More digitalization: Corona as a brake pad
During the pandemic, more people worked from home and were reliant on digital technology, but this did nothing for digitalization.
The pandemic may have brought benefits for people who like to work from home, but not for the economy as a whole.
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During the coronavirus pandemic, more people worked from home than before and needed the necessary technology. However, the Leibniz Centre for European Economic Research (ZEW) in Mannheim has researched that this has not boosted digitalization in Germany. On the contrary, the majority of investments in modern digital technologies were made before the pandemic, while investment activity declined overall as a result of the pandemic.
"The pandemic-related investment gap amounts to around 50 percent", writes the ZEW. Contrary to public perception, the pandemic has not provided a boost to digitalization, but has set back technology development in Germany by almost 1.5 years.
The ZEW came to this conclusion after evaluating the "IAB-ZEW-Arbeitswelt 4.0" company survey, in which around 3,000 companies took part. Companies have spent more money on technology that enables working from home and virtual collaboration. At the same time, however, investment in state-of-the-art production equipment has declined, as has investment in the latest analysis and planning technologies and digitally supported customer management. Larger projects in particular have been postponed or abandoned altogether.
Mitigated consequences of the pandemic vs. overall investments
Companies could have mitigated the negative consequences of the pandemic by investing in adjustments, for example, they had to introduce less short-time working as working from home was extended. "However, these adaptation investments were made at the expense of other technology investments, which may be contributing to the current weak productivity growth in Germany," explains Professor Melanie Arntz from ZEW, co-author of the study.
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Based on the results of the study, the ZEW suspects that the energy price and uncertainty shock that set in immediately after the pandemic due to the war in Ukraine has contributed to Germany continuing to postpone major investments even after the pandemic has subsided. "These are not good conditions for productivity growth in Germany and the recovery of the economy," said Dr. Arntz.
The "IAB-ZEW Working World 4.0 Company Survey" compares the use of state-of-the-art digital technologies in German companies between 2016 and 2021. It covers modern means of production such as self-controlling machines and systems as well as analysis tools with big data, cloud computing systems, collaboration and communication tools and artificial intelligence, explains the ZEW.
(anw)
