COVID-19 and digitalisation

The COVID-19 outbreak was declared a pandemic by the World Health Organization (WHO) on 11 March 2020. As the number of people infected with the virus continues to rise around the world, the level of uncertainty about global economic growth increases. The virus has infected more than 176 million people worldwide. Globally, the death toll is more than 4.7 million people, according to Worldometer (as of 22 September 2021).

Overview

According to the Organisation for Economic Co-operation and Development (OECD), the COVID-19 shock has accelerated the digitalisation of public and private sector activities in many countries, including in the form of improved broadband connectivity, the adoption of online business models, the promotion of online payments and the enhancement of digital skills.

According to a McKinsey Global Institute survey of executives, the COVID-19 crisis has also accelerated the digitisation of customer and supply chain interactions and of internal operations by three to four years. The share of digital or digitally enabled products in their portfolios has been accelerated by seven years.

Since most national governments in the EU urged workers to stay at home as much as possible during the pandemic, one of the most visible impacts of the COVID-19 crisis has been the huge increase in teleworking. Companies have been obliged to quickly invest in software platforms that facilitate communication and meetings (such as Zoom and Microsoft Teams) while making changes in production and service provision processes to reduce face-to-face interaction. The adoption of automation and digitisation technologies, as well as some types of platform work, has increased substantially during the pandemic.

The interaction between the health crisis and technological development has been noticeable, since the adoption of digital resources to prevent and better manage the effects of the pandemic has been considerable. From efforts in researching vaccines to the rise in telemedicine and the use of additive manufacturing – not to mention the controversial contact tracing apps – digital technology has shown its capacity to contribute to mitigating and fighting the pandemic.

Introduction

The COVID-19 outbreak has changed the shape of the economy, work and societies all around the world. During the pandemic, the digital transformation accelerated overwhelmingly, particularly with the increased use of online services and the enormous breadth of users and consumers. Curfews and lockdowns, travel constraints, restrictions on face-to-face business operations – particularly affecting services, transport, and commerce and hospitality – and remote working have catalysed profound changes, pushing companies to explore digital solutions to keep their businesses running (Figure 1).

Figure 1: Shares of enterprises reporting disrupted business operations due to the COVID-19 outbreak by sector, EU27 (%)

The pandemic forced companies to move rapidly to deploy digital technologies, dramatically accelerating trends that were unfolding at a much slower pace before the crisis. Businesses abruptly started to change or speed up changes in the way they were engaging with customers and with employees, embracing modifications to work organisation, internal communication and day-to-day operations, including the deployment of automation, faster processes and workplace flexibility. One of the most striking changes in this shift towards digital operations has been the move to remote working : during the first wave of the pandemic in April 2020, in almost 60% of EU companies at least some employees switched to telework (Figure 2). In 2019 (pre-pandemic) only one-quarter of these companies had employees working from home.

Figure 2: Shares of enterprises in which at least some employees telework by size class (number of employees), EU27 (%)

The digitalisation of enterprises and the use of digital tools by employees became a more dominant topic during the pandemic in many countries. In some, the degree to which these enterprises needed public support to become more digital was already a discussion point; in others, where digitalisation had previously been relatively low on the policy agenda, the pandemic helped bring this topic to the fore.

The degree of adoption of digital technology resulting from COVID-19 responses varies across sectors and countries. Factors influencing adoption depend on productive, economic and market features, as well as pre-existing levels of digital development and technological maturity. The ability to innovate within digital environments and ecosystems, leading to new services that reach or create new markets, has also played an important role in the acceleration of digitalisation in some sectors.

Despite the difficulties in the business environment resulting from the pandemic, companies and organisations have adopted and deployed technologies that have helped them to survive and to take advantage of newly emerging markets. The adoption of digital technologies has also been pushed by governments and public spending in health research, telemedicine and healthcare – for example, automated delivery of medications or blockchain-based epidemic monitoring platforms.

