s objectives.
One of these programmes is the Strategic Partnership Programme, which supports research initiatives with strong potential for delivering economic and societal impacts. Since 2013, twenty-eight projects addressing challenges in areas such as healthcare, climate change and financial services have benefitted from €40 million in funding under the programme
Another support programme is the Frontiers for the Future 2021 which, in particular, supports top talent and excellent research themes. This programme will enable SFI to deliver on its target to provide grants to support 140 individual-led research projects and to work closely with and support the new Technological Universities and the remaining Institutes of Technology.
In March 2021, the SFI set out its objectives to 2025, which include:
- Increasing SFI individual-led research awards to 140 annually
- Attracting 20 world-leading researchers to Ireland every year (the current number is two to three annually)
- Increasing “women leaders” in research to 35 per cent
- Having 65 per cent of postgraduate and postdoctoral researchers departing to positions outside academia after six years.
Skillnet Ireland is a business support agency of the Government dedicated to workforce development and with a mandate to support the competitiveness, productivity and innovation of Irish businesses through enterprise-led skills development to ensure a highly skilled workforce and that businesses have the available skills they need for competitiveness in their relevant markets. This is delivered through a number of skill training programmes, such as the Digital Skills Accelerator and the Future in Tech Academy.
Skillnet supports over 21,000 businesses nationwide and provides a range of valuable learning experiences to over 81,000 trainees with training and upskilling which enhances their career mobility. Skillnet operates a joint investment model, where Government grants are combined with contributions from enterprises, thus reducing costs and other barriers for businesses. Having a key role for enterprises ensures that the training programmes are relevant to the needs of industry. This approach also enables cohesive enterprise networking and the flexibility to respond to ever-changing skills demands through both formal and informal learning. Skillnet is supported by the trade union movement and local and national levels.
National Recovery Plan 2021
In July 2020 the European Council adopted a historic €750 billion recovery package
for Member States.  To draw down funds from this initiative, each country was required to draft a national recovery plan, outlining how it would invest the funds allocated to it.
In its plan, the Irish Government set out three key priorities – Priority 2 committed to
Accelerating and Expanding Digital Reforms and Transformation with six key investments, totalling €291 million as follows:
- Development of a Shared Government Data Centre to support digitalisation of Government services through delivery of high-quality Data Centre facilities;
- Programme to Drive Digital Transformation of Enterprise in Ireland through the introduction of a new grants scheme for businesses to support digitalisation and the establishment of European Digital Innovation Hubs in Ireland;
- A Programme to Provide Digital Infrastructure and Funding to Schools will see high speed broadband connectivity provided to over 1,100 primary schools and grants provided for schools to purchase ICT infrastructure;
- Provision of an Online Response Option for the Census of Population as part of Census 2026 which could also be used for other CSO and Government surveys;
- Using 5G technologies to Drive a Greener More Innovative Ireland will see Government use 5G technology to enhance connectivity and service provision;
- Roll out of a number of eHealth initiatives including community eHealth solutions, investment in ePharmacy and in an integrated financial management system as part of wider health system reform. 
European Commission Covid-19 Stimulus Fund
Following the assessment of the National Recovery Plan by the European Commission, Ireland has been allocated just under €1 billion from this fund, which was adopted by the ECOFIN Council on 13 July, 2021. Of this, Ireland is allocating 32% (€293 million) to different aspects of the digitalisation, such as:
- Further improvements in the digitalisation of public administration and services (€105 million)
- €85m to go to the digital transformation of Irish enterprises
- €64m for the funding of connectivity and ICT devices in schools
- €39m to the development of a shared Government data centre.
Key digital reforms will include addressing the ‘digital divide’, by ensuring that all those in education develop the skills to engage in the digital economy and take advantage of the digital transition. On the topic of social and economic resilience, there is €114m for reskilling and upskilling workers in the labour market – something seen as key in the effort to get people back to work after the Covid-19 pandemic. 
With so many technology companies locating their EMEA Headquarters and other facilities in Ireland, in particular software and social media companies, and with the enactment of the EU General Data Protection Regulation (GDPR) Regulation 2016/679, the role of the Irish Data Protection Commission (DPC) has taken on a particular importance within the EU and in the ‘policing’ of the electronic sectors.
The DPC was set up under the Data Protection Act, 2018, which also transposed the GDPR into Irish law, but it also works within the framework of earlier data protection legislation, the Data Protection Acts, 1988-2003. It is the national independent authority responsible for upholding the rights of EU citizens to have their personal data protected and it is the supervisory national authority responsible for monitoring the application of the GDPR. This includes the Law Enforcement Directive (LED), EU Directive 2016/680, which was enacted in parallel to the GDPR.
The DPC also has statutory powers related to other regulatory frameworks, including the ePrivacy Regulations (2011) which transposed the ePrivacy Directive 2002/58/EC (as amended by Directive 2006/24/EC and 2009/136/EC) into Irish law. This legislation covers any personal data transmitted by electronic communications (including, amongst other things, unsolicited electronic communications made by phone, e-mail, and texts). 
The European functions of the DPC include supporting the work of the following EU bodies:
The European Data Protection Board (EDPB) is an independent European body, which contributes to the consistent application of data protection rules throughout the EU and promotes co-operation between the EU’s data protection authorities, which include:
- The Customs Information System (CIS) Supervision Co-ordination Group and the Customs Joint Supervisory Authority supervise data processed within the CIS to ensure compliance with data protection legislation
- Europol Co-operation Board (ECB) is designated as the supervisor of personal data processing since 1 May 2017. The EDPS cooperates closely with national supervisory authorities through the ECB
- The Co-ordinated Supervision Committee (CSC) is a group comprised of national data protection supervisory authorities and the EDPS. The CSC was established within the framework of the European Data Protection Board to ensure co-ordinated supervision of certain large scale IT systems and EU bodies, offices and agencies.
The EURODAC Supervision Co-ordination Group ensures that the sharing of personal data relating to asylum seekers between EU countries takes place in a manner that respects data protection rights.
The Schengen (SIS II) Supervision Co-ordination Group ensures that personal data within the European Schengen Information System is processed in a manner that respects privacy rights. 
Another key organisation in IT security is the National Cyber Security Centre (NCSC) which was set up in 2011 as an office within the Department (Ministry) of the Environment, Climate and Communications (DECC). This Centre is responsible for advising Government IT and critical national IT infrastructure providers of current threats and vulnerabilities associated with network information security. It is mainly focused on the cyber security of Government networks and the security of the national infrastructure. The role of the NCSC includes the National/Governmental Computer Security Incident Response Team (CSIRT-IE). 
In May 2021 a ransom attack on the national health service, the Health Services Executive (HSE) brought the need for regulation and supervision of data into sharp focus. This cyber-crime and breach of data protection was the most significant digital attack on the Irish State. It caused all of the HSE IT systems nationwide to shut down, crippling the health services at a critical time in the battle against Covid-19. The attack has had a significant impact on hospital appointments across the country, with many appointments cancelled, including all outpatient and radiology services and the postponement of scheduled medical procedures.
Security researchers believe this attack was carried out by a Russian based cybercriminal group known as Wizard Spider. In a ransom note posted online, the group threatened to publish the health network’s stolen data, unless a ransom of $20 million was paid. Having refused to pay, the HSE confirmed that confidential medical information for 520 patients, as well as sensitive corporate documents, were later published online, on the ‘dark-web’.
It is estimated that the HSE has had to replace some 30,000 laptops and that the estimated cost of restoring all its IT systems is €500 million. By early July 2021, the HSE had ‘decrypted’ about 80% of its servers and some 79% of its computer devises.
The DPC and the NCSC were notified immediately after the cyber-attack and both organisations have been central to the investigation.
4. Technology and Work – Social Dialogue
In the Irish context, studies on the impact of technologies on work have been undertaken within the trade unions and employers’ organisations and there is general agreement that an all-Ireland tripartite approach is needed and, indeed, has been the norm in recent decades.
The Irish Congress of Trade Unions (ICTU) Nevin Economic Research Institute (NERI) has undertaken a number of research studies under the overall title of Employment and the Future of Work, including the effects of automation and the green transition on employment between the financial crisis in 2008-2009 and the onset of the Covid-19 pandemic in 2020, looking at aspects of new technology and work in both Northern Ireland and the Republic.  The NERI 7th Annual Labour Market Conference, held in Magee College, Ulster University, Derry, May 2019, specifically focused on different aspects of the future of work and new technology.
In analysing the future of work in the digital age, the former Director of NERI, Dr Tom Healy, speculated on the impact of the speed of change – what will the next thirty years bring?
For sure, rapid changes in technology will continue to transform the way we live and the manner in which business trade and communicate. New and faster connections facilitate a rapid exchange of information as well as a consolidation of huge stores of data that transcend national boundaries and regulations. Real-time technology has transformed the way public and private services are delivered. These changes have transformed globalisation and trade and have impacted on the structure of demand for skills and knowledge. 
For the employers’ organisation, Technology Ireland is an sectoral association within the Irish Business and Employers’ Association (IBEC). It is mainly a sectoral lobby group for the technology companies and enterprises in Ireland. However, in 2020 it published Future Needs, Future Thinking which sets out four pillars to shape the future and puts forward a vision for the Technology Sector in Ireland:
- Education and skills
- Competitiveness and constraints
- Supporting Digitalisation across Ireland and Managing and Protecting Data
- Taxation Policy and Investment Support.
