[OECD Topics] Digital

 

The OECD helps policy makers shape digital transformation for a trusted, sustainable and inclusive digital future. Through evidence-based policy analysis and as a global standard setter, the OECD supports countries in navigating the profound effects of digital transformation in areas such as connectivity, privacy, data flows, artificial intelligence and emerging technologies, safety, security, and policy design at the intersection of digital and other policy domains.

 

 

Policy issues

 

 

1. Artificial Intelligence 

AI holds the potential to address complex challenges from enhancing education and improving health care, to driving scientific innovation and climate action. However, AI systems also pose risks to privacy, safety, security, and human autonomy. Effective governance is essential to ensure AI development and deployment are safe, secure and trustworthy, with policies and regulation that foster innovation and competition.

 

1. Initial policy considerations for generative artificial intelligence
Generative AI models are rapidly advancing, offering numerous possibilities but also posing significant risks and challenges, such as labor-market disruption and disinformation. Governments must explore and shape the future trajectories of generative AI. Established tech companies and private research labs are leading the development of this nascent technology, employing various strategies to capitalize on it while mitigating downsides. Public discussions and policy considerations on generative AI are ongoing, with debates ranging from halting advanced experiments to downplaying existential risks. The OECD aims to aid governments in navigating these challenges through dialogue, research, and forward-looking policies.

2. OECD programme on AI in Work, Innovation, Productivity and Skills (AI-WIPS) - with the support of Germany – analyses the impact of AI on the labour market, skills and social policy

OECD Employment Outlook 2023 - Artificial Intelligence and the Labour Market
1. Under pressure: Labour market and wage developments in OECD countries
Labour markets in the OECD have been resilient despite economic slowdowns due to Russia's war in Ukraine, with stable employment and low unemployment rates. However, a cost-of-living crisis has emerged, driven by energy-related price inflation, leading to falling real wages despite nominal wage growth. No price-wage spiral is evident, but the cost-of-living crisis remains a major concern. Monetary policy should focus on stabilizing prices, while fiscal and wage policies should support vulnerable households and ensure fair inflation cost distribution. Adjustments in minimum wages and collective bargaining are crucial to sustaining wages and mitigating inflation impacts. Long-term real wage gains depend on sustained productivity growth, leveraging new technologies like AI.

2. Artificial intelligence and the labour market: Introduction
AI's impact on labor markets is uncertain, but proactive policy decisions are crucial to shaping a positive future. Trustworthy AI must be safe, respect fundamental rights, and be transparent, with clear accountability. Effective policy action can protect workers and promote AI innovation by reducing uncertainty. The OECD's AI principles, adopted by many countries, aim to foster innovative and trustworthy AI that upholds human rights and democratic values. Countries are updating existing legislation and considering AI-specific laws to address workplace concerns. Effective implementation will require technical standards, oversight mechanisms, and stakeholder engagement. Collective bargaining and social dialogue can support AI transition by addressing rights flexibly and promoting fairness, though challenges remain due to declining union memberships and AI's rapid evolution. Training is essential to equip workers with skills for AI-related tasks. Public policies must incentivize employer training and incorporate AI into formal education. While AI offers opportunities for improved training design, risks must be managed. Evidence-based policy is needed, but much is still unknown about AI's impact on labor. The OECD Employment Outlook provides insights on AI's effects on job quantity and quality, skill policies, ethical challenges, and the role of social dialogue. Future research should focus on inclusiveness, labor market concentration, public service delivery, management practices, and governance for trustworthy AI. The OECD will continue to gather data and study these areas.