In addition to these examples, the COVID-19 digital responses cover a wide array of sectors such as robotics and 3D printing technologies in manufacturing and logistics, online platforms in the education sector, and financial technology (fintech) and the expansion of mobile money. Another impact of the proliferation of online business models and platforms relates to the increasing use of big data analytics and artificial intelligence (AI), which became essential during the pandemic and are likely to be part of the way forward in the post-COVID-19 period. However, despite the wide spread of successful AI-related developments and optimistic publicity, other voices claim that AI technologies are still underdeveloped in the business arena since they require efficient data management processes that are not yet running, except in big tech and other high-technology companies.

The COVID-19 pandemic has also incentivised more companies to engage in online sales. This requires companies to be able to gather information and data from the front office and sales orders received, among other sources, using them to continuously update decision-making in the whole business cycle, from design to storage and logistics. Getting and processing high-quality data has become a core strategy for companies.

With partial or total lockdowns, the education sector – from schools to universities, business schools and training centres – has been profoundly affected by the pandemic. To an extent depending on previous experience of, and readiness for, online education and training, education systems have transformed traditional teaching methods and face-to-face courses into online programmes. Online learning platforms have been disseminated, but with uneven results, given the requirement for internet connectivity (the 5G network is not yet fully fledged) and variations in the pedagogical approaches applied; however, the expansion of the use of mobile devices that work with these online platforms has helped to keep education going.

The pandemic has also accelerated the development of electronic banking, including online and mobile banking. Contactless payments made electronically are becoming the norm, supported by powerful online platforms that traditional banking institutions have improved. According to research by the financial advisory organisation deVere Group, shortly after the COVID-19 outbreak the use of its own fintech apps increased by 72% in Europe. The growth in the use of digital technology has included banking apps, which shows that customer expectations and practices have substantially changed during the pandemic.

Influence of digitalisation in managing COVID-19

Diverse digital technologies and tools have proved helpful in fighting against the virus. Most EU countries have launched a national contact tracing app that can be used on a voluntary basis. While some have been working through the EU’s COVID-19 tracing app project, which allows national apps to exchange information, other EU countries have also launched other digital measures.

The EU Digital COVID Certificate, which came into effect in July 2021, is another example of cross-border digitalisation empowering EU citizens to move safely in the EU for work or tourism. The European Commission promoted this certificate as an EU-wide vaccine passport that proves that a person has been vaccinated against COVID-19. It can be hosted on mobile apps, along with the results of tests for those who are not vaccinated and/or other information relevant during the COVID-19 recovery.

In addition to tracing apps, AI and high-performance computing are valuable assets for identifying patterns and for monitoring the spread of the coronavirus and its variants all over the world. AI has also contributed to the delivery of response strategies in the healthcare sector. Furthermore, three powerful European supercomputing centres are working on developing vaccines, treatments and diagnoses by comparing digital models of the virus’s proteins and matching them against a database of thousands of existing drugs.

Perhaps even more striking has been the application of technology to create the COVID-19 vaccines. Moderna, using a technology platform that functions very much like an operating system on a computer, was able to create the first mRNA COVID-19 vaccine within two days of receiving the genetic code for COVID-19 by email. This demonstrates the overwhelming progress in both the speed and the effectiveness of this new technology platform.

Opportunities

Most companies have been forced by the COVID-19 crisis to review their operating methods and adopt more flexible approaches to business management – for example, by implementing ICT systems for internal communication and remote working. The long-term effects of the pandemic will reinforce the potential for companies to communicate through digital means and still do business efficiently.

The pandemic has also demonstrated the value of digital educational tools and online platforms for inclusiveness by helping those having trouble attending traditional face-to-face courses and keeping them connected.

Contact tracing apps, if fully compliant with EU privacy rules, could play a key role in interrupting the transmission chain of the virus, helping to fight against it.

Risks

The acceleration of technology development and deployment brought about by the COVID-19 crisis has been uneven across sectors and countries. In the EU, there is a geographical urban–rural digital divide in terms of the quality and affordability of broadband networks, which affects people’s opportunities to make use of telemedicine. There is also a digital divide between those used to managing digital devices and those who are digitally illiterate or have a low level of digital skills. Inequalities in health, purchasing power and digital literacy mean that the patients who stand to benefit most – such as older people, people with disabilities and those who have retired – are often also those who are least able to access and make use of telemedicine.