It captures the key policy priorities of the sector together with several recommendations, to secure a healthy ecosystem for the sector and enable it to continue to contribute to Ireland’s success. The digitally intensive sector now directly employs over 210,000 people. 
5. To conclude
Over more than six decades the Government of Ireland and its agencies have identified the electronic, digitalisation and automation developments as essential for the economic and employment needs of Ireland. All arms of government are directed towards this objective, through the educational and research institutions and through the specialist State agencies for business support and FDI agencies.
This approach has been fully supported by industry and business organisations, by the trade union movement and by civil society and has resulted in the provision of high-skilled employment and successful Irish spin-off global enterprises in hardware, software and, more recently, automation and robotics development. However, while working within the EU framework, the challenges for the future as a small open economy exposed to the challenges of international trade are to ensure continued indigenous research and development which will lead to new technologies and new employment opportunities in the Irish workplace. To do this the pool of high-skilled researchers, innovators and entrepreneurs has to be maintained and the replacement of jobs overtaken by automation, AI, robotics and globalisation have to be constantly reviewed and addressed. These challenges can be summed up as follows:
Huge changes in manufacturing, outsourcing, off-shoring and the rise of borderless companies transferring activities across frontiers and booking their profits and tax bills in different locations have greatly complicated the nature of production and political control. Globalisation in trade, finance and knowledge has had mixed effects. In some cases it has transformed for the better living standards and conditions of education and health for large populations. In other cases it has triggered rising inequalities, displacement of workers, impoverishment of particular regions and countries as well as causing long-term environmental damage. 
Kevin P O’Kelly
 See Mastering the Fourth Industrial Revolution Foreign Affairs, New York, December 2015
 See Value(s): Building a better world for all M Carney, William Collins Books, London, 2021: page 2 and endnote p 531
3 Carney ibid; pages 454 and 461. He lists the periods of the three previous industrial revolutions as approximately: 1IR was from the mid-1700s to 1840; 2IR from 1871 to 1914; 3IR from 1950s to early 21st century (see also https://en.wikipedia.org/wiki/Fourth_Industrial_Revolution).
 Making Globalization Work J Stiglitz, Allen Lane (London) 2006, pages 56-59
 See video masterclass by Prof Krugman: https://www.masterclass.com/classes/paul-krugman-teaches-economics-and-society/chapters/the-economics-of-technological-progress
 Employment, technology and development: A study prepared for the ILO within the framework of the World Employment Programme International Labour Review, Vol 152, (Geneva) January 2013.
 See Future Needs, Future Thinking 2021 Technology Ireland, www.technology-ireland.ie
 See https://www.idaireland.com/doing-business-here/industry-sectors/ict and https://www.nathantrust.com/insights/ireland-is-the-number-1-destination-for-us-tech-firms
 See https://techarchives.irish/irelands-first-computers-1956-69/ The Swedish technology company, Ericsson, quickly followed in 1957
 The author attended the opening of the Apple plant in Cork by the Minister for Labour, Gene Fitzgerald TD in December, 1980. Steve Jobs, co-founder of Apple also participated in the opening ceremony.
 https://statsports.com/about-us/ See also Irish Times article Irish companies play to win in competitive sports tech arena page 19, 15 July 2021. Another new sports software enterprise, Karios, is also based in Northern Ireland, in Belfast, provides solutions for sports planning for elite teams and athletes, including the tracking of training sessions, meetings with physios and medical appointments, etc.
 https://ec.europa.eu/eurostat/web/products-eurostat-news/-/ddn-20210413-1 The four AI applications used by Eurostat are: a) Machine learning to analyse big data internally; b) A chat service, where a chatbot or virtual agent generated natural language replies to customers; c) Use of service robots, which are characterised with some degree of autonomy, for example to carry out cleaning, dangerous or repetitive tasks such as cleaning up poisonous substances, sorting items in the warehouse, helping customers in shopping or at payment points etc.; d) use of natural language processing, natural language generation or speech recognition
 Alessia Paccagnini, Smurfit Business School, University College, Dublin, in an article by Sandra O’Connell, Irish Times, 23 July 2021: https://www.irishtimes.com/special-reports/ai-focus/ai-has-changed-the-way-the-world-works-and-offers-rewarding-careers-1.4621301
Foreword to the National AI Strategy, July 2021, by Robert Troy TD, Minister of State responsible for Trade Promotion
 O’Connell, Irish Times, op cit
 Top 1000 Companies Irish Times, June 2021.
 Programme for Competitiveness and Work Government Publications, February 1994, page 14
 See https://dspace.uevora.pt/rdpc/bitstream/10174/12999/31/47ieimplementingtheinformationsocietyinirelandan.pdf
 This Social Partnership Agreement was terminated by the Government in 2009 as a result of the challenges to the economy by the global financial and economic crisis.
 See Irish Times report, 19 February 2019 at https://www.irishtimes.com/business/innovation/partner-profile-enterprise-ireland/tech-centres-bridging-the-gap-between-research-and-industry-1.3797872?mode=amp
 See https://en.wikipedia.org/wiki/Institutes_of_technology_in_Ireland
 Three Institutes of Technology were merged on 1 January 2019, to form Technology University, Dublin, (TUD), while two further Institutes merged to form the Munster Technology University (MTU) (January 2021). See also: https://www.educationinireland.com/en/where-can-i-study-/view-all-institutes-of-technology/
 Ireland’s National Recovery and Resilience Plan Europe’s Contribution to Ireland’s Recovery Government of Ireland, October 2020 (updates June 2021). See https://www.gov.ie/en/publication/d4939-national-recovery-and-resilience-plan-2021/
 In the aftermath of the ransom attack on the HSE IT systems, it is widely agreed that the NCSC has been understaffed and underfunded for many years The high level of expertise and experience required, and the levels of Public Service remuneration on offer in comparison to that available in the private sector, makes it extremely difficult to recruit and retain staff for this office.
 ICTU is an all-island trade union confederation and NERI also operates on an all-island basis.
 An Ireland Worth Working For – Towards a new democratic programme T Healy, New Island Books, 2019, p74
 See https://www.technology-ireland.ie/Sectors/TI/TI.nsf/vPages/About~Press~future-needs,-future-thinking-2020-04-11-2019/$file/TI+Future+Needs,+Future+Thinking.pdf
 Healy op. cit. P 75
Historical Trends and Development of Digital transformation in partner country
What is the national structure of the economy?
Introduction to the Economy of Malta
The Maltese economy is best understood in its historical context, comprising a largely service-based economy which has evolved of the decades from a dependency on the British naval presence in the years after achieving Independence in 1964, to a more diversified structure relying on tourism and hospitality, financial services, foreign trade and various other economic sectors. This highly industrialised economy benefits from the island’s strategic location in the centre of the Mediterranean as well as a predominance of spoken English in the Maltese workforce and a low corporate tax rate.
Statistical and Sectoral Analysis of the Economy of Malta
The Gross Domestic Product (GDP) of Malta for 2020 amounted to approximately 12.8 billion euros, a marked decrease of 5.7% from the 2019 figure of 13.6 billion euros. This corresponded with a decrease in Gross Value Added (GVA) which was largely due a larger drop in services particularly in the hospitality industry, transportation and storage activities and trade activities and can largely be attributed to the impact of the COVID-19 pandemic on tourism as well as consumption by locals. The decline occasioned by these sectors was somewhat compensated by growth in other sectors particularly those related to ICT activities.
The Chart above illustrates the structure of the Maltese Economy through an analysis of the GDP identity from the production side, namely with regard to the GVA by NACE Sector. As the Chart shows the largest sections of the economy include those related to retail, transport, manufacturing, financial services, hospitality and tourism as well as the public sector. 
Development of digital transformation in recent years
Introduction to the development of digital transformation
Digital transformation has increasingly come to the forefront of public consciousness in Malta, particularly with regards to the potential positive and negative impacts this transformation could have on the labour force as well as the efficiencies that it can offer businesses and individuals. In the 2019 European Commission Country Report on Monitoring Progress in National Initiatives on Digitising Industry Malta was given an overall score of 57.7 and a ranking of 12th out of the then 28 EU Member States. This puts Malta firmly in the medium performing cluster of countries showing some substantial progress in digital transformation.
The key focuses of Malta’s digital strategy in recent years have been ensuring a high level of Connectivity throughout the country as well as the Use of Internet Services by citizens. On both of these fronts Malta has experienced substantial improvements with universal access to Fixed Broadband, Fast Broadband and Ultrafast Broadband for the entirety of the population by 2018, with a substantial increase in the percentage of the population making use of Mobile Broadband. Malta also scores well above the EU average on most indicators on digitalisation including use of social media, reading news online and making video calls. Conversely Malta still lags behind the EU average in terms of those making use of eGovernment services, provision of eHealth services and the percentage of the working population equipped with e-skills.
Key Training and Fiscal Incentives in the Digital Transformation Process
A key indicator of the Maltese government’s efforts to boost the digital transformation process are a number of fiscal incentives which it has offered businesses and individuals in recent years to promote the development of STEM centric and digitally empowered economy, targeting established enterprises, startups and students to ensure the long-term viability of this process. Below are some key fiscal incentives including some information of the nature of the incentive and its impact on digital transformation in recent years.
