Dutch employer organization emphasizes greater need for digital investments

In November 2022, the Confederation of Netherlands Industry and Employers (known as VNO-NCW) also the largest employers'​ organization in the country, representing more than 185,000 enterprises and the common interests of over 160 (branch) associations, highlighted the urgent need for more digital investments in the Netherlands as it believes that the "digital business climate is under pressure".

Given the weight of this organization, its input will, in some shape or form, have an impact on the new digital policy of the Ministry of Economic Affairs and Climate Policy and, subsequently, on the decision-making process of thousands of businesses and organizations in the Netherlands.

Urging national and international investments in the Dutch digital future is not new, as both private and public bodies do this all the time. However, the VNO-NCW has pointed out key investment areas that it believes will foster technological innovation, stimulate competition, and reduce the digital gap between the US and China.

The VNO-NCW, in a joint digital memorandum with the Royal Association MKB-Nederland (largest entrepreneurs' organization in the Netherlands), NLdigital, and the Dutch Data Centre Association (DDA), agree on key areas that are under pressure and/or delaying investment/innovation. These areas include:

1. Slow roll-out of 5G and allocation of frequency space
2. Working population lacks basic digital skills
3. IT talent shortage
4. Lack of progress in technological innovations such as virtual and augmented reality
5. Cybersecurity

Concerning connectivity (citizens with internet access, fiber, 4G coverage..), the Digital Economy and Society Index 2022 (DESI Index) ranks the Netherlands 2nd, behind Denmark. However, regarding 5G, countries such as Germany, Denmark, and Finland, among many others, have taken the lead. The Netherlands falls behind in commercial 5G networks, further delaying 5G pilots and deployments. Most large enterprise 5G use cases are found in a private 5G network setting.

The digital memorandum's research shows that today, over 20% of the Dutch working population have insufficient basic software skills. Combined with the shortage of IT professionals, according to the Employee Insurance Agency (UWV), in 2022, there were over 33,000 IT vacancies, up from 23,600 in December 2021, which significantly limits digital and technological progress while jeopardizing widening the digital technology gap with the US and China.

To conclude the top five, it is largely known that cybersecurity is central to IT, and a weak cybersecurity stance can quickly take a toll on businesses, particularly when cyberattacks are increasing. Provider Check Point concluded that the number of attacks in the Netherlands rose by 40% in Q2 2022 compared to Q1 2021. As such, business organizations are emphasizing cybersecurity as a precondition to IT investments and projects.

Lastly, the digital memorandum is advocating for structurally incorporating digital skills into education, supporting employees with digital training, stimulating data-sharing between companies, and creating the right conditions to attract IT talent - such as seen in Amsterdam (the largest start-up ecosystem in Europe) and Eindhoven (strong start- and scale-up community).  

In PAC's view, these are challenges felt throughout Europe and not solely seen in the Netherlands. However, structural change starts at the top. Topics such as industry data-sharing, embedding digital skills into education, a cybersecurity-first culture, and 5G deployments are all areas where the Dutch government can and should take a leading role in facilitating, boosting, and attracting IT investments and talent through incentives, proactive regulation, and national digital strategies.

For IT providers, the top five challenges listed by the joint digital memorandum are all areas where IT players can provide support. In other words, there continue to be significant opportunities in the Dutch market, which struggles with digital innovation and IT skill shortages. For example, within a dynamic industry such as manufacturing, Dutch businesses (mainly SMBs) fail to see how digitalization can be profitable for their business and how they can achieve fast ROI. This is one aspect the Ministry of Economic Affairs and Climate (EZK) is trying to fix through the 'Digital Economy Strategy 2022-2026'. IT services providers have the expertise to help dispel skepticism surrounding digital innovation through, e.g., existing case studies, consultancy engagements, etc.