The health emergency caused by the COVID-19 pandemic has required a vast amount of personal data to be collected and processed. Digital tools and devices (for example, tracing apps) have been put in place to gather mobility data from people’s use of mobile phones, email and social media to limit the spread of the virus and aid in accelerating the recovery, especially through digital contact tracing. Two main technologies have been applied: GPS methods of co-localisation tracking; and Bluetooth-based methods of proximity tracking. Such data collection and sharing of personal and non-personal sensitive data have raised concerns when they have been applied for purposes not directly or specifically related to the COVID-19 response.

Concluding commentary

As a result of the COVID-19 pandemic, digitalisation has flourished in companies, organisations and society, pushed by the need to maintain social distancing and by the shutdown in economic activity. By challenging companies’ survival, the pandemic has sped up digitalisation and related changes in work, production and provision of services. No longer a business objective or a goal, digitalisation has become a business restriction: if you do not go digital, you will be out of the market.

Most companies have shifted to new business methods and gone digital in a very short period, while taking care of their staff’s health and safety. Remote work and the use of private devices in the work environment have increased, as has the use of digital tools, ICT software and online platforms for work, reflecting profound changes in processes and business models, and demonstrating that employees have become better integrated into technological environments.

The impact of the COVID-19 crisis on companies has been uneven, however. This can be partly explained by the ability of some businesses to go digital more quickly, namely those that had started the transformation prior to the pandemic; many then adapted to the pandemic by accelerating this transformation, creating technological solutions while reducing face-to-face customer interactions. Such early transformation and resilience will help to ensure that businesses are well placed to succeed in the post-pandemic world. Despite the uncertainty surrounding the economic outlook post-COVID-19, organisations are expected to continue to experience an acceleration in the adoption of disruptive technologies and a proliferation of online business models and platforms.

With the increase in remote work and online business, companies and organisations have recognised the importance of ensuring higher levels of cybersecurity, as relying on technology, connectivity and ICT has made them vulnerable to cyberattacks. Keeping business and personal data secure has become a top priority. Therefore, as a key element of the accelerated digital transformation during the pandemic, companies and organisations have invested more resources in cybersecurity, even amid diminishing budgets due to decreasing revenues. In addition to allocating more money to reinforcing ICT and network security, they have targeted staff – particularly remote workers – with awareness-raising campaigns and training focused on this growing global concern.

In accelerating the digital transformation, the pandemic has created a landscape that will continue to encourage innovation and technological adoption moving forward. As businesses begin to better understand the capabilities of these types of modern technology, they will also begin to understand the opportunities that lie before them, even after the pandemic. In this regard, the COVID-19 crisis has also boosted a rather technologically oriented business culture. Digitalisation is not only about implementing technology, the internet and remote working: it is also about implementing business innovation itself.
 

Automation is one of the ‘vectors of change’ identified as part of the broader notion of ‘digitalisation’ in Eurofound’s conceptual framework. It is the replacement of human input, in full or in part, by machine or software input. Advanced robotics, both for services and for manufacturing, is grouped with autonomous vehicles under the automation vector, since the ultimate aim of their application is to substitute machine for human input.

Introduction

The significant disruption brought about by the COVID-19 crisis has forced companies to reorganise production and use automation to ensure business continuity, increase processing capacity and provide responses to customers. Constraints on human interaction have resulted in the creation of COVID-19-secure workplaces, with increased use of robots and drones. To put it bluntly, robots do not get sick. The pandemic could therefore lead businesses to adopt automation technologies to reduce the risk of contagion.

The deployment of industrial robots has been severely hit because of their reliance on the automotive and electrical/electronic industries – sectors that were particularly affected by the COVID-19 crisis. Although the outbreak of the pandemic in early 2020 disrupted most businesses all over the world, the outlook for recovery at the end of 2020 accelerated companies’ decisions to invest in automation. An acceleration in the adoption of robots is expected across a wide range of industries, including healthcare, defence and security, logistics, inspection and maintenance, automotives, electronics, and food and beverages.

According to a Deloitte survey of 441 executives from 29 countries, more than two-thirds (68%) of business leaders used automation to respond to the impact of the COVID-19 pandemic. Around three in four (73%) organisations worldwide are now using automation technologies – such as robotics, machine learning and natural language processing – up from 58% in 2019. In manufacturing, robotic process automation is expected to be almost universal in the coming years (93% of business leaders expect to be using robotics by 2023).