The Malta Information Technology Agency (MITA) has instituted the YouStartIT programme which is a training programme for early-stage tech startups. This initiative sees startup founders validating their startup idea to understand whether their project is viable and worth pursuing. Through this publicly funded course these entrepreneurs gain the ability to clearly frame the problem they wish to solve and identity and verify the market for their tech solution. 
The Malta Council for Science and Technology (MCST) has managed a national funding programme to drive and support local research and innovation and to bring this research into a state of market readiness. The stated aims of this programme include:
- Raising the level and profile of locally funded research
- Ingraining R&I at the heart of the Maltese economy
- Spurring knowledge-driven and value-added growth
- Sustaining improvements in the quality of life
E-Skills Malta Foundation
The eSkills Malta Foundation is a National Coalition made up of various representatives from Government, industry and education, who can contribute to the increase in digital skills and the development of the IT profession. The Foundation’s main areas of concern are advising stakeholders on matters of eSkills policies, contributing to ICT educational programmes and professional development, and championing campaigns to promote eSkills in the population. This gap in eSkills under Human Capital is one that has been repeatedly identified as a leading barrier to digitilisation in Malta. The Founding members of the Foundation are the Ministry for Education and Employment, the Malta Information Technology Agency, the Malta Communications Authority, the Malta Enterprise, The Malta Gaming Authority and The Malta Chamber of Commerce Enterprise and Industry.
The Malta Communication Authority (MCA), as the entity responsible for the implementation of the National eCommerce Strategy has offered eCommerce training for businesses under its eBiznify programme. This programme was both publicly and privately funded, with the ultimate aim of assisting businesses in taking the leap into a concrete online presence beyond marketing strategies, with advice on the setting up of eCommerce services and platforms.
FastTrak to e-Commerce
The Malta Communications Authority has also organised a number of hands-on information sessions on the use of digital marketing with the aim of helping participants improve their businesses by establishing an effective online presence. Its main focus areas were Digital Marketing Concepts, Social Media Marketing, Email Marketing, as well as a general overview of the eCommerce landscape in Malta. The objective of these practical sessions was to support and mentor local businesses on how to boost brand awareness, generate more leads, and improve customer relationships. This initiative was followed by a similar initiative named “Fast Trak to Mobile” which focused on similar themes but centered around mobile commerce. 
Malta Cloud Forum
The aim of the Malta Cloud Forum (MCF) is to facilitate the uptake of cloud computing, particularly by micro-organisations and SMEs. The forum therefore strives to increase and diffuse cloud awareness and create an innovative local culture that supports, embraces, and benefits from cloud computing. The MCF is a multi-stakeholder forum of parties, comprising representatives from consulting companies, civil society, government and academia.
Business Start and Microinvest
Business START is an incentive offered by Malta Enterprise which offers seed and growth funding for small start-ups. Start-ups undertakings that are still in their early development phase may receive an initial grant of up to ten thousand euro (€10,000) to help them develop their business proposal. Start-ups that present a viable business plan may receive additional support linked to full time employment which may reach up to twenty thousand euro (€20,000) per quarter. Similarly, Microinvest is another scheme established by Malta Enterprise which encourages undertakings, not only start-ups but also family business and the self-employed, to invest in their business, so as to innovate, expand and develop their operations.  Both of these schemes target digitalization areas such as the use of social media, mobile services, cloud technology, the Internet of Things (IoT), development in cyber security and data analytics amongst others.
Skills Development Scheme
Through this scheme, Malta Enterprise aimed to support business undertakings to provide training to develop and update the skills and knowledge of their workforce. This initiative complements other eSkills related programs discussed above by supporting training and knowledge transfer initiatives that will support employees to acquire new skills, know-how and knowledge. 
Business Re-Engineering and Transformation and Change to Grow Schemes
Malta Enterprise has launched two twin schemes with the Business Re-Engineering and Transformation Scheme having the aim of supporting small and medium-sized enterprises (SMEs) to realign their business activity and restructure their business in order to optimise the use of technology and embrace green technology and practices. Through this scheme SMEs are provided with support from external advisors which will enable them to accelerate development. This Scheme is then re-inforced through the Change to Grow initiative whereby businesses are incentivised to kick-start transformation processes, oftentimes, but not exclusively, on the basis of the advice received under the previous scheme
What are the forecasts for the future?
The advent of the COVID-19 has undoubtedly quickened the pace for digitalisation the world over, and this trend has also had its impact on the Maltese society and economy. Throughout 2020 and the first half of 2021 vast shifts have taken place in societal needs, bringing about pressure on the existing digital infrastructure and a realisation of the impending need to upskill and reskill students, employees, and other individuals to face up to the needs of an increasingly digitised world.
Evidence of these changes can be found in the Maltese government’s use of a home schooling and teleworking policy, obliging schools and businesses to foster a culture of digital competency whilst also providing those tools that are necessary to enable the smooth transition from in person communication to online interaction. These policies have also brought into sharp relief flaws in digitalisation process in recent years as well as potential barriers for this digitisation in the future, particularly centring around economic and social disparities in accessibility to technology as well as the lack of e-skills particularly in the adult population. In response to these challenges Malta has seen increased investment in its already ongoing digitisation process as well as the recognition that connectivity can be considered a right of individuals and amongst the obligations that the Maltese welfare state should be tackling.
However, the implications of this digitalisation process cannot be accurately forecast with commentators and economists still playing catchup as to the impacts of these unforeseen pandemic on the local economy. Amongst the key changes during this period have been those to consumer trends, with a vast increase in the use of technology in order to solve complex problems, create new business models, and reach untapped markets. The increase in the use of e-Commerce platforms coupled with delays in global shipping as well government incentives have given the necessary impetus for many businesses to launch an online presence, however as the COVID-19 vaccination program reaches its peak and the inevitable relaxation of measures takes place it remains uncertain as to whether this trajectory in the investment in digitalisation by businesses will continue.
The forecasts for the future of digitalisation in Malta are therefore hard to assert, and should be understood within the context of the various government innovations in terms of legislation, strategic documents and institutional frameworks to be discussed in the subsequent Chapter to this report. However, in establishing an understanding of the timeframes for some of the expected milestones in digitisation one may refer to the Maltese Economic Vision as launched in July of 2021 entitled “A Future-Proof Malta. In this document the Government recognises the scale of the digital transformation needed within the country, citing the low-level digital skills found in the population particularly among older workers, and commits to the introduction of policy measures to promote re-skilling over the next decade. These commitments accompany others related to the digitalisation of public administration and strengthening the fintech, gaming and ICT sectors which form part of a vision which the government refers to as that of a “digital island of the future”.  This emphasis on digitalisation as one of the key pillars of the government’s economic vision gives a positive indication to those forecasting the future of digitalisation in Malta, an optimism tempered by the lack of concrete timeframes attached to these government proposals.
The Malta Digital Innovation Authority Act (MDIA Act)
The MDIA Act came into force in July 2018 with the aim of establishing the Malta Digital Innovation Authority (MDIA). MDIA’s role can be summarised under two key points namely that the MDIA was established to promote and develop the innovative technology sector in Malta but also to give it the State’s stamp of approval whilst developing the necessary framework of regulation around them. The stated objectives of the MDIA as enshrined under its founding act is the:
- Promotion and enforcement of ethical and legitimate criteria in the design and use of innovative technology arrangements;
- Harmonisation of practices and facilitating the adopting of standards on innovative technology arrangements in Malta in line with international norms, standards and rules;
- Promotion of transparency and auditability in the use of innovative technology arrangements;
- Promotion of the ease of accessibility to the facilities provided by publicly available innovative technology arrangements and the recognition and implementations of the right of exit, withdrawal or termination of participation from any arrangement.
Innovative Technology Arrangement and Services Act (ITAS Act)
The ITAS Act came into force in November 2018 with the aim of supporting the previously enacted MDIA Act. Through the introduction of the ITAS Action regulation was provided for innovative technology arrangements (ITAs) and designated innovative technology services providers (ITSPs). This regulation was included within the broader scope of the MDIAA to which there is substantial reference throughout the act and aims to provide further structure for the Authority to recognise, categorise and regulate innovative technology arrangements, taking an approach designed to allow flexibility of application whilst simultaneously providing for the necessary regulatory safeguards.
Virtual Financial Assets Act (VFA Act)
The Virtual Financial Assets Act came into force in November 2018 and was aimed at regulating the area Initial Virtual Financial Asset Offerings and Virtual Finance. This act allows for the classification of cryptocurrency as a VFA with a comprehensive regulatory framework to ensure that consumer protection and the growth of the industry occur side by side. This Act was pioneering legislation in the field of virtual financial assets.
National eCommerce Strategy
The National eCommerce Strategy was launched in 2014 by the Parliamentary Secretariat for Competitiveness and Economic Growth and the Malta Communications Authority with the aim of supporting the take up of eCommerce and the provision of eCommerce related services by local businesses. As part of its broader strategy this document also sought to address the prospect for Malta to attract foreign companies providing eCommerce or ancillary services to establish operations in Malta. This strategy was divided into four pillars:
- Engendering trust in eCommerce: seeking to entice those that may still not realise the advantages that online shopping can offer them through the implementation of educational and ongoing awareness programmes.
