Published on Delfi.lv
At present, the world is experiencing the largest wave of challenges related to Covid‑19 — and it will remain a central issue on our agenda for some time. The second wave of challenges concerns environmental and resource sustainability, while the third major challenge is digital transformation, which can be compared to an iceberg, where the visible part represents only a small fraction of the whole. Creating a more modern website or switching to an updated accounting system are the easily understandable, visible elements. Beneath the surface lie other, much larger topics that will reshape the lives of individuals, businesses, and society as a whole. Preparing for these changes in time and investing — including through European Union funds — will strengthen competitiveness and the ability to generate revenue in the future.
The pandemic has given an irreversible push to digital transformation. The ability to use popular online platforms such as Zoom or Teams, as well as other everyday digital tools, has become necessary for almost everyone. Although expert forecasts vary, the advantages of remote work will continue to be appreciated even after the pandemic ends, and the share of remote work may range from 30–70%.
The European Union has allocated funding to help various groups in Latvian society improve their digital skills. For several years now, adults have been able to enhance their digital competencies through adult education programmes. Recently, the sixth application round of the EU‑funded adult education project “Improving the Professional Competence of Employed Persons” concluded; this round was dedicated entirely to digital skills training and covered both basic digital competencies and advanced, higher‑level digital skills across 12 competence areas. Nearly 14,000 people have already begun learning different digital skills within this round (the most popular programmes include digital tools for supporting the learning process, programming, and computerised accounting). Remote learning forced teachers and other professionals — many of whom had previously been very unfamiliar with technology — to jump into a fast‑moving train, and of course this affected people across many other sectors as well.
ENTREPRENEURS — UNTIL NOW RATHER SLOW IN INTEGRATING DIGITAL TECHNOLOGIES
Digital skills also need to be improved within the business environment. The Digital Transformation Guidelines for 2021–2027, approved by the government this July, note that entrepreneurs overall have been slow to integrate digital technologies into their companies. Latvian businesses are not fully utilising their digital transformation potential, as reflected in their lag behind the EU average. Latvian companies still make insufficient use of the potential of online sales for goods and services, and small and medium‑sized enterprises lag behind the EU average in terms of e‑commerce. Only 11% of SMEs sell goods online, which is below the EU average of 17.5%. The share of SMEs engaged in cross‑border trade also remains lower than the EU average (only 6.6% of all SMEs compared with 8.4% across the EU), and just 5.3% of SME turnover comes from the online segment. Businesses make limited use of electronic information exchange, cloud computing services, and social media, and only 7.7% of companies use big data.
Integrating and effectively using digital skills and tools enhances the productivity and competitiveness of every company, which is why digital transformation is now becoming an important weapon in the competitive landscape.
Of course, there are also positive examples, such as the metalworking company Peruza, which has transformed into a digital‑first enterprise. Adapting technology in this way requires strong leadership within the company and a clear understanding of how to secure tomorrow’s market niche.
THE MUNICIPAL REFORM WILL PROMOTE THE DIGITAL TRANSITION
A digital breakthrough would also be necessary for the state administration and local government sector. It would be important to prevent the fact that digital governance has so far been fragmented and decentralized, but for more successful resource utilization it would need to be centralized.
The recently implemented administrative‑territorial reform will make it possible to consolidate digital solutions, helping to balance the differing levels of digital competence. This will be especially true if the available EU Recovery Fund resources are used in a consolidated manner to centrally develop the digital products needed by all municipalities.
Many municipalities have invested in modern digital solutions, while many others still do their accounting in Excel. As a result, the merger of municipalities and the digital transition will also benefit residents, who will gain access to more modern and higher‑quality services.
HOW CAN WE PREVENT MAJOR PLAYERS FROM USING THEIR DOMINANCE FOR MALICIOUS PURPOSES?