3. Artificial intelligence and jobs: No signs of slowing labour demand (yet)
Policies should encourage AI's productivity and reinstatement effects to maximize economic growth and minimize job displacement, depending on AI's application. For instance, AI can enhance teaching by tailoring education to individual student needs, potentially increasing demand for specialized teachers. Policymakers should revise skills policies to ensure workers can complement AI systems, focusing on computer, programming, and data skills. Current tax systems may favor excessive AI adoption by subsidizing capital more than labor, leading to automation of low-value tasks. Rebalancing capital and labor taxes can curb excessive automation and promote meaningful innovation. Tight labor markets can also enhance automation's productivity effects, as firms adopt new technologies when unemployment is low and wages are high. Antitrust regulations can ensure that AI-driven automation leads to significant cost savings, benefiting the wider economy through lower prices and higher output. A coordinated mix of soft law and legislation is necessary for trustworthy AI in the workplace. To ensure AI benefits are shared with workers, policies should empower social partners and strengthen worker bargaining power. This can help retain workers in different roles within firms, distributing AI gains more equitably.

4. Artificial intelligence, job quality and inclusiveness
This chapter reviews the current literature on AI's impact on job quality and inclusiveness. Workers with AI skills earn a significant wage premium, though the broader effect on wages for non-AI skilled workers remains inconclusive. AI adoption is associated with greater job satisfaction, likely due to the automation of tedious tasks and improvements in mental health and physical safety. Managers, workers with AI skills, and those with tertiary degrees report improved job quality. AI can alter management practices and job environments, sometimes reducing worker autonomy and increasing work intensity. Workers under algorithmic management report less positive experiences and concerns about privacy due to AI-related data collection. The impact of AI on job satisfaction and health varies, posing risks for workplace inclusiveness. AI systems can perpetuate biases, decreasing workplace inclusiveness and negatively affecting job satisfaction for disadvantaged groups. Policies promoting AI that enhances job quality include allowing workers to opt-out of full algorithmic management and ensuring meaningful human input in important decisions. Countries are addressing privacy, full automation, and bias prevention in AI use through various measures. Skills policies and agile training systems can help workers benefit from AI. Further research is needed on AI's broader impact on wages and job quality, especially for non-specialized workers. Current studies are limited and retrospective, highlighting the need for ongoing research as AI evolves.

5. Skill needs and policies in the age of artificial intelligence
The impact of AI on skill needs is significant, with AI replicating cognitive skills and increasing demand for AI knowledge, digital skills, and complementary skills like social and management skills. Training opportunities must target vulnerable groups, higher-skilled workers, managers, and leaders to facilitate the development and adoption of trustworthy AI. However, key questions remain under-researched. There is a lack of cross-country data on AI training, including the type, amount, and effectiveness of training programs. Firms report providing training, yet skill shortages persist, suggesting inadequate training. More data and research are needed to provide actionable policy recommendations. Governments play a crucial role in promoting AI skills development, but current AI policies often lack comprehensive actions for skill development. Evaluating the effectiveness of policies and initiatives is essential for understanding their impact and optimizing resource allocation. The use of AI in training systems is emerging but under-researched. Monitoring AI's use in training will help understand its risks and benefits. The role of social partners in addressing skill needs and the adaptation of active labor market policies to equip job-seekers with AI-related skills also require further attention. Ultimately, the goal is to ensure all workers have the necessary skills to thrive in an AI-powered economy.

6. Ensuring trustworthy artificial intelligence in the workplace: Countries' policy action
AI systems have the potential to enhance labor markets and workplaces but also pose risks that must be managed through trustworthy development and usage. Trustworthy AI should be safe, respect privacy and fairness, and ensure transparency and accountability in employment-related decisions. Policymakers must develop policies that harness AI's benefits while mitigating risks to workers' rights and well-being. Rapid AI development necessitates quick, proactive policymaking. This chapter reviews various policies countries have implemented to ensure trustworthy AI use in workplaces, including adapting legislation, employing auditing tools, and ensuring human oversight in AI-driven decisions. Existing non-AI-specific legislation provides a foundation for AI governance, but AI-specific laws are being developed, like the AI Act in the EU and the Algorithmic Accountability Act in the US. Soft law, while flexible, may not prevent AI-related harm, indicating a need for a combination of soft and hard laws. Ensuring trustworthy AI involves policies that increase transparency, reduce bias, and clarify accountability. Coordinated international efforts can minimize regulatory inconsistencies and compliance costs. The EU AI Act aims to regulate AI development and use comprehensively. Policymakers and regulators must have the capacity and resources to enforce policies effectively, requiring guidance for developers and users to understand and comply with regulations. Training programs need to include AI-specific content to equip workers with necessary skills. Supporting social partners in AI adoption can foster trustworthy AI in workplaces. Continuous, evidence-based assessments are essential to adapt policies to the fast-evolving AI landscape.