- Transforming micro-enterprises: aiming to facilitate the proliferation of eCommerce activity by increasing awareness amongst potential sellers on the opportunities brought about by the use of internet technology and by supporting the latter in becoming more competitive, entrepreneurial, efficient and resilient.
- Taking SMEs and industry to the next level: establishing an SME business innovation framework that will support and ensure that both business and industry are equipped with the necessary tools and possess the right business acumen to tap into new markets and enhance competitiveness.
- Making Malta a Global eCommerce player: Explore and exploit the opportunities created by the advent of a stronger European digital single market, the developing North African market and the new entrants penetrating and disrupting mature industries.
Digital Malta Strategy
The Digital Malta Strategy is a strategic document issued in March 2014 in a joint collaboration between the Malta Information Technology Agency (MITA), Malta Communication Authority (MCA) and the Parliamentary Secretariat for Competitiveness and Economic Growth. The Strategy lays out a number of key principles and actions with the ultimate aim of harnessing information and communications technology to impart a positive impact on the county’s economic well-being, particularly in terms of employment, industry and assisting small businesses. The Strategy outlines three major themes, namely, the Digital Citizen, Digital Business and Digital Government, which in turn are supported by three strategic enablers: Regulation and Legislation, Infrastructure and Human Capital. The key actions arising from these themes are of particular interest as they give some insight into which stumbling blocks to digitalisation the government considers to be most pressing.
Within the broad theme of the Digital Citizen actions are grouped around tackling security concerns, particularly with regard to children accessing the internet, as well as the issue of the universal accessibility of technology, both in terms of providing the necessary physical access to tech but also in the education of individuals to make good use of it, particularly with regard to basic digital skills. The actions falling under Digital Business can be grouped under initiatives to assist in the reskilling of the workforce, measures directed towards developing an entrepreneurial environment in the field of digitalisation as well as providing support in digital transformation and change management to existing companies. These actions can be seen reflected in the key training and fiscal incentives discussed in the previous chapter of this document. The final pillar, that of the Digital Government, is comprised of actions which envision the government administrative services becoming digitised for two main reasons; the ease of the consumer, be they commercial entities or private persons, as well as efficiency and accuracy of data handling and processing.
The Malta.AI Strategy “Malta: The Ultimate AI Launch Pad” was launched in October of 2019 by the Parliamentary Secretariat for Financial Services, Digital Economy and Innovation. The aim of this strategic document was for Malta to gain a strategic competitive advantage in the global economy as a leader in the AI field. As with the previous strategy this document sets out a series of three pillars which are then paired to three enablers. The Pillars are as follows:
- Investment, start-ups and innovation: The government sets out a number of initiatives aimed at generating investment in order to position the country as a frontrunner and centre for the application of emerging AI technologies
- Public sector adoption: The strategy document explores how AI can be deployed widely in public administration to improve citizens’ experiences, expand access to public services, and directly improve well-being. The document outlines how this can be used in pilot projects in the spheres of traffic management, education, health, customer service, tourism, and utilities. This point builds on the Digital Government initiative outlined the Digital Malta Strategy.
- Private sector adoption: This pillar outlines initiatives catered at enabling private companies to integrate AI into their company structures and across their organisations. These initiatives include both access to expertise and financial assistance.
The strategic enables for these pillars as outlined by the document are as follows:
- Education and workforce: The focus of this enabler focuses on the impact of the envisioned AI transformation on the country’s human resources and seeks to lay out a plan for re-skilling workers to make use of this technology whilst simultaneously increasing the number of specialists in the field.
- Ethical and legal: This enabler seeks to establish the world’s first national AI certification programme to provide a platform to practitioners and companies that wish to showcase ethically aligned, transparent and socially responsible AI solutions, building on Malta’s Ethical AI Framework Towards Trustworthy AI.
- Ecosystem infrastructure: The government proposes a series of investments in tools to enable Maltese Language AI solutions, initiatives to support data availability and actions to mitigate cybersecurity risks and facilitate cost-effective access to high-performance compute capability among other measures designed to create the underlying infrastructure to support a thriving AI ecosystem. 
National eSkills Strategy 2019-2021
The National eSkills Strategy 2019-2021 was launched in October of 2019 by the eSkills Malta Foundation, a Coalition of stakeholders on which further information was given in the previous Chapter. The stated aim of this strategy was to complement initiatives at both local and EU level to address the need for existing and new digital skills. The National eSkills is formed of twelve main recommendation areas which will be summarized briefly below:
- Developing a 3-year rolling plan to ensure that the strategic direction pursued retains full relevance on an annual basis.
- Developing a robust communications plans suited to a digital environment by utilizing various online mediums that are also being used by trainees, individuals, businesses and industries.
- Publishing an online reference technology board to serve as a benchmark for technology adoption and corresponding market usage.
- Funding sustainable initiatives business models taking into account aspects of project continuity as well as incorporating a triple bottom line which includes considering stakeholder interest, the environment and society.
- Providing students at an early stage with a fuller industry experience by inviting experts to the classroom.
- Supporting the introduction of ICT changes in curriculum across all educational structures, particularly to ensure harmonisation of new curricula across public, private and independent education organisations.
- Collaborating with industry to develop continuous profession development (CPD) toolkits to assist various industries in establishing the relevant core skills that shall be required in the coming years.
- Supporting initiatives at a national level leading to the provision of short-cycle specific training in order to support agile upskilling of the workforce in targeted areas of business.
- Developing a framework for grading and evaluation digital competence.
- Establishing initiatives that support a shift of youth focus from the consumer aspect of technology to participative use of technology and online systems.
- Reducing the mismatch between the skills available and those demanded for thedigital transformation of the.
- Opening up to a professional structure in the domain of ICT whereby there would be a structure that supports recognition for IT professionals at local level.
The role of social partners
Maltese national social partners discuss and promote their views at the Malta Council for Economic and Social Development (MCESD), which is an advisory council issuing opinions and recommendations to the Maltese Government on social and economic matters. The MCESD is the official fora for social dialogue in Malta. Considering its tripartite format, social partners expect that the Maltese Government listens and takes up recommendations prior to implementing important reforms.
A second important tripartite institution for social dialogue in Malta is the Employment Relations Board (ERB), which is set up according to the provisions of the Employment and Industrial Relations Act and is tasked with making recommendations on national standards for conditions of employment. The ERB representatives are nominated by the social partners that form part of the MCESD.
Trade union density accounts to around 45% of Malta’s workforce and is mostly concentrated in the public sector and other traditional sectors such as manufacturing. Coverage is less found in other established sectors such as financial services, gaming, construction, and tourism.
Apart from the public sector, where a collective agreement is signed between Government and several unions representing different categories of employees (such as in the medical and education professions), in the private sector collective bargaining is characterised by a decentralised system. This means that in the absence of multi-employer and sectoral collective agreements, collective bargaining takes place at company level. As such the employers’ associations are not direct participants to the process.
Decentralised collective bargaining in Malta is viewed as a system that is more in tune with the exigencies of individual firms and ensures flexibility in wage setting. From a national perspective, wage flexibility is considered as a main trait for preserving economic competitiveness in the context of a small open economy.
Apart from wage increases negotiated in collective agreements, all employees in Malta qualify for annual statutory wage increases linked to the cost of living; an economic formula referred to as the Cost of Living Allowance (COLA). Over time, collective agreements have also started including more non-wage clauses such as family-friendly measures.
For the past decades, Malta largely experienced harmonious industrial relations, with no firm changes expected to the system in the foreseeable future. In this respect, discussions relating to the EU autonomous framework agreement on digitalization are likely to take place among social partners, with outcomes contributing to national strategies and/or legislations, while specific recommendations are communicated to respective members for adoption at company level.
State of play on the main issues outlined in the Autonomous Framework Agreement on Digitalisation
Being a small open economy deprived of any natural resources, Malta depends entirely on its human capital to create added value. For this reason, Malta has developed a high-level educational system made of both academic and technical institutions that have produced qualified persons for all aspects of economic activity. Nevertheless, as Malta experienced high economic growth in the years prior to Covid-19 and as work functions rapidly develop, primarily because of digital transformation, labour market challenges escalated. These related to (i) insufficient supply of labour for work categories of all skills sets, (ii) lack of interest by Maltese nationals to work in certain trades, (iii) inadequate skills forecasting, and (iv) slow adaptation of educational providers to the needs of industry.
To address these issues Malta has looked at different solutions, some of which aimed for the short term, while others for the medium and long term. For the short term, in the years prior to Covid-19, Malta imported substantial amount of labour, both from the EU and third countries, to meet the demand generated by high economic growth. In parallel, comprehensive debate took place at national level on how to improve the provision of home-grown labour skills to meet the demand of industry. As explained further below, several initiatives were undertaken to address the skills gap through better forecasting. Finally, fully aware that the level of their competitiveness depends on productivity, enterprises in Malta proactively provide continuous training to develop the skills of their workforce. Digital skills are one of the most important components of training provided.
Training or further study opportunities are also widely available with the support of several national and EU funded opportunities provided through Government-led schemes and other national public agencies’ initiatives such as by the Employment Service Agency (Jobs Plus), the Malta Development Bank (MDB) and the Malta Financial Services Authority (MFSA).