There has been an acceleration in the use of robots in hospitals and in other sites where people gather, such as healthcare facilities and warehouses, to make social distancing easier. The more structured the environment is, the more feasible it is to automate. More dexterous robotic hands and better object-tracking software allow for more effective order picking in warehouses, while the use of drones and autonomous forklift trucks has risen sharply, mainly due to the huge increase in e-commerce and delivery needs.

In turn, the implementation of automation technologies has improved the customer experience and demand for services, which has fed into the development of new business lines. Thus, in the retail sector, Amazon is opening the Amazon Go convenience and Amazon Fresh grocery stores using computer vision, sensor fusion and deep learning technologies to detect when products are taken from or returned to shelves. Customers are charged automatically when they leave, eliminating the need for cashiers or self-service checkout assistants.

During the pandemic, sophisticated drones have played a role in preventing further spread of the coronavirus. They have provided medical delivery services in rural and remote areas in Africa, for example, transporting medical supplies, medical equipment and consumables, and urgently needed blood samples and testing devices.

Opportunities

As drones are remotely controlled they are proving to be a valuable tool in helping to reduce the risk of COVID-19 transmission. They are also becoming a support tool for public authorities in several cities and territories for many other purposes, such as issuing instructions and warnings, performing logistical tasks and disinfecting contaminated areas.

It seems clear that companies will continue to invest in automation processes, keeping up the momentum created by the pandemic, as they have acknowledged the competitive advantage of being digitalised.

Risks

Although contact tracing systems have the potential to save lives and help authorities flatten the coronavirus curve, the vast trails of collected data could see the monitoring of health issues moving towards the surveillance of individuals.

Concluding commentary

The pandemic experience is very likely to result in the continued acceleration of automation across different sectors of the economy.

The applications of automation during the pandemic have supported the fight against the virus; robotic disinfection systems have been introduced in warehouses to reduce infection risk and drones have been used for the delivery of products and services in different parts of the world.

A correlated investment in automation skills and digital capabilities is needed to build new competencies and create jobs.
 

Digitisation is one of the ‘vectors of change’ forming part of ‘digitalisation’ in Eurofound’s conceptual framework. It refers to the process through which aspects of the physical world are rendered into data and virtual models, and vice versa. Three main technologies fall under this vector of change: 3D printing; augmented reality (AR)/virtual reality (VR); and the internet of things.

Introduction

There has been a strong relationship between the pandemic and the use of certain digitised technologies in online education, telemedicine, and the manufacturing of medical devices and equipment to mitigate its effects. Digitisation technologies such as AR/VR and additive manufacturing are playing a key role in supporting the COVID-19 response.

During the COVID-19 pandemic, additive manufacturing – often referred to as 3D printing, although other additive manufacturing processes exist – was brought to the front line in the fight against the virus. For hospitals, healthcare centres and individuals, there was a massive shortage of medical equipment and devices – a situation aggravated by the disruption in global supply chains and the transport of physical goods – particularly during the first months of the pandemic. For example, as COVID-19 is mainly associated with respiratory issues, there was a much-increased demand for ventilators. In this context, logistical and design advances in 3D printing emerged as a relatively simple way to address shortages and gaps in medical supplies. These advances made it possible to produce and deliver personal protective equipment (such as masks and face shields) and other 3D-printed medical accessories (such as valves and nasopharyngeal swabs). Other 3D-printable alternatives could be printed and assembled on site, such as splitters that allowed multiple patients to use a single ventilator machine, entirely 3D-printable ventilators, and adaptors that enabled commercially available snorkelling masks to be used for ventilation purposes.

This success was possible thanks to a combination of factors. Among them, the patent expiration period for some desktop 3D printers (20 years) contributed to reducing market prices considerably, making this technology available for anyone to use. Between 2002 and 2014, about 225 early 3D printing patents expired.

Augmented reality and virtual reality

While VR has been used during the pandemic for telemedicine and drug discovery, among other applications, AR has been used in healthcare, marketing, universities and schools. The advantages of using these technologies include the ability to provide high-resolution audio and video communication, facilitate remote collaboration and visualise abstract concepts.

