A snapshot from the EU’s 2018 Digital Economy and Society Index of the progress Hungary has made, and where it needs to do more.
It’s difficult to attend a business conference or trade fare these days without “digital transformation” or some variant of this term forming part of the agenda. In fact, several recent events have been dedicated exclusively to this topic – for example the Digital Business Transformation conference held in April at the new Ericsson House and the American Chamber of Commerce in Hungary and Hungarian Investment Promotion Agency “Digital Mythbusting” conference held in May.
At these events the message is clear: Develop digitally or get disrupted. But what actually is the state of play on digital transformation in Hungary? Where are we doing well and where are we falling short?
The European Commission attempts to answer these questions in its annual digital scoreboard – the latest of which was released in May 2018. The scoreboard measures the performance of each EU country in a wide range of areas, from connectivity and digital skills to the digitization of businesses and public services.
Overall, Hungary ranks 23rd out of the 28 EU countries. The top-five is perhaps unsurprisingly dominated by Scandinavian countries, with Denmark, Sweden, and Finland followed by the Netherlands and Luxembourg.
There is, however, also praise for Hungary to be found in the commission’s report – particularly in the areas of high-performance connectivity and citizens’ use of internet services. Also important is the fact that Hungary’s relative progress in terms of digital development is on par with the EU average.
On connectivity in general, Hungary ranks 18th. The commission praises the “very strong platform-based competition” amongst the telecoms operators. It notes significant progress in the take-up of fixed broadband, surpassing the EU average of 75%. And almost half of homes subscribe to at least 30 Mbps, as opposed to the EU average of 33%. In addition, Hungary scores well above the average on ultrafast connectivity, mainly as a result of its widespread cable networks.
Moreover, the European Commission makes a point of mentioning the 5G Coalition (5GC), initiated by the Digital Success Program, that was formed with the aim of making Hungary a major European center of 5G innovation and taking a leading role in the region in testing 5G-based applications.
When it comes to business digitization and e-commerce, Hungary ranks 25th. The commission considers Hungary as having “an alarmingly low” share of enterprises using business software to share information electronically. Although businesses’ use of social media, e-invoices, and cloud services have all grown, a significant gap to the EU average remains. With respect to e-commerce, only 12.5% of SMEs sell online, with the EU average being 17.2%.
The commission therefore considers it “absolutely vital” for the competitiveness of the Hungarian economy that the government continues and extends its programs to digitize Hungarian companies – referencing the Digital Success Program 2.0 (DJP 2.0) and the Modern Business Program.
On human capital in a general digital context, Hungary ranks 21st among the EU countries. As for advanced skilled professionals, the number of ICT specialists is just below the EU average and the number of STEM (science, technology and mathematics) graduates has increased, although it still remains relatively low.
The commission points to the fact that government and industry are seeking to address the shortage of ICT professionals by a specific program aiming to increase the number of university and college graduates with IT qualifications and to improve their skills. The goals through various programs is to double the number of IT graduates by 2021.
Finally, in terms of digital public services, Hungary is ranked second-to-last as 27th which – believe it or not – is an improvement from last year’s position of dead last at 28th.
The commission’s findings show that although Hungary is well into its digital transformation journey, there is still a fair way to go. Businesses in particular will need to continue to adopt and incorporate digital technologies aiming to enhance efficiency, reduce costs, better engage customers and business partners, and generally grab the opportunities of the Digital Single Market.
Sam MacMahon Baldwin is an attorney (advokat in Denmark) and a registered European lawyer (Budapest), having joined Szecskay Attorneys-at-Law’s EU Competition Law practice in June. Originally a British national, he practiced for eight years in Copenhagen, Denmark with top-tier law firm Gorrissen Federspiel. He is a seasoned compliance and competition law practitioner with experience of advocacy before national competition authorities and the European Commission. He has represented companies in national court proceedings as well as at the General Court and European Court of Justice in Luxembourg.