As autonomous vehicle (AV) technology gets ever closer to scalable, real-world application, consumer trust in the safety of AVs appears to be stalling, according to the 2019 Deloitte Global Automotive Consumer Study.
“Consumers remain skeptical of AV safety, but we believe there will be a longer-term trend toward gradual acceptance of AVs as familiarity with the technology increases and as the benefits of self-driving cars are demonstrated,” says Thomas Schiller, European automotive leader, Deloitte Germany. “The automotive industry needs to factor into its plans the long capital investment cycle that will be required to bring flawless autonomous vehicle technology into the mainstream. And a majority of consumers will want governments to exert a significant amount of control over the development and use of AVs.”
The drive to electrification
This year’s study uncovered increasing consumer demand for electric vehicles (EVs), revealing that electrification could make a more immediate impact on global mobility than AVs.
While some barriers to mass adoption do remain, demand for EVs is growing across Europe due to supportive environmental policies, big brand bets, and shifting consumer attitudes. Interest grew fastest in the UK, where 37 percent would prefer a nontraditional powertrain, up 10 percent from last year – including hybrid, battery or other alternative – for their next vehicle.
“EVs can reduce the negative environmental impact caused by burning fossil fuels for transportation. And autonomous vehicles have the potential to dramatically improve road safety by reducing driver error. These are undeniably positive goals, but achieving them may be challenging,” continues Schiller. “Most analysts agree that electrified, autonomous vehicles will be part of our lives at some point in the future, but there are varying opinions on how long this may take. Some say this revolution may play out over the next several years. A more conservative view tempers this enthusiasm by taking into account several headwinds.”
Mobility revolution faces headwinds
The mobility revolution seems to be running up against entrenched consumer behavior, as consumers remain committed to private car ownership and multi-modal transportation remains an occasional behavior.
Private-car ownership continues to prevail: Daily usage of personally-owned vehicles is quite high in some European markets, but even where usage is lower, the expectation is to maintain the status quo in the coming years. The percentage of consumers that use their own vehicle every day ranges between 37 percent in the Netherlands to 66 percent in Italy and respondents across markets indicated they expect this usage to remain about the same over the next three years.
Multi-modal transportation remains low: The idea of integrating multiple modes of mobility, such as a subway or a commuter train in addition to a private vehicle, into one trip remains largely an occasional behavior for consumers.
Along with new transportation options, connectivity has unlocked an array of new choices for consumers purchasing vehicles:
priorities: Survey respondents
overwhelmingly favored connected vehicle features which would save them time
and ensure their safety. Updates regarding traffic congestion and alternate
routes, suggestions on safer routes, and updates to improve road safety and
prevent potential collisions were consistently listed as the top three
connected car features.
Consumers split on the benefits of connectivity: When it comes to vehicle connectivity, consumer opinion is split. Consumers in Italy (60 percent) are embracing the idea of vehicle connectivity at almost twice the rate of consumers in Austria (29 percent) and Germany (35 percent).
Data collection and privacy: Connected-vehicle sensors can track everything from powertrain performance and operational statistics to geolocation information and occupant wellness. More than half of respondents from Austria, Germany, the UK, and the Netherlands are concerned about biometric data being captured via a connected vehicle and shared with external parties, whereas a smaller percentage of consumers in Belgium, France, and Italy expressed similar concerns.
Who should manage the data?: Consumer concern extends to who whould manage the data being generated and shared by connected vehicles. While some would trust original equipment manufacturers (OEMs) in this role, many would prefer anybody else – from government to auto dealers, insurance companies, cloud service providers, or others.
Reluctance to pay for connectivity: Once consumers are sold on a feature, they are not necessarily sold on the price. Approximately half of consumers in the Netherlands, Austria, France, and Germany are not willing to pay any extra money for a connected vehicle. Consumers in Italy and the UK are most likely to be willing to spend more for these features, with 72 percent of responents in Italy and 63 percent of respondents in the UK indicating they’d spend some money for a vehicle with certain kinds of connectivity technologies.