While some are only just gaining momentum in the digital world, others are already grappling with how to slow down those who have advanced too far. EU institutions have been working for several years on regulations to create a unified digital market within the EU. In this context, lesser‑known digital platforms (such as DuckDuckGo) have submitted demands to EU institutions to limit Google’s dominance and monopoly position. This will be a tough challenge for the responsible institutions — how to avoid and prevent major platforms like Google from using their dominant position for malicious purposes, how to foster competition, and how to encourage technological innovation on the one hand, while eliminating monopoly power and dominance on the other. Experts within EU institutions are well aware of the risks posed by the abusive dominance of global platforms such as Google and Facebook, and one can hope that these risks will be limited in the interest of the business sectors of EU Member States.
At the same time, the EU is working on a data‑governance framework that would allow everyone to share their data — whether personal, business‑related, or held by public institutions — but this process must be regulated. Questions remain: who will be allowed to collect data belonging to others, who will oversee data processing, how the data should be processed, who may process them, and what should be stored and where. It is still unclear what benefits this will bring to small and medium‑sized enterprises, or how sharing their data could help a company increase its profits. What is clear, however, is that it will significantly reshape the business environment.
WHO WILL DEFEND THE INTERESTS OF THE INDIVIDUAL?
The rapid pace of digital transformation has simultaneously raised a number of questions regarding personal data security breaches. In France, the data protection authority has recently demanded that the Ministry of the Interior improve data security, particularly in databases where fingerprints and other personal information are collected and stored electronically. The authority concluded that the ministry is violating requirements related to the security of personal data.
Meanwhile, Ireland’s Data Protection Commissioner a few days ago imposed a fine of €225 million on WhatsApp, a subsidiary of Facebook, for insufficient data oversight — specifically, the data exchange between WhatsApp and its parent company was deemed insufficiently transparent. What is most interesting here is that data‑protection authorities in other European countries criticise Ireland’s commissioner for being too timid toward Facebook, WhatsApp, and other digital platforms, arguing that the fines demanded are far too low. Many of these global companies have located their European operations in Ireland due to the country’s low tax rates. It is possible that the commissioner is reluctant to impose higher penalties so as not to “scare off or anger” these global firms.
It is difficult to disagree with the experts’ view. The numerous violations that have repeatedly occurred on digital platforms such as Google, Facebook, and TikTok are impossible to overlook. Breaches related to fake‑news regulation, data leaks, the negative impact of Facebook and TikTok on young people and children, censorship, and restrictions on freedom of expression — all these issues have been discussed many times in various national parliaments, in the media, among experts, and elsewhere. Therefore, it is evidently reasonable to agree that the fines imposed so far have been too small.
Discussions in the European Parliament on legislation related to artificial intelligence have been ongoing for some time — and they have recently intensified around the use of AI in video‑surveillance systems. Already years ago, digital programs were developed that can identify a person’s visual identity in public spaces — specialised video‑surveillance systems with AI‑based solutions capable of automatically recognising faces. It is likely that law‑enforcement authorities would gladly use such tools; however, civil society in Western Europe strongly opposes them, arguing that this would lead to mass surveillance and control characteristic of oppressive totalitarian regimes, which contradicts human freedom and fundamental rights in the EU.
THE GERMANS WANT A MINISTER FOR DIGITALISATION
The recent German parliamentary elections brought renewed attention to the idea that the country needs a Minister for Digitalisation — a position with broad powers and the ability to make rapid decisions. According to the digital‑solutions association Bitkom, Germany’s business sector risks falling behind in the digital transformation process and losing ground in global competition. Based on the association’s research, Germany’s small and medium‑sized enterprises are particularly vulnerable in the digital transition, and Bitkom urges the government to support faster digital change in the business sector. If German businesses already feel uncertain about the rapid pace of digital transformation, we can assume the same applies to Latvian businesses, which also need financial support to maintain their competitiveness. Fortunately, Latvia has access to EU funds aimed at promoting digital transition. Swift and targeted use of these funds will help both businesses and municipalities carry out their digital transformation.
Photo: LETA