7. Social dialogue and collective bargaining in the age of artificial intelligence
AI systems can improve labor markets and workplaces but also pose risks. Trustworthy AI, as outlined by the OECD AI Principles, should be safe, respect fundamental rights like privacy and fairness, and make transparent, understandable employment-related decisions. Policymakers need to develop policies that leverage AI benefits while addressing risks to workers' rights and well-being. This chapter reviews current and developing policies for trustworthy AI in workplaces. Countries like the UK and Japan use soft law for AI governance, while others like Canada, the EU, and the US are developing specific legislation. Effective AI governance will likely require a combination of soft and hard laws, international collaboration, and continuous policy adaptation. Additionally, AI-specific training for workers and employers is crucial. Policymakers must conduct evidence-based assessments to ensure effective AI policies.

 

 

 

2. Communication infrastructure and services

In today's interconnected world, broadband connectivity is a necessity. Broadband serves as the critical infrastructure driving digital transformation of economies and societies worldwide. The OECD provides detailed broadband statistics as well as tailored regional and country recommendations to enhance access to high-quality communication infrastructures and services at competitive prices.

 

1. Broadband networks of the future
The growth of AI systems and IoT are pushing the boundaries of the digital transformation. The next evolution of broadband networks, such as Gigabit fixed networks and 5G, are rapidly becoming the underlying connectivity of the digital transformation with applications across all sectors of the economy.

The need for low latency and high capacity networks for smart hospitals, automated vehicles, and fully connected factories is driving the advancement of broadband networks. The COVID-19 pandemic highlighted the necessity of high-quality broadband networks, with economic recovery packages emphasizing connectivity. The report on "Broadband Networks of the Future" reviews current network statuses and how they adapted during the pandemic, noting a 58% increase in Internet traffic and a record 21.15 million new fixed broadband connections in the OECD area from December 2019 to December 2020. Fibre has been steadily growing, and 5G is now commercially available in 36 out of 38 OECD countries as of June 2022. Technological trends influencing broadband networks include virtualisation, cloud service integration, AI use, and network openness. There is a shift towards disaggregated RAN in 5G, combining virtualisation and open interfaces, and integrating cloud and edge solutions. AI is being used for network management, predictive maintenance, and energy optimization. Emerging satellite broadband solutions and "beyond 5G" technologies are also discussed. The report emphasizes the complementarity of connectivity solutions, highlighting the need for co-integration to maximize synergies and the importance of interoperability. It introduces new indicators like latency to measure network quality and advocates for a user-centric approach to assess quality of experience (QoE). Finally, the report outlines regulatory and policy measures to enhance broadband deployment, such as efficient spectrum management, infrastructure sharing, easing deployment barriers, and extending backhaul connectivity. OECD countries are incentivizing fibre deployment, easing legacy network shutdowns, and ensuring transparency in broadband performance measurement.

Communication regulators of the future
The communication sector is undergoing high-paced developments driven by the digital transformation of our economies and societies.

Communication regulators play a crucial role in this transformation and must continually evolve to seize emerging opportunities. Addressing the challenges posed by the digital transformation requires coherent regulatory approaches and adequate regulatory frameworks to keep up with technological and market changes. To meet future communication regulation challenges, countries must adapt their frameworks. Although there is no universal solution, the report presents various options, such as expanding mandates and increasing regulatory cooperation. Adapting existing regulations to support the deployment of advanced broadband networks is becoming increasingly important. Future communication regulators will need enhanced capabilities to fulfill their mandates in an environment where market evolution and digital transformation are reshaping roles and expectations.

