The Need for the Government's Continuous Response Policies Emerges
[Asia Economy Reporter Kim Jin-ho] Despite South Korean companies having world-class digital accessibility, concerns have been raised that their digital utilization is low compared to major countries. This implies that good infrastructure is not being properly utilized, which could negatively impact not only companies but also national competitiveness in the digital era.
◆World-Class Digital Accessibility=According to the Korea Economic Research Institute on the 3rd, an analysis of digital competitiveness comparison data from major overseas institutions showed that South Korea has one of the top digital environments worldwide. South Korea ranked 12th among 64 countries surveyed in the digital competitiveness rankings published by the International Institute for Management Development (IMD).
South Korea also ranked 11th out of 120 countries in the Inclusive Internet Index by EIU (Economist Intelligence Unit) and 8th out of 141 countries in Cisco's Digital Readiness Index. Notably, among OECD countries, South Korea had the highest number of fixed broadband subscribers with speeds over 100Mbps per 100 people, at 40.0. This indicates world-class accessibility to high-quality internet.
◆Declining Digital Capabilities in Companies...SMEs More Vulnerable=However, despite this high level of digital accessibility, key indicators reflecting companies' digital utilization capabilities were found to be lower than those of other countries. In particular, small and medium-sized enterprises (SMEs) with fewer than 250 employees showed lower digital capability indicators compared to large companies with 250 or more employees.
A comparative analysis of the Eurozone (19 countries), the UK, and South Korea revealed that South Korean companies scored below average in cloud computing usage, CRM software usage, and e-commerce sales ratios, which are indicators of digital economy utilization capabilities.
Especially after COVID-19, cloud-based digital transformation is expected to accelerate, but among South Korean large companies, the cloud computing usage rate was 46.5%, ranking last among 20 surveyed countries. SMEs recorded 24.5%, ranking 19th among the 20 countries surveyed.
The CRM usage rate, which plays a central role in personalized customer relationships in the digital economy era, also remained at the bottom. Among large companies, CRM software usage was 51.2%, and among SMEs, it was only 17.3%, both ranking 19th out of 20 countries surveyed. The proportion of companies generating e-commerce sales was 38.2% for large companies, ranking 17th among the 20 countries surveyed.
The Korea Economic Research Institute pointed to South Korea’s aging population and digital polarization as reasons why SMEs lag behind large companies in digital transformation. It analyzed that the proportion of employees aged 60 and over in SMEs is higher than in large companies, and the gap is widening. South Korea’s digital polarization by age group is among the highest within the OECD.
Among those aged 16 to 24, the proportion of digitally highly skilled individuals was 63.4%, the highest among OECD countries, whereas for those aged 55 to 65, it was only 3.9%, revealing the largest generational digital skill gap among OECD countries.
However, in the proportion of companies using big data, large companies recorded 47.7%, ranking 6th among 20 surveyed countries. SMEs also ranked relatively high compared to other areas.
◆"Continuous Response Needed for Digital Technology Advancement"=Accordingly, the Korea Economic Research Institute called for continuous policy responses to improve companies’ digital utilization and capabilities and to prepare for the aging workforce. In fact, South Korea’s investment rate in ICT technology education and training tends to fluctuate significantly depending on external economic conditions.
Cho Kyung-yeop, head of the Economic Research Department at the Korea Economic Research Institute, stated, “Instead of focusing on short-term and monetary measures such as subsidies or loans, continuous measures to adapt to digital technology are necessary.” He added, “Attracting talent with digital skills is the fundamental solution to strengthening digital capabilities, so digital-related education and training must be enhanced,” and emphasized, “It is also necessary to intensively improve digital adaptability among the elderly.”
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