Because of lockdown restrictions, both of these digitised technologies have been used for education and training during the pandemic. Furthermore, there has been increased use of VR for skills management and safety protection. For example, Oxford Medical Simulation made a VR medical training system available to healthcare facilities in Canada, the United Kingdom and the United States; training administered in this way was provided to medical personnel and additional nursing staff in an effort to strengthen the capacity of hospitals engaged in the care of patients infected with the virus.

Telemedicine

The COVID-19 pandemic has accelerated the rise of digital health, a broad concept that includes solutions for telemedicine – which the WHO defines as ‘the delivery of health care services … using information and communication technologies for the exchange of valid information for diagnosis, treatment and prevention of disease and injuries’ – and teleconsultation, remote monitoring, connected devices, digital health platforms and health apps. The concept also covers related health data analysis and its application in systems based on big data, for instance in epidemiological research and AI-enabled diagnosis support.

According to research, since the pandemic began more than half of EU countries have been using telemedicine to replace face-to-face consultations. The diverse digital solutions that have been implemented include mobile applications, websites, chatbots, e-prescriptions, remote patient monitoring to diagnose COVID-19 patients in their homes, and screening in real time. Technology has acted as a great enabler of continuity of care through remote consultation, ongoing monitoring and patient education by telephone and through videoconferencing. Furthermore, videoconferencing has enabled patients to stay in touch with their families when hospitalised, including in intensive care. In addition, telemedicine has allowed medical professionals to collect new data from their patients and provide new services.

Opportunities

The flexibility in prototyping and the versatility of 3D printing have been demonstrated during the COVID-19 crisis, when global supply chains for medical devices and equipment were significantly disrupted. This decentralised, digitised technology has provided a valuable response to the emergency by producing designs – many of them shared online – that are highly customisable, as well as printing applications that cover a wide range of medical products. In combination, 3D scanning and 3D printing may contribute to the EU’s climate neutrality goals by using recyclable materials and creating reusable products.

Some businesses have adapted their additive manufacturing production processes to provide specific medical supplies to public health systems. In addition, the 3D printing community and makers’ hubs have worked together with professionals in the health sector on the design and manufacturing of 3D-printed products – this could be a mutually beneficial way to further innovative collaboration in the future.

In the education sector, teachers and students in many school systems and universities have become increasingly adept at creating virtual lesson plans for online classes. This achievement has great potential for those who might have previously struggled to attend education because of distance or any other personal condition or socioeconomic reason.

Scientific studies have shown that, in various therapeutic programmes, AR/VR may contribute to the assessment and treatment of mental health concerns, including stress-related psychopathological symptoms, depression and anxiety disorders. These technologies can help patients to deal with the emotional aspects of traumatic memories and to better manage COVID-19-related stressors.

Risks

The expansion in the use of 3D-printed medical devices and equipment during the pandemic has raised concerns about the suitability of the designs and the materials. All devices intended for medical use must comply with international safety standards and biomedical standards to avoid losing the essential confidence of medical professionals and the public. Some government authorities have implemented regulations and drawn up guidelines with which manufacturers of 3D-printed medical devices must comply. Another risk is high levels of copyright infringement, since much 3D printing design is based on digital file sharing.

In telemedicine, there is a risk of widening the digital divide, since reliable connectivity is not guaranteed in all rural areas in the EU. In addition, elderly and socially disadvantaged people who are not engaged with technology and are not familiar with – or, in fact, distrust – these technologies are also at risk of being left behind.

Cybersecurity issues have been highlighted as growing risks that need to be considered, as cyberattacks on hospitals are on the rise. In this regard, risks concerning the transfer of personal health data raise questions about fundamental rights.

Concluding commentary

3D printing is being used to provide many different solutions to the challenges posed by the COVID-19 pandemic, ranging from personal protective equipment to emergency dwellings for isolating patients under quarantine.

The technology has helped to mitigate medical shortages during the COVID-19 crisis by supplying additional devices and equipment to healthcare systems. In this regard, the pandemic has given citizens the opportunity to see this digitised technology at work in the medical sector. It is expected that 3D printing industries and makers will maintain the momentum in the post-pandemic period, and this technology may scale up in combination with the internet of things and AI.