The utopian visions of future of mobility systems will not come to fruition overnight. As global consumers start to critically evaulate advanced vehicle technologies and whether they are willing to pay for them, OEMs are in the position of needing to push forward on costly R&D programs with little assurance of when this may realize a return on investment.
“Connected, electrified, and autonomous vehicles offer tremendous value for society, but consumers may be slow to adopt these advanced technologies at scale until there is clear and undisputed improvement in safety, cost, convenience, and superior customer experience from a trusted brand,” says Joe Vitale, Deloitte Global automotive sector leader.
SMEs are driving job growth, but need higher investment in skills, innovation and tech
Small and medium-sized enterprises (SMEs) have been a significant driver of employment growth in recent years, mainly through the creation of new firms, including in high-growth sectors such as information and communication technologies (ICT). But the new OECD SME and Entrepreneurship Outlook highlights that most SME job creation has been in sectors with below average productivity levels, with SMEs typically paying employees around 20 percent less than large firms.
While SMEs are more engaged in new organisational or marketing practices than large firms, and sometimes more innovative in developing new products and processes, many continue to struggle disproportionately to navigate the increasing complexity in technologies and markets.
“We need a fundamental rethinking of SME and entrepreneurship policies to improve business conditions and access to resources. This will enable workers to have higher wages and greater productivity, as smaller employers harness major trends like digitalisation,” said OECD Secretary-General Angel Gurría, launching the report at the annual OECD Forum. “We need a renewed policy and measurement agenda to understand how countries, regions and cities can capitalise on their many diverse small businesses as drivers for inclusive and sustainable growth.”
Bringing together unique data and evidence on SME performance and policies, this first edition of the OECD SME and Entrepreneurship Outlook offers policymakers new benchmarking tools and insights on good practices to help frame national SME and entrepreneurship policies. The report illustrates that SMEs are more dependent on the business ecosystem and the policy environment than large companies, and identifies a number of key challenges:
- While the wage gap is smaller for exporting SMEs, trade barriers are disproportionately large, and recent trade tensions may further hamper their ability to benefit from globalisation.
- SMEs struggle to combine different types of innovation, and continue to face size-related barriers in accessing strategic resources, such as skills, finance and knowledge. A quarter of SMEs in the EU reported a lack of skilled staff or experienced managers as their most important problem and, in most OECD countries, less than one-quarter of small firms provided ICT training in 2018.
- The digital transformation provides scope for productivity growth but large adoption gaps exist compared to larger firms, with half as many small firms in the OECD investing in cloud computing services in 2016, for example.
Governments have been proactive in their efforts to improve framework conditions and address size-related barriers for SMEs. The 36 country profiles in the OECD SME and Entrepreneurship Outlook show that, in the OECD area, governments are focused on accelerating innovation diffusion to SMEs; ensuring SMEs keep pace with the digital transformation; engaging SMEs in upskilling; scaling-up innovation networks and MNE-SME linkages; and levelling the playing field in product markets, public procurement and ‘lead’ innovative markets. Small businesses are also benefiting from the strengthening of e-government services and from reforms undertaken in OECD countries aiming to lower administrative and tax burdens and enforce smart regulation.
Despite these efforts, the complexity of regulatory procedures remains a major obstacle for SMEs and entrepreneurs. Furthermore, the pace of structural reform has slowed in recent years and progress remains uneven in areas that are key for business creation and SME investment, such as insolvency regimes, civil justice and enforcement of competition laws.
The report argues for more efficient governance and more coherent arrangements across national and subnational levels, regions and cities. It also calls for fostering international peer learning and enhanced monitoring and evaluation capacity.
Urgent action needed to address growing opioid crisis
Governments should treat the opioid epidemic as a public health crisis and improve treatment, care and support for people misusing opioids. Overdose deaths continue to rise, fuelled by an increase in prescription and over-prescription of opioids for pain management and the illicit drugs trade, according to a new OECD report.
Addressing Problematic Opioid Use in OECD Countries examines how, over the past few years, the crisis has devastated families and communities, especially in North America. It documents that deaths are also rising sharply in Sweden, Norway, Ireland, and England and Wales.