Social partners in Malta agree on the need for more take-up of digital skills at all levels due to the impact of digitalization on the workplace. Trade unions acknowledge the positive impact on business operations while also express the concern of the impact this may have on workers. Nevertheless, they acknowledge that the digital transformation will continue nonetheless and that the key to overcome the issue lies in the upskilling of competences. This is not a simple task due to the challenge that may be experienced by some to accept or adapt to digitalized systems.
On the other hand, business organizations are all for technological advancement at enterprise level and are active in promoting the take up of digital tools as well as identify barriers. They also push for support programmes that provide adequate training and encourage employers from within their membership to enroll employees in training.
Social partners see the value of social dialogue in this area and are committed to contribute to national policies through the established fora such as the MCESD, based on their experience and feedback provided from members.
Modalities of Connecting and Disconnecting
Modalities of connecting and disconnecting, or as it is better known, the right to disconnect, is not an entirely new topic, with some EU member states having already legislated on the subject matter in recent years. In Malta the issue was not predominant prior to Covid-19. It was only brought to the fore of public debate as remote working became mainstream due to the pandemic, which increased awareness around the topic.
For many years remote working was associated with flexible-work arrangements, requested in the great majority by female workers, due to care responsibilities. Provisions for remote working have been included for applicable categories of workers in collective agreements, particularly for public sector workers. The practice, while not totally absent, was less common in the private sector.
Covid-19 changed the perception of remote working entirely. Although the change was initially brought about by convenience rather than conviction, both employers and employees quickly adapted, opening horizons to new operational and work practices for the future. This phenomenon was studied locally in a report undertaken by the Malta Business Bureau on the implications of working from home on business and the environment. The study concluded that remote working positively impacts work satisfaction and productivity although this diminishes progressively towards a senior level. Positive environmental aspects are derived from less road congestion although on the negative side household energy and water consumption increases. Some barriers to the work environment relate to communication and social interaction with co-workers. However, other research suggests that one of the biggest obstacles to remote working is the challenge of blurring between work and private life.
The Minister within the Office of the Prime Minister responsible for social dialogue announced in November 2020 that the Maltese Government was considering making the right to disconnect legally enforceable, even prior to any EU initiative. This refers to a Maltese MEP-led motion for a European Parliament resolution calling for an EU Directive on the right to disconnect, which was also strongly motivated by the increase of remote working across Europe due to the pandemic. The resolution was adopted in December 2020.
In July 2021, the Maltese Government announced that as from October 2021, civil servants, whether working physically or remotely, will have the right to disconnect, which allows them to disengage from work and refrain from participating in work related communications. Following the November 2020 announcement, no further public statements or tripartite discussions took place between Government and social partners on regularizing modalities for connecting and disconnecting in the private sector.
Social partners’ discussions on the right to disconnect has been very much centred around the aspect of remote working. Employers view the opportunities related to remote working and the use of digital services in the workplace as self-evident, namely for the potential to improve work-life balance for employees by eliminating long commutes and mold their lives more easily around family life. It is broadly acknowledged that remote working could blur the line between work and private life, although this does not lead to a common position among social partners on the need for legislation. Trade unions tend to emphasize the difficulty to disconnect from work while at home and the stress levels this could lead to. Employers’ representatives believe that working hours are regulated and these should be respected through good management processes such as by assigning deliverables that can be met within the working hours for which employees are contracted for.
Both employer and worker representative organisations see the scope for social partner dialogue to jointly address these issues.
AI and guaranteeing the human in control principle
Artificial intelligence (AI) is increasingly becoming a core component of goods and services. It has great potential to improve standard of living as well as to increase the competitiveness of companies. Nevertheless, there are certain risks with AI that should be kept in check, particularly the human in control principle.
In recent years, AI has gained more traction in Malta’s public policy. As referred to earlier in this report, in October 2019, the Maltese Government published Malta’s national AI strategy with the objective of creating a new economic niche and positioning Malta as an investment destination for the sector, particularly for start-up support and innovation. It also envisages further AI solutions adopted to improve services by the public sector. The strategy also focuses on the requirements for the education and workforce, a legal and ethical framework as well as infrastructure.
A special task force was established made of academics, entrepreneurs, and experts to provide a holistic approach for the sector. The progress in the implementation of the Maltese national AI strategy is promoted on a dedicated web portal.
As stated above, the human in control principle is of strategic importance for there to be trust in AI systems. They require strong governance and control practices. For this reason, the Malta AI strategy is complemented by an Ethical AI Framework to support AI practitioners in identifying and managing the potential risks of AI. This focuses on four main areas:
- Human autonomy: humans interacting with AI systems must be able to keep full and effective self-determination over themselves;
- Prevent harm: AI systems must not cause harm at any stage of their lifecycle to humans, the natural environment or other living beings;
- Fairness: the development, deployment, use and operation of AI systems must be fair;
- Explicability: end users and other members of the public should be able to understand and challenge the operation of AI systems as required for the particular use case.
Malta has also developed a certification framework that is technology neutral and voluntary. It believes that this will be used by reputable organisations that wish to send a positive sign of recognition in the process of building trust and transparency. The certification framework is managed by the Malta Digital Innovation Authority.
Social partners in Malta share the view on the benefits of Artificial Intelligence and what its limits should be. On the positive side there is the efficiency in business processes and on the other hand the increasing dependence on AI raises other concerns such as around issues of cybersecurity. In terms of impact on employment, Unions emphasize that distribution of AI technology should not lead to job losses. On the other hand, business organisations acknowledge that with the advent of successive technological advancements some job functions may be lost, but also note that others are created. They argue that this cyclical process therefore ensures that whilst economies develop towards a point of increased efficiency, the workforce remains gainfully employed in the industries that surround this advancement.
Social partners also agree that despite the comprehensive AI strategy launched by the Maltese Government, there needs to be a bigger drive, a horizontal one, in terms of implementation. Very little has been done in terms of integrating outcomes of that strategy into tangible policy solutions. Employer social partners also expressed the concern that AI is not present enough at the workplace and that greater uptake is necessary. It is noted that there is a shortage of skills within the workforce and great disenchantment. Nevertheless, the advent of Covid-19 has accelerated digital transformation and this needs to be reinforced by necessary financial schemes to accelerate the uptake of AI at the workplace.
Respect of human dignity and surveillance
There is a broad understanding among stakeholders in Malta that surveillance at the place of work must take place only for adequate reasons. There are merits to it such as for example for security reasons and to expose any dishonest activity taking place at the workplace, but this should not be to the extent of impinging on the employees’ right for privacy.
There is little research on the subject referenced in Malta, albeit a study conducted in 2013 by a Maltese researcher as part of advanced academic studies, which focused on workplace surveillance among graduate professionals in the Maltese public sector. A summary was featured by Eurofound. In the study, most interviewed workers claimed that monitoring systems resulted in a loss of dignity and lack of empowerment, which created a sense of discomfort. The greatest concern was on how the organization managed the monitoring system.
Nevertheless, there is no specific regulation on employee monitoring and surveillance in the place of work in Malta. This is regulated more broadly in the context of the Data Protection Act of the Laws of Malta and its subsidiary legislation. Furthermore, the Information and Data Protection Commissioner adopted the 2020 European Data Protection Board’s (EDPB) recommendations on European Essential Guarantees for surveillance measures.
Therefore, in the absence of specific regulation, monitoring, rather than surveillance, is permitted if it is relevant, not excessive and implemented in the least intrusive way possible. While employers are not required to obtain express consent for monitoring if the above criteria are fulfilled, they should inform the employees about any monitoring that is carried, for which purpose, and how data will be used.
There has not been elaborate discussion among national social partners on the subject matter. As stated above, there is general agreement that surveillance at the workplace should be done for adequate reasons. Unions also expressed a more specific opinion in the context of remote working, stating that any surveillance should be strictly work related. From their end, business representatives consider the need for surveillance for operational and productivity reasons. While they support policies measures that protect employees, they express caution with respect of creating a litigation culture. They would like to see an educational approach through positive communication among employers and employees.
Both employer and worker representative organisations see the scope for social partner dialogue to jointly address these issues.
Challenges and opportunities faced by social dialogue deriving from the digital transformation of the world of work
On the positive side, industrial relations in Malta are generally harmonious and social dialogue takes place at the MCESD, a tripartite institution. Social partners are open to discuss matters of national importance and come up with solutions that are mutually beneficial. Nonetheless, the role of social partners in Malta’s industrial relations framework is a consultative one. In the absence of collective bargaining by social partners due to Malta’s decentralized system, they can only come up with policy recommendations. Depending on the relevance of the topic, this is either legislated upon by Government, or communicated to members for voluntary action.
Nonetheless, in the context of Malta’s size and economy, Maltese social partners are small organisations. Despite all good intention, they often lack the capacity to engage on an extensive range of issues and can only focus resources on selective topics. Priorities change over time and are influenced by both international and local trends.
Maltese social partners require better support to increase capacity for a stronger engagement and contribution to national policy making. The European Social Fund (ESF+) can play a role in this respect. In a document published in 2021 for consultation by the Maltese Government, the ESF+ programme is being earmarked to support the capacity building of partners to strengthen social dialogue and their contribution towards the formulation of national social, education and employment policies. However, it was indicated that a budget of Eur1 million would be allocated for social partners, civil society, voluntary organisations, workers’ and employers’ organisations over a 7-year period. In view of the capacity issues mentioned above, this amount is clearly inadequate and should be revised. Business organisations have conveyed this concern in their feedback to Government.