 

 

 

3. Data flows and governance

Data and data flows are essential for digital transformation. Falling costs of data processing and storing, increasing connectivity and uptake of digital technologies, as well as recent advances in AI, have led to a rapid increase in the importance of data in economic activity. The effective use and governance of data relies on ability to move, share, analyse and protect data. The technical, policy, regulatory and institutional arrangements are a top policy priority for governments.

 

1. Measuring the value of data and data flows
A measurement agenda for the value of data : This section of the report provides estimates of the value of data, using the United States as an example, highlighting that estimates vary widely based on the type of data and valuation methods. The report outlines a measurement agenda for valuing data, emphasizing the need to better capture data products and activities, develop international statistical guidelines, create dedicated survey tools, and engage various policy and technical communities within the OECD.

1-1. Estimating the value of data
The report advances the measurement of data's economic value within the System of National Accounts (SNA), considering the market value of data sold and purchased, as well as data produced for internal firm use. It presents a range of value estimates, demonstrating variability based on data type and valuation method.

1-2. Recommendations
The report highlights key areas for further methodological and statistical work, defining the main axes of a measurement agenda for data value:
a. Develop product and industry classifications: Current classifications are inadequate for capturing data-related activities. The United States has partial capabilities, but improved classifications are needed globally to measure data products and activities.
b. Develop international statistical guidelines: There's a consensus on measuring data assets within the SNA, but implementation is nascent. Developing international guidelines for data investment and assets is crucial.
c. Create dedicated survey tools and econometric approaches: Measuring cross-border data flows remains challenging. Innovative methods, including new survey tools and econometric approaches, are required.
d. Engage diverse policy and technical communities: Data value extends beyond macroeconomic statistics to consumers, firms, governments, and society, potentially including negative value. Developing concepts and statistical frameworks to measure these values necessitates multidisciplinary collaboration within the OECD.

The report calls for comprehensive engagement across policy and technical domains to successfully implement this measurement agenda for data.

2. Going Digital to Advance Data Governance for Growth and Well-being
Policy considerations : Data are a building block of the digital economy. Drawing on the body of work realized across the OECD, this chapter provides considerations for policymakers when developing or revising data governance policies. It highlights that policy choices need to promote growth, well-being, innovation, and competition through increased access to and use of data. However, policies must ensure that incentives and safeguards exist for data to be collected and processed responsibly, managing the risks of increased data openness, including privacy concerns.

1. Data governance is a cross-cutting issue that requires a whole-of-government approach
Data characteristics, such as non-rivalry and externalities, imply that data generation and use involve multiple actors and applications with widespread effects. Policies to govern data should be developed holistically, considering spillovers and requiring cooperation between various government sectors. Departments concerned with consumer protection, privacy, competition, health, finance, and economics must collaborate to ensure data governance arrangements are comprehensive.

2. Promoting cross-border data flows with trust requires an international approach
The digital economy's global nature necessitates international cooperation on data governance. Promoting "trust" among stakeholders is crucial for enabling cross-border data flows and realizing their benefits. International bodies, like the OECD, play a key role in fostering data free flow with trust, building on shared values and commonalities. Efforts should focus on interoperability of privacy regimes and developing principles for government access to personal data held by the private sector.

3. New technologies and governance arrangements can help align incentives and balance data-related benefits and risks
Data governance issues involve policy tensions affecting investment incentives. New organizational and technical mechanisms, such as data intermediaries and privacy-enhancing technologies (PETs), can help manage these tensions. PETs, for instance, enhance user control and data confidentiality while enabling data use. Policies must remain flexible, technologically neutral, and broad to adapt to evolving digital technologies and associated policy concerns.

