We hear all the time that people are being “left behind” by technological progress. The success of Donald Trump, Brexit, Marine Le Pen and Geert Wilders has been attributed to voters worried that they have more to lose from progress than they have to gain. Jobs are being automated, and low-skilled positions in the labour market are increasingly perilous.
Nobody disputes the new opportunities offered by the technologies such as driverless cars, drones, the app economy, machine learning, and virtual reality. But how can we ensure that growth is inclusive and benefits everybody economically instead of just highly-skilled and highly-educated workers?
In 2016 we published a debate looking at the growth of the ‘app economy’ in Europe. Apps could unlock a peer-to-peer economy of entrepreneurs across Europe, with people offering services directly to others. They can also be used by governments and corporations to facilitate other parts of the economy, doing everything from helping tourists navigate a city to letting people manage their personal finances from their phone or tablet.
Will the “app economy” benefit everybody? We had a comment sent in from Sebastian, who was concerned about Europeans being “left behind technologically”. Not everybody can be a coder or a software engineer, so how can we avoid people being ‘left behind’ in the digital era?
To get a response, we spoke to Dr. Michael Mandel, Chief Economic Strategist at the Progressive Policy Institute, a Washington-based think-tank that promotes innovation and growth in a knowledge-based economy. What would he say to Sebastian, particularly when it comes to the rise of the app economy?
I give two answers to that. One is that the app economy creates jobs for more than the app developers. It creates jobs for workers in the companies that are supporting app developers. So, there are a lot of middle class jobs being created by the app economy in terms of, say, office workers in companies that are developing apps or supporting apps.
Then there’s a broader question, which is that we do need to be concerned about people being left behind. We have to make a financial and moral commitment to the people who are being left behind as the app economy generates more jobs and more wealth.
When we published our debate on the growth of the app economy, we had a comment from Marcel, arguing that new technology is disruptive and leads to job losses. Are there any losers from the growth of the app economy? Does it create more jobs than it disrupts?
The app economy creates jobs for app developers, it creates jobs for people who are maintaining and supporting apps, it creates jobs for people that are supporting the app developers, and it creates spillover jobs. Our last estimate was that the app economy accounted for more than 1.6 million jobs in Europe. So, we believe that the app economy is actually a great job creator.
Finally, we had a comment from Paul, who argued that the problem with the app economy is that it’s so uneven in terms of quality. Indeed, some reports suggest that over 99% of paid apps make no money, with most developers unable to recoup their costs for development. So, is it sustainable?
No, that’s misleading. Most apps being written today are actually not designed to make money on the app stores. There’s a portion of apps – game apps in particular – that are designed to make money on the app stores, but there are many more apps being written by companies, or sponsored by governments, that are not designed to make money on the app store but are actually designed to facilitate other parts of the economy. So, for example, if a government sponsors an app that is about mass transit in a city, it never shows up on any of the app store top listings but it creates jobs for developers. So, the app economy includes much more than apps that appear on the moneymaking list of app stores.
How can we avoid people being ‘left behind’ in the digital era? Does the app economy create more jobs than it disrupts? On 28 March 2017, Debating Europe is co-hosting an event in Brussels with Google on “Digital Transformation in the Mobile Era: New Skills, Jobs and Growth”, and we’ll be taking your questions to participants about the app economy Let us know your thoughts and comments in the form below and we’ll take them to policymakers and experts for their reactions!