 Malta Council for Economic and Social Development (MCESD)
 Employment Relations Board (gov.mt)
 Subsidiary legislation: Wage increase national standard order (legislation.mt), Schedule A, pgs.2-3
 ENDEAVOUR Scholarship Scheme (gov.mt)
 Get Qualified (gov.mt)
 Jobsplus (gov.mt) / Jobsplus.gov.mt/iis
 MDB to launch a new EU funded scheme for students
 Financial Services Scholarships Scheme | EduMalta (gov.mt)
 Working from Home in Malta: Implications for Business and the Environment | Malta Business Bureau (mbb.org.mt)
 Workers want to telework but long working hours, isolation and (europa.eu)
 Government considers making right to disconnect legally enforceable (timesofmalta.com)
 REPORT with recommendations to the Commission on the right to disconnect (europa.eu)
 Civil servants on track to get right to disconnect before it becomes EU law (timesofmalta.com)
 Malta AI
 Malta towards Ethical and Trustworthy AI.pdf (gov.mt)
 Malta Digital Innovation Authority – Malta Digital Innovation Authority (gov.mt)
 Garzia, C. (2013), Workplace Surveillance: Good Watchdog or Cynical Control?, unpublished manuscript, Birkbeck College, University of London – Impact of electronic surveillance in the workplace | Eurofound (europa.eu)
 LEĠIŻLAZZJONI MALTA (legislation.mt)
 Recommendations 02/2020 on the European Essential Guarantees for surveillance measures – IDPC
 Working Conditions – Employee monitoring and surveillance: The challenges of digitalisation (europa.eu)
 Public Consultation Document_26 July 2021.pdf (gov.mt) p.53
Disclaimer: With reference to social partners opinions cited in this report, the national social partners were invited by the affiliated entity, the Malta Business Bureau, to provide their views on the four topics addressed in the European Social Partners Framework Agreement on Digitalisation. Feedback was received from: (i) The Malta Chamber of Commerce, Enterprise and Industry; (ii) The Malta Chamber of SMEs; and (iii) The General Workers Union.
Historical trends and development of Digital transformation in Cyprus
What is the national structure of the economy
Cyprus economy is small mixed economy. Its small open economy is well known for its resilience with an ongoing expansion in the last 30 years, until the financial crisis of 2009 that impacted the economy. The GDP for 2020 was €21 billions.
Following this crisis the economy and after the implementation of the agreement of Cyprus reform project with the International Monetary Fund , Cyprus exceed expectations and managed to put its economy back to growth, ranking its economy as one of the fastest growing EU economies. At this time banking sector was completely reformed, by boosting and diversifying their capital base and cut their non performing loans by 65%. Also one of the big banks went bankrupt. At the same time the Cypriot Government brought its debt under 100% of GDP, with a reform in its public finances. Something amazing was the fact that Cypriot debt to IMF was paid five years earlier than the expected end that was agreed.
The medium-term focus is on continuing structural reforms that will encourage investment, raise the economy’s competitiveness and leverage the eurozone economy’s highly educated population.
The Cyprus economy is dominated by services for 82.7% in 2019, while industry sector was 8%, construction sector 7%, and agriculture, forestry and fishing 2.3%. In the last twenty years there was a turn of the economy to services sector. As Cyprus is island tourism remains one of the most significant sectors, due to its wider impact on retail, transport, construction and employment. Its value-added contribution in the economy has now been overtaken by professional, financial and real estate services.
Diversification has been made possible due to the fact that Cyprus was been established as an international business centre. Other services that had been in low levels but are growing rapidly in the last 10 years are information and communication service sectors. Also administrative services are rising fast as a result of the growing of compliance industry.
Despite the economic crisis from the banking sector the economy recovered back fast returning to growth in 2015 with an annual real GDP growth of 5.4%. Opposite to this amazing growth the Covid-19 pandemic raised new threats. The challenge for the government now is to limit the impact of this pandemic. In order to support businesses had contributed to them €1.3 billion (6.4% of GDP), mainly to cover salaries and also another €1.9 billion to support banks liquidity.
Forecasts for the future
Today Cyprus in terms of digital transition ranks at 24th place out of the 28 EU Member states according to the 2020 European Commission’s Digital Economy and Society Index (DESI). Prior to the pandemic the data shows that Cyprus managed to improve its scores on all DESI dimensions in terms of connectivity and use of internet, but it is still below EU average scores. We have to point out that 10% of Cypriot citizens have never used the internet and 50% don’t have basic digital skills.
To face this new challenges the Cyprus government decided some actions that will take place in order to move to new digital era. Some of them are
Promotion of e-government as a part of its strategy, fostering a new economic model with a vision to become a dynamic and competitive economy, driven by research, scientific excellence, innovation and technological development.
Upgrade infrastructure for connectivity with an aim to bridge divides ensure an inclusive digital transformation. Its goal is to ensure 5G and fiber coverage by 100% of the population living in organized communities.
Dealing with this health crisis the government continued its structural reforms in order to run and implement this strategy of the digital transformation. To achieve this they developed the Deputy Ministry of Research, Innovation and Digital Policy.
This deputy ministry has the responsibility to run and develop programs in order to run the digital transformation. Some programs that will lead to modernization of the internal state operation machine are the introduction of:
A resource management system ( ERP)
Office automation system ( eOASIS) , to manage the public services mail
Central antivirus system, to protect the hardware and software of public sector
Unified government network, to centralize and upgrade of telephone services in all dimensions
Expansion of the government information repository, upgrade and enriched with new features
Creation of a data center, unification of public sector IT departments
Digitalization of services, a continuous development of new and improvement of existing services such as the social insurance payment ( Labour and Social Insurance Ministry) and the digitalization of Tax Department
Optimization of government portal Ariadne, improvement of the existing system
Modernization of Local Authorities e-government systems that will provide uniform electronic services to the citizens.
Also the ministry aims to improve other software systems that exist in the public services in order to complete government’s strategy. During the Covid-19 pandemic the ministry had run in cooperation with the National Health Organization the Vaccination Program. Another action that is taking place is the introduction of digital ID with the development of digital signatures.
In addition to the above components there are digital projects which are related to other reforms such as
Digital transformation of courts
Reform of the Law service
Modernizing public and local authorities
Deployment of generic cross border eHealth services in Cyprus
At the time of writing the report there is no specific legislation concerning digitalization in Cyprus. Cyprus has been a bit slow in implementing any legislation in regards to digitalization of economy and this is addressed to many aspects of digitalization and not specifically on the aspect of digitalization dealing with the world of work in general. In a recent publication in the Cyprus Mail it has been noted that Cyprus was in trouble in regard to failing to deliver the benefits of EU digital legislation in the area of audio-visual media and telecommunications. It said the delay restricts choice and weakens protection for both businesses and consumers and gave two months to remedy the situation, otherwise, it may refer their cases to the EU Court of Justice. Cyprus and other states are required to transpose into their national laws two new sets of rules: the Audio-Visual Media Services Directive and the European Electronic Communications Code, both of which are crucial for the EU’s digital transition. Therefore we can see that Cyprus is slow into the transition of the digital era and it is not moving quickly in adopting legislation for this transition. Despite the delays and the not existence of specific regulation, there is discussion going on involving social partners and other stakeholders for the constitution of legislation that would regulate teleworking in Cyprus. The draft legislation that is being discussed is trying to regulate many aspects of teleworking such as the cost incurred by the employee during teleworking, issues relating to the employee’s health and safety, the right to disconnect, the right of the employee for not being monitored amongst others. Moreover the framework for telework that has been created in 2002 and has been dormant for many year, is drawing attention following the pandemic that has forced the need for teleworking and the discussion that is in place regarding the need for the creation of teleworking. In the beginning of the year (Feb 2021) the General Secretary of Cyprus Workers’ Confederation has called on the social partners and especially the employers sides to view the need created from the use of teleworking during the pandemic in ceasing the opportunity to regulate the issue. Besides this, the affiliated member of the EU social partners that have signed the EU Framework on digitalization are also of the opinion that this matter should also be regulated and become part of the collective bargaining agreements. Although there is no clear legislation in regards to digitalization and all the forms of employment associated with, it is clear that the discussion has been started which is something that can be termed as positive especially having in mind that no such terms ever existed in the discussion a couple of years before. Of course all of these discussions revolving around the need to regulate digitalization pinpoint other regulation that make reference to other regulations in regards to digitalization that might have somehow go unnoticed. The GDPR is placing a lot of pressure to the data protection and states that organisations also need to provide the individuals with the rights and requirements deriving from the fairness principle, which refers, for example, to the need for organisations deploying AI applications to be aware of implications that this deployment may have on individuals and their rights and freedoms but also on communities and societal groups. Furthermore and although it is indeed clear that no legislation exists, there are many aspects in place that somehow promote and try to regulate digitalization. The government has developed and implemented data protection legislation with adequate and co-ordinated levels of enforcement, addressing the development of fintech, retail, AI and digital health in order to ensure equivalent and adequate levels of protection and additionally, Cyprus recognises that digital transformation, boosting investment in scientific research and innovative entrepreneurship is the prospering of every citizen and company alike in a dynamic digital economy. In Cyprus, the Institute for Research and Innovation supports innovative projects and research, by providing funding opportunities and overseeing the participation of research/innovation projects to domestic and international competitions. As of March 1 2020, the Cyprus government has been operating a Deputy Ministry of Research, Innovation and Digital Policy, as part of the Ministry of Finance, which was established in order to promote, guide and develop the digital transformation of Cyprus, while facilitating the operation of start-up businesses and supporting the Institute for Research and Innovation. In its strategic planning the Deputy Ministry is focusing on a number of strategies that are linked with digitalization and on the ministry’s strategic enabler is referring to digital transformation. The ministry will try to ensure that necessary strategies, technologies, infrastructures and skills for digital transformation of the economy are interlocked with the Research & Innovation ecosystem, as facilitating and enabling factors for knowledge sharing and innovation. The Digital transformation should mark a radical rethinking of how a company, an organization, the public sector and the society uses technology, people and processes to radically change performance. Throughout this strategy enabler, the Ministry will be focusing on
- Adoption of strategies such as the National Digital Strategy and E-Government Strategy;
- Focus on leading technologies, such as Artificial Intelligence (AI), Distributed Ledger Technologies (DLT), Big Data and Internet of Things (IoT);
- Support of infrastructures related to Electronic Communications and Information Technology;
- Development of skills and competencies required to support the fast pace in which technology is adopted in everyday life and the widespread disruption expected to occur in business models and the labour market within the next decade
In line with the Ministry’s aim of developing the skills and competencies required, the Human Resource Development Authority in its research paper for the training needs of the economy in 2020 is placing a lot of importance in the enhancement of digital skills in the New Industrial Policy will help develop a flexible, “Smart” and technologically advanced industry with enhanced participation in GDP of the country, something that will help developing innovative products and services of high added value that will contribute to the sustainability and competitiveness of the Cypriot industry. The report also states that the return of the economy to positive growth rates and the growing need for digital transformation, creates prospects new jobs but it will also intensify the need for the acquisition of new and / or the upgrading of existing knowledge and skills. In its effort to support this digital transformation the Human Resources Development has developed 40 training programs for the acquisition of the knowledge needed.