4. Unlocking the potential of data for digital transformation requires encouraging firms of all sizes to use data
Data usage is uneven across firms, with larger firms better positioned to invest in data. Policies should encourage broader data use, particularly among small and medium-sized enterprises (SMEs), by addressing market failures in financing systems and promoting data portability mechanisms. Policy efforts should also focus on ensuring data use promotes competitive dynamics and avoids concentration of market power.

5. Efforts to measure the value of data, including in the System of National Accounts, should be encouraged
Efforts to measure the value of data are essential, despite challenges in establishing market prices for data. The OECD is developing guidelines for the sum-of-cost approach to value data produced by firms for their own use. This approach is promising for estimating data value within the System of National Accounts (SNA). International statistical frameworks and nomenclatures need adaptation to better identify data products and measure cross-border data flows.

6. The OECD is well placed to support countries in their data governance policy making and can facilitate international co-ordination
The OECD provides multidisciplinary, evidence-based advice on data governance and the role of data in economies and societies. It has been instrumental in developing policy guidance for data governance and promoting international regulatory cooperation. The OECD serves as a platform for shared learning among countries, helping to develop policies that realize the potential of data for global social and economic prosperity.

 

 

 

4. Data security

Digital security is the economic and social dimension of cybersecurity. It is essential to sustain trust in our increasingly digitally dependent economies, and to increase resilience in a world subject to growing geopolitical conflicts and cybercrime.  

 

1. OECD Policy Framework on Digital Security
The accelerating digital transformation of our economies and societies brings remarkable benefits to businesses, public sector organizations, and individuals, from enhanced competitiveness and improved well-being to increased resilience during major catastrophes such as the global COVID-19 pandemic.

However, this transformation has increased our digital dependency, the complexity of information systems, networks, data assets, and data flows. Organizations often fail to assess digital security risks adequately or take proportionate security measures. Complex cybersecurity jargon and procedures confuse individuals, while products and services expose users to security risks without appropriate information or mitigation means. Criminal and state-sponsored actors exploit these vulnerabilities for financial, political, and geopolitical gains, with global cyberattack costs ranging from USD 100 billion to USD 6 trillion annually. Cybersecurity's economic and social dimension is becoming a public policy priority. Governments recognize that market forces alone are insufficient to incentivize businesses and public sector organizations to manage digital security risks effectively. Externalities, information asymmetries, and misaligned incentives often prevent secure-by-design product development and comprehensive digital security risk management. The OECD, as an international organization, facilitates policy dialogue among governments, businesses, and civil society, developing evidence-based, balanced, and neutral policy analyses and standards. Since 1990, the OECD has led international efforts in digital security, establishing digital security policy Recommendations that guide policy makers in fostering trust and resilience, supporting digital transformation, and protecting critical activities, human rights, and fundamental values.

The OECD digital security Recommendations are international legal instruments, adopted by consensus and open to adherence by partner economies. While not legally binding, they represent a political commitment to their principles. By the end of 2022, the OECD will have seven digital security Recommendations, evolving over time to cover additional aspects of digital security policy making.Despite the importance of these Recommendations, many high-level policy makers and stakeholders are unaware of them, missing out on their guidance. The economic and social policy dimension of cybersecurity often takes a backseat to national and international security, technical information security, and cybercrime law enforcement. The OECD Policy Framework on Digital Security aims to provide a coherent narrative based on OECD digital security Recommendations, highlighting their relevance to economic and social dimensions of cybersecurity. It seeks to raise awareness among policy makers, encouraging them to use the Recommendations to develop better policies and engage in international dialogue. The Framework also facilitates multi-stakeholder dialogue at domestic and international levels. As a communication tool, the Framework presents key aspects of each Recommendation in an accessible manner for non-experts. It aligns with technical digital security standards while bridging the technical and policy levels. The Framework's terminology may differ from technical standards to cater to its policy-focused audience.

2. Global Forum on Digital Security for Prosperity

The OECD Global Forum on Digital Security for Prosperity is an international multilateral setting for all stakeholder communities of experts to dialogue, share experiences and influence public policy making on digital security.