Between 2011 and 2016, in the 25 OECD countries with available data, opioid-related deaths increased by more than 20%. In Canada, for example, there were more than ten thousand opioid-related deaths between January 2016 and September 2018, with rates increasing from 8.4 per 100,000 people to 11.8 over this period. Opioid abuse has also put a growing burden on health services through hospitalisation and emergency room visits.
“The opioid epidemic has hit the most vulnerable hardest,” said Gabriela Ramos, OECD Chief of Staff and G20 Sherpa, launching the report in Paris. “Governments need to take decisive action to stop the tragic loss of life and address the terrible social, emotional and economic costs of addiction with better treatment and health policy solutions. But the most effective policy remains prevention.”
The majority of those who die in Europe are men, accounting for 3 out of 4 deaths. However, in the United States, opioid use has been rising among pregnant women, particularly among those on low incomes. Having a mental health disorder was also associated with a two-fold greater use of prescription opioids in the US.
Prisoners too are vulnerable. The prevalence rate of opioid use disorders in Europe was less than 1% among the general public but averaged 30% in the prison population. Social and economic conditions, such as unemployment and housing, have also contributed to the epidemic.
An increase in prescription and over-prescription of opioids for pain management is among the factors driving the crisis. Governments should review industry regulations to ensure they protect people from harm as, since the late 1990s, manufacturers have consistently downplayed the problematic effect of opioids.
Doctors should improve their prescribing practices, for instance through evidence-based clinical guidelines and increased surveillance of opioid prescriptions. Governments can also regulate marketing and financial relationships with opioid manufacturers. Coverage for long-term medication-assisted therapy, such as methadone and buprenorphine, should be expanded, in coordination with harm minimisation specialised services for infectious diseases management, such as HIV and hepatitis.
Strengthening the integration of health and social services, such as unemployment and housing support, and criminal justice systems would help improve treatment for people with Opioid Use Disorder.
Italy should boost spending and strengthen cooperation and integration of employment services
Italy should boost spending and cooperation at national and regional levels as part of broader efforts to help more people into work and reduce the country’s high unemployment rate, according to a new OECD report.
Strengthening Active Labour Market Policies in Italy says that the country faces greater labour market challenges than most other OECD countries. The employment rate and labour productivity are low, youth unemployment is still around 30% and the gender employment gap and long-term unemployment are decreasing only slowly.
Regional disparities are high and persistent compared to most other OECD countries. Spending on active labour market policies (0.51% of GDP) is close to the OECD average but well below the average of EU countries and levels in countries with similar unemployment rates. Moreover, active labour market policies are not well targeted to the most effective programmes and people in need, relying heavily on employment incentives. Only 2% of the budget is devoted to services that have internationally proved to be more cost-effective, such as job mediation, job placement and related services.
Public employment services play only a modest role as job brokers. Only about half of unemployed persons in Italy are registered with the public employment service (centri per l’impiego) and only half of them use these services to look for work. Access to and quality of employment services vary greatly across the country.
“To improve the performance of employment services, there is a need for further funding, boosting the local offices’ staff and their skills and modernising the IT infrastructure,” said Stefano Scarpetta, OECD Director for Employment, Labour and Social Affairs, launching the report in Rome. “The ongoing reform started by the Jobs Act and the recent additional financial allocations to the system of public employment services have the potential to improve the performance of employment services in Italy.”
However, for the real gains to the labour market to emerge, cooperation and co-ordination should be simultaneously introduced in the system. Within the decentralised governance system, national and regional authorities need to agree on a binding framework for accountability, enabling to measure performance of employment offices according to a set of indicators and their regionally-adjusted target levels.
The funding of local offices from the state budget should be somewhat contingent not only on the number of clients to serve but also on improvements in performance indicators, thus providing incentives to improve the quality and effectiveness of services provided.
The recent introduction of the citizen income (Reddito di cittadinanza) adds further responsibilities to the system of employment services as the new benefit recipients should receive support with job-search and should be provided the necessary active measures to succeed in that. As such, improvements in the investment and performance of the system of employment services become today more critical than ever.
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