Another current aspect that makes a lot of references to the digitalization of the economy and prioritizes amongst others, the digital transformation of the country is the Cyprus Recovery and Resilience Plan (2021-2026). The Cypriot plan is structured around the five policy areas: public health and civil protection; the green transition; economic resilience and competitiveness; The actions identified incorporate recommendations stemming from the new National Digital Strategy (June 2020), which aims to achieve the digital transformation of the public sector, promote the digital transformation of the private sector, and promote innovation in line with the Country’s level of digital maturity. In all the components identified in the plan it is quite obvious that the digitalizatio and digital transfomation are quite apparent. It is quite clear that Cyprus is lacking the digital aspect, something which is identified in the plan. In terms of digital transition, Cyprus ranks 24 out of the 28 EU Member States based on the 2020 edition of the European Commission’s Digital Economy and Society Index (DESI). The latest available data (prior to the pandemic) shows that Cyprus has improved its scores on all DESI dimensions but mostly in terms of connectivity and use of the internet, although it still scores below the EU average. As a result The RRP is a key means through which Cyprus will drive forward its digital transformation by devoting 23% of the estimated cost to digital objectives therefore complying with the draft RRF Regulation. The actions identified incorporate recommendations stemming from the new National Digital Strategy (June 2020), which aims to achieve the digital transformation of the public sector, promote the digital transformation of the private sector, and promote innovation in line with the Country’s level of digital maturity. These actions are primarily included in the components under the Policy Axis 4 Towards a digital era.
- Component 4.1 Upgrade infrastructure for connectivity aims to bridge divides and ensure an inclusive digital transformation. Ensuring adequate access to communication infrastructures for all citizens is essential for the realisation of the opportunities of digital transformation. Specifically, it aims at ensuring 5G and fibre coverage for 100% of the population living in organised communities, including deployment of 5G along the main terrestrial corridors, and enabling universal and affordable access to Gigabit connectivity in all urban and rural areas, including 5G and Gigabit connectivity, in line with the EU’s 2025 5G and Gigabit connectivity objectives.
- Component 4.2 Promote e-government is a fundamental part of the overall policy and strategy of the Government for the digital transformation of Cyprus, fostering a new economic model with a vision to become a dynamic and competitive economy, driven by research, scientific excellence, innovation, technological development and entrepreneurship, and a regional hub in these fundamental areas. In addition to these two components there are digital projects which relate to other CSR/reform areas and appear under the corresponding axes/components – e.g. Digital Transformation of Courts, Smart Cities and Reform of the Law Service under Component 3.4 Modernizing public and local authorities, making justice more efficient and fighting corruption and Deployment of generic cross border eHealth services in Cyprus under Component 1.1 Resilient and Effective Health System, Enhanced Civil Protection.
As we have already analysed, Cyprus does not have any specific legislation in regards to digitalization. There are however a number of other efforts from governmental authorities, private institutions as well as other stakeholders that are placing a lot of their efforts for bringing digitalization to the society and the world of work with the aim of making the transition as smooth as possible and of course as soon as possible. The Cyprus government is fully aware of the need to transit the economy to the new digital era and it is by no surprise that the Deputy Ministry of Research and Innovation was created and it is of course by no surprise that more than 20% of the RRI will be allocated for the digital transition. It is also worth noting that Cyprus government is planning to move up several gears to digitalise its economy, with a €283 million EU-backed recovery fund, while teaming up with Estonia, considered the champion of e-government and the president of president Anastasiades is planning to visit Estonia where the two countries will sign an updated Memorandum of Cooperation in e-government, information, and communication technologies. On the other hand private institutions are fully aware of the importance of the fourth industrial revolution and are working into bringing it to the economy. CyRIC is a regional network hub of research, innovation, business and industry organisations, utilizing state of the art infrastructure, in order to bring the fourth digital revolution in Cyprus by offering cutting-edge digital technology innovations and services to the manufacturing industry. It is therefore quite clear that all the issues that have been analysed would somehow need some sort of controls and monitoring, and it is our belief that the fact that once the importance of the digital transformation has been identified and efforts are been made to move to the fourth industrial revolution combined with the fact that the functioning and the monitoring of this digital transformation will indeed create the new in the very near future for the creation of the legislation to guide this digitalization era that Cyprus will be entering very shortly.
The Role of Social Partners
State of play
In Cyprus there is a strong tradition of bipartite and tripartite social dialogue which is deeply entrenched both in custom and practice, since the establishment of the Republic in 1960. The voluntary industrial relations system through which employers and trade unions negotiate freely on all matters relevant to the employment sphere, has secured industrial peace throughout the decades.
The discussions, consultations and negotiations between employers and trade unions, are set out in the Industrial Relations Code (IRC), a Social Partner Agreement signed back in 1977. This agreement was concluded between the Cyprus Employers & Industrialists Federation (OEB), the Cyprus Workers Confederation (SEK), the Pancyprian Federation of Labour (PEO) and the Minister of Labour and Social Insurance. It recognises the right of employers and employees to organise freely and establishes procedures for the settlement of disputes arising from collective agreement negotiations. More specifically, the Code sets out the process to be followed when matters arise either through negotiating collective agreements or while interpreting such agreements and acknowledges a consultation process for matters of common understanding.
It follows from the extensive involvement role of Social Partners that their role in the adoption of the European Social Partners Autonomous Framework Agreements and its implementation on a national level, is not only important but also a prerequisite for a smooth transition. More specifically, two of these Agreements have been adopted through the joint signing of policy statements, namely the agreements on Work – Related Stress and Violence and Harassment at Work, exemplifying thus the collective commitment to improving the Cypriot workplace environments, making them free of violence, harassment and stress for all persons at work.
The Framework Agreements on Telework, Inclusive Labour Markets, Active Ageing and an Intergenerational Approach and Digitalisation have yet to be officially adopted.
The latest Framework Agreement on Digitalisation, signed by the European Social Partners in June 2020, sets out a partnership process between employers and employee representatives in order to achieve a smooth transition and successfully integrate digital technologies in the workplace. The main issues identified as key topics to be discussed during the process include the following:
- Working conditions/work life balance/Health and Safety.
- Work relations.
- Work organisation.
In relation to the topic of skills, the relevant body in Cyprus is the Human Resource Development Authority (HRDAuth), the Governing Body of which consists of government representatives and representatives of employer organisations and trade unions. The Authority is funded by mandatory employer contributions which amount to 0.5% of the payable earnings of their employees and its mission is to create the prerequisites for planned and systematic training and development, through such programs, surveys and reports, of the human capital of Cyprus at all levels and in all areas so as to meet the needs of the economy.
The main tools of skills anticipation in Cyprus are the studies run by the HRDA which are used to predict future labour market needs. However, an important role is also played by the Ministry of Finance which collects and analyses information on the state of the national economy and proposes actions and legislative measures, the Ministry of Education and Culture which works on the development and implementation of educational policy and the Ministry of Labour, Welfare and Social Insurance which has responsibility for introducing employment and social policy measures.