 

 

 

5. Digital transformation

Digital transformation – the impact of digital technologies and data and their use on existing and new activities – is accelerating worldwide, affecting all sectors. It offers immense opportunities for our economies and societies yet poses important risks that must be addressed to reap its benefits. Countries and stakeholders must work together in an evidence-based, whole-of-governance approach to advance a trusted, sustainable and inclusive digital future for all.

 

key links:

1. Digital performance across countries

2. Artificial intelligence policy database and trends

 

 

 

 

6. Online safety and well-being

The Internet has connected people like no other technology before it, but bad actors are just as skilled at using it as legitimate ones. That puts users’ safety and well-being, and therefore their trust, at risk. In response, more jurisdictions are turning to regulation. However, sound policies require a solid base of evidence, and we cannot lose sight of the benefits of being online while trying to ensure users’ safety. 

 

1. Recommendation of the OECD Council on Children in the Digital Environment
The document pertains to the OECD's revised "Recommendation on Children in the Digital Environment," adopted in 2021. It provides guidelines for governments and stakeholders to balance maximizing opportunities for children in the digital environment while protecting them from risks. Key points include safeguarding children's rights, supporting the roles of parents and guardians, and emphasizing the responsibility of digital service providers to create a safe and beneficial digital environment. It also highlights the importance of international cooperation to ensure consistency and effectiveness in policies and encourages child participation. The recommendation aims to guarantee children's well-being and rights in a rapidly evolving digital landscape through a comprehensive approach.

2. Transparency reporting on terrorist and violent extremist content online 2022
The OECD's third annual benchmarking report on terrorist and violent extremist content (TVEC) policies of online content-sharing services focuses on transparency reporting. The report, divided into two parts, reviews the evolution of TVEC policies of the top-50 popular services and analyzes those of the most intensively used services for TVEC dissemination. Key findings include minimal overlap between popular and intensive services, with mainstream platforms showing greater transparency. While transparency reporting has improved among popular services, it remains rare among intensive ones, many of which are operated by extremist groups. The report highlights that small platforms can manage transparency despite resource constraints, and stresses the need to address the shifting landscape of TVEC dissemination to smaller, less regulated platforms. It also raises concerns about the impact of content moderation on privacy and freedom of expression, underscoring the necessity for human oversight to ensure fair content moderation practices.

 

 

 

 

7. Privacy and data protection

Promoting respect for privacy is essential for a well-functioning digital economy. When individuals have confidence in the protections surrounding their personal data, they are more likely to engage in online activities, share information, and participate in the digital economy. This, in turn, drives economic growth, fosters innovation, and encourages the free flow of data across borders. 

 

1. Recommendation of the Council concerning Guidelines Governing the Protection of Privacy and Transborder Flows of Personal Data
The OECD Council recommends Member countries to demonstrate leadership in protecting privacy and the free flow of information, implement Guidelines involving all stakeholders, and disseminate this Recommendation. Non-Members are invited to adhere, and the Committee for Information, Computer and Communication Policy is instructed to monitor implementation. The Guidelines, which were revised in 2013, set out principles for handling personal data, emphasizing accountability, security, and international cooperation. They aim to balance privacy protection with the benefits of data flows, influencing global policies since their original adoption in 1980. The OECD continues to support privacy and data protection through evolving digital landscapes.

2. Review of the OECD Recommendation on Cross-Border Co-operation in the Enforcement of Laws Protecting Privacy
This report assesses the continued relevance of the OECD Recommendation on Cross-Border Co-operation in the Enforcement of Laws Protecting Privacy, originally adopted in 2007. It examines whether the Recommendation has kept pace with the evolving needs of Privacy Enforcement Authorities (PEAs) in light of significant technological and legal changes over the past 15 years. While the principles underlying the Recommendation are seen to remain solid, the report highlights several gaps and challenges for cross-border enforcement co-operation. It concludes that the OECD could either provide additional guidance to support the implementation of the Recommendation or consider revising it to better address current challenges.