AR/VR have been used to virtually break social distancing rules, for training, and to support the sale of products and services, helping to prevent the complete shutdown of the economic ecosystem.

Telemedicine to provide care to patients infected with the coronavirus has limited exposure to, and the spread of, the virus in healthcare facilities and hospitals. Furthermore, the mass adoption of telemedicine as a result of the pandemic has created a breakthrough; in the years to come, healthcare will be available regardless of geographical location, assuming that broadband speed is sufficient and 5G connectivity is reliable.

Cybersecurity incidents are on the rise and the healthcare sector has been targeted by cyberattacks using ransomware almost since the start of the pandemic. Healthcare has been recognised as a critical sector, and its protection from cyberattacks needs to be at the top of the EU agenda.
 

Platform work is a form of employment in which organisations or individuals use an online platform to access other organisations or individuals to solve specific problems or provide specific services in exchange for payment.

Introduction

An analysis of about 1,400 active online platforms by the OECD shows that, during the lockdowns, businesses and individuals increasingly turned to online platforms to pursue economic activities. This was especially the case in areas of activity requiring little or no physical proximity for product or service delivery, such as mobile payments, consumer marketplaces, professional services and restaurant delivery. However, in areas of activity requiring physical proximity, such as accommodation, restaurants and transport, platform activity declined markedly (by around 90% in the first half of 2020), reflecting the generalised economic disruption caused by the COVID-19 pandemic.

The COVID-19 crisis has impacted platform businesses differently. Those mediating delivery services tend to have expanded their services to other types of goods, including groceries and medical supplies, because of the increased demand. Other platforms, mediating household services or personal transport, have experienced a decline driven by a lack of demand due to lockdowns and travel restrictions.

Opportunities

The pandemic has enhanced access to work and income generation in some types of platform work, for example where delivery services have expanded. In this regard, employment opportunities have been created by the increased demand during lockdowns.

On the consumer side, the COVID-19 crisis has caused a structural shift in demand towards digital commerce that is likely to continue in the years to come. Most platforms have seen increased use of digital payments, notably using digital wallets. This presents an opportunity to invest in and develop digital payment infrastructure and services, including mobile banking. Furthermore, the expansion of e-commerce resulting from the COVID-19 pandemic could facilitate a surge in specialised platforms and marketplaces with new business models.

Risks

In contrast to the expansion of business operations and hence employment in some platforms, other platforms and platform workers have experienced job losses and loss of income during the pandemic. Soon after the start of the pandemic in 2020, the Fairwork Foundation estimated that 50 million platform workers globally would be affected by the COVID-19 crisis, with half of them losing their jobs and those still in work losing two-thirds of their income on average.

Work during the pandemic on some platforms has meant physically demanding working hours and higher work intensity because of increased demand, as well as psychological pressure for front-line workers, without proper social recognition. Furthermore, because of the uncertain employment status of platform workers, it has been unclear who is responsible for implementing precautionary health and safety measures, such as equipping platform workers with masks or hand sanitiser.

Platform work has been carried out during the pandemic despite the inherent health risk accompanying some types of work, resulting in dangerous situations, particularly for those platform workers in a precarious situation and lacking social protection and medical insurance.

The expansion of the business operations of some platforms due to the COVID-19 pandemic has increased concerns about the disproportionate power of these giants, as well as the use of the personal data gathered through their operations.

Concluding commentary

The expansion of the business operations of the most popular platforms during the pandemic has coincided with increased scrutiny by the European Commission and the launch of a package of legislative initiatives aimed at establishing governance rules for the single data market that are aligned with EU values and principles. The Digital Services Act refers to fair rules in the provision of digital services, while the Digital Markets Act aims to ensure that the large platforms that act as gatekeepers in digital markets behave in a fair way online – for example, although Amazon prioritised deliveries to hospitals and governments during the pandemic, it also prioritised the delivery of its own consumer products over those of its sellers.

Given the high-tech component of their business models, the staff administering platform companies are usually better set up for remote work than those of other, more traditional manufacturing companies or services providers.

Since the platform business model relies to a great extent on collecting data, owing to the increase in data flows more sophisticated and data-driven models of market and customer segmentation have been developed, and the use of AI has increased.

Related material

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