Through their participation in the HRDAuth, the role of Social Partners in monitoring the needs of the labour market and formulating training programs in the context of digital transformation is even more prominent. It is also noted that Social Partners also operate as training centres, providing specialised programs for their members.
While currently achieving significant results, it is crucial for Social Partners to take into account the rapid developments in the field of technology and promote the necessary investments for the training of employees in order to enrich their knowledge, expand their skills (especially digital skills) and remain productive in upskill as well as acquire new skills so that they can be employed in new jobs and in different sectors of economic activity in case the company in which they are employed suspends its activities (reskill). Employer organisations put forth claims that there is a lack of workers to cover current labour demands (September 2021) while trade unions insist on the improvement of terms and conditions of employment in some fields in order to become more attractive.
In relation to the topic of working conditions, a number of issues are dealt with through collective bargaining and the conclusion of collective agreements (such as working hours, time off, agreed paid leave periods etc) while other issues such as health and safety matters, are discussed by Social Partners at the Pancyprian Health and Safety Council that is the advisory body to the Minister of Labour, Welfare and Social Insurance.
Work relations deal with interpersonal relationships and with social interaction between employees themselves and between employees and the business, an area not touched upon by the Social Partners in Cyprus as a collective matter.
Lastly, work organisation is a more complex matter as it deals with internal company structures, organigrams and systems. This topic, according to the IRC, falls under the topic of matters of common understanding, where the two sides are obligated to discuss, but the decision remains as an employer prerogative. In some cases, however, through negotiations, the organigrams and other structures have been added as addendums to the collective agreements thus making them negotiable. In these cases, the involvement of Social Partners is catalytic as they can only be amended through agreements.
Challenges and opportunities
The Framework Agreement sets out in its introduction the challenges and opportunities and more specifically, ‘The digital transformation brings clear benefits for employers, workers and jobseekers alike, in terms of new job opportunities, increased productivity, improvements in working conditions and new ways of organising work and improved quality of services and products. Overall, with the right strategies, it can lead to employment growth and job retention. The transition also comes with challenges and risks for workers and enterprises, as some tasks will disappear and many others will change. This requires the anticipation of change, the delivery of skills needed for workers and enterprises to succeed in the digital age. Others include work organisation and working conditions, work life balance and accessibility of technology, including infrastructure, across the economy and regions. Specific approaches are also needed for SMEs to embrace digitalisation in a way that is tailored to their specific circumstances.’
In light of the above, examples of the challenges and opportunities faced by social dialogue in relation to the digital transformation in the workplace include:
- managing new employment opportunities Vs jobs that will be lost,
- tackling with new forms of work that are thus far unknown and unconventional,
- setting the training needs of the future to keep people employable,
- assisting SMEs in the transition era especially at company level,
- maintaining productivity and safeguarding work – life balance,
- dealing with health and safety issues that may arise.
Digitalisation is a process that will create employment opportunities and stipulate growth. It is undoubted that the introduction of new technology will render some traditional job positions void, thus leading to number of employees becoming redundant. The role of Social Partners will be to predict and assess the impact in time so as to find mutually accepted solutions to lessen the problem. It is necessary for the Social Partners to be trained sufficiently in order to be able to identify the challenges and have the capacity to manage them. Understanding new fields of economic activity and technology, will enable employer representatives and Trade Unions to better manage the changes.
Relevant research should be carried out and disseminated in order to raise awareness on the impact of technology. The research should first deal with an overview of workplace realities, then an assessment of how digitalisation falls in and then a check list of actions and follow up steps to be taken. Forming the guiding principles to approach the issue, will assist Social Partners in the process.
Towards this end, Social Partner Capacity Building programs and funding are considered a priority for Cyprus. It is noteworthy that Eurofound defines ‘capacity building’ as ‘the enhancement of the skills, abilities and powers of social partners to engage effectively at different levels (EU, national, regional, sectoral, company and establishment) in the following industrial relations processes: social dialogue, collective bargaining, (co-)regulating the employment relationship, tripartite and bipartite consultations, public policymaking and influencing public policymaking via advocacy’, exemplifying the wide spectrum of Social Partner activities, engagement and role.
New forms of employment have always been a controversial topic for the social dialogue agenda in Cyprus as trade unions have always been sceptical about flexible forms of employment. This has changed during the Covid-19 pandemic as a large number of employees were forced into telework in order to preserve public health. According to Eurostat, prior to the crisis, only 1,2% of Cypriots were working mostly from home. Although there are no data on telework after 2020, it is acknowledged by all that the percentage of teleworkers has risen to unprecedented levels.
The sudden push into telework and its emergence as a needed form of employment, has forced the Social Partners to look into it more carefully so as to understand it better and take any measures necessary to adjust it to the real needs of both sides and normalise it. The challenges with the digital transformation will be to go through the process of evaluating new forms of employment as they arise and find ways to enable them and make them work.
In the area of setting the training needs for the future to keep people employable, the most important role will be that of the HRDauth as analysed previously. As the Framework Agreement sets out at the beginning of the relevant chapter, ‘the main objective is to prepare our current and future workforce and enterprises with the appropriate skills by continuous learning, to reap the real opportunities and deal with the challenges of the digital transformation in the world of work’.  Thus, any strategies designed will need to maintain their flexibility and reviewed on a frequent basis so as to keep them aligned with the real needs of the labour market. Social Partners should prioritise matters related to training, re-skilling and up-skilling to ensure all persons remain active and in employment. They should also aim under each review, to precisely identify the needs so that there is an actual return on the training investments made. A personalised approach should not be excluded from the agenda for people who want to follow specific paths.
According to the Cyprus Statistical Service, in 2019, 94.9% of businesses employed up to 9 persons, 4.3% employed 10 – 49 persons, 0.7% employed 50 -249 persons and a mere 0.1% employed more than 250 persons. These demographics pose a certain challenge for the role of Social Partners as the largest number of companies are small and family owned and the impact can be abrupt and dispersed and not easily detected and managed. Also, due to company sizes, the cost, both monetary and in practice, of digitalisation is expected to be higher. Hence, the support to SMEs must be specific and targeted.
In addition to the challenges above, the topics of productivity, work life balance and health and safety are all intertwined and Social Partners, when engaging in related discussions and negotiations, will need to look into the entirety of the matters in order to achieve better results. Especially on health and safety, Social Partners will need to revisit the issue of work – related stress under the new situation. It must also be mentioned that modalities of connecting and disconnecting, as set in chapter 2 of the Framework Agreement, are can apply to health and safety of the challenges analysed in this section. This topic is expected to be the most significant challenge for the Social Partners that will have to work within the current legal framework and find the necessary solutions.
A major challenge will also be to assess the impact on men and women and promote solutions and ideas that do not hinder gender equality as protected through the different laws and directives.
Lastly, the Framework Agreement also deals with the issue of artificial intelligence and the human in control principle and the respect of human dignity and surveillance, matters that the Social Partners in Cyprus need further assistance in understanding as they go further than the normal issues that are dealt with as matters of the workplace.
Good practice examples
In Cyprus and thus far, examples of the impact of the digital transformation on work include the media sector and most specifically the shift from printed newspaper/magazines to digital editions. This shift has caused a number of job positions to become redundant with employers and trade unions involved in the discussions with the aim to mitigate the impact on employment. At the same time, the digital opportunities led to the creation of new positions in the sector as a number of online news agencies have been formed and with a good practice example being the creation of Digital Tv, a channel that transmits its content only digitally. The channel has created job positions
Another case where Social Partners were called in to deal with the result of the introduction of new technology, was in the Public Transport company. The company upgraded the fleet of buses in an attempt to provide better services and as a result a lot of drivers needed new training in order to be able to continue to perform their duties. The employer agreed with the trade unions to cover the cost for the training and any drivers that failed to successfully complete it to be trained for other positions in the company. Other concerns raised by the unions and discussed included the concerns expressed by some employees that the company would cancel or merge some routes due to the new buses, making employees redundant. The company agreed to safeguard all job positions despite the introduction of new technology.
Various other positive examples where digitalisation impacted the workplace exist, such as a beauty product company that created online sales, without cancelling physical stores, and thus raised new jobs in IT, marketing and logistics (warehouses and delivery drivers). The same applies for a large number of companies in the catering sector that increased their online sales thus creating more jobs.
- Framework Agreement on Digitilisation, European Social Partners, June 2020
- Κώδικας Βιομηχανικών Σχέσεων (Industrial Relations Code)
- Cedefop (2017). Skills anticipation in Cyprus. Skills Panorama Analytical Highlights.
- https://www.sek.org.cy/index.php/blog/item/1215-i-sek-xairetizei-tin-ypografi-tis-simantiki-symfonias-plaisio-gia-tin-psifiopoiisi-apo-tous-evropaious-koinonikoys-etairous https://www.brief.com.cy/etairika-nea/tilergasia-en-kairo-pandimias
 Cedefop (2017). Skills anticipation in Cyprus. Skills Panorama Analytical Highlights. https://skillspanorama.cedefop.europa.eu/en/analytical_highlights/skills-anticipation-cyprus
 Framework Agreement on Digitilisation, European Social Partners, June 2020, page 3
 Framework Agreement on Digitilisation, European Social Partners, June 2020, page 8