Michael Mandel [i]
In this report, we estimate that the European Union, plus Switzerland and Norway, has a surprising 1.64 million App Economy jobs as of January 2016–a sign of a growing and vital tech sector.
This is the second in our series of global App Economy reports. In the first report, released earlier this month, we used the same methodology to estimate that the United States had 1.66 million App Economy jobs, only slightly above Europe. While Europe still lags by other measures, it’s clear that European companies and workers have been able to take advantage of the global App Economy boom in a very positive way.
Our policy agenda, in doing these reports, is to show how innovation can create jobs globally, a point that is of great interest to both workers and policymakers. Moreover, by developing this data set, we hope to link app-related job growth to government policies in different countries, to understand what can be done to spur innovation-related jobs in the future.
We focus on the App Economy because the introduction of the iPhone in 2007, followed by the opening of the innovative App Store in 2008, created a profound and almost unprecedented economic force. It was a match made in heaven—handheld powerful computers that were always connected to the Internet, combined with the ability for developers to write and maintain the mobile applications that made smartphones useful.
The App Store was the rare case of an innovation with a clear starting point and immediate global adoption. Moreover, the innovative design of the App Store lowered the barriers to entry for mobile app developers all around the world. It created a low-cost mechanism for distributing apps to users that allowed even the smallest of software developers to reap global economies of scale. In some sense, the App Store was an important step in fostering a global entrepreneurial culture.
At the same time, large companies have realized that mobile apps are the new “front door” to their business, a way of reaching customers and potential customers. Similarly, we have reached a tipping point where more and more people of all income classes have smartphones, allowing governments and nonprofits to use mobile apps to deliver social services and as an interface for important citizen interactions. This change, while slow, has reached a tipping point.
Looking forward, the growth of the App Economy is likely to continue, as people increasingly use mobile apps as their interface to their home, cars, schools, and health providers. Indeed, the rise of the Internet of Things will guarantee the need for more and more highly functional and sophisticated apps, serving an essential role in interacting with our environment.
Measuring the App Economy[ii]
This report on European App Economy employment builds on previous estimates of App Economy jobs around the world, starting with our February 2012 report “Where the Jobs Are: The App Economy.” Over the past several years, we have documented the enormous number of jobs created by the App Economy in developed countries such as the United States and Australia, and developing countries such as Vietnam and Indonesia (see past work referenced in “App Economy Jobs in Europe–Methodology and References”). Other researchers have estimated App Economy employment for Europe and elsewhere.
But as the App Economy grows in significance globally, it becomes essential to have a consistent set of App Economy job estimates so that policymakers can compare their country’s performance with that of other countries. For that reason, we have developed a new, standardized methodology for estimating App Economy employment. This methodology can be applied to a wide variety of countries, languages, and economic environments. The methodology uses online job postings for workers with app-related skills as a real-time measure of App Economy employment. We benchmark this data against official government statistics in order to eliminate many of the well-known problems connected with using big data to measure economic variables. [iii]
Our goal is to produce a set of globally-consistent and credible estimates for App Economy employment by individual countries, by broad geographical regions, and by major cities. The ultimate objective is to be able to track the growth of the App Economy globally, and to see which countries are benefitting the most. Ideally we should be able to link App Economy growth to policy measures implemented by governments.
This preliminary report on Europe’s App Economy represents the second in a series applying our new universal methodology to countries and regions. Our analysis includes the 28 countries in the European Union, plus Norway and Switzerland. Our methodology is described in detail in the accompanying post. A forthcoming blog post, “App Economy Jobs in Europe–Cities (part 2),” not yet available, will estimate App Economy employment in major European cities.
Our analysis shows that the European App Economy includes 1.64 million jobs as of January 2016. Companies employing workers with App Economy skills include large and small app developers; software and media companies; financial and retail companies; industrial companies; health and education enterprises; leading European and non-European tech companies; nonprofits and government suppliers; and large accounting and consulting firms.
Table 1: The European App Economy, January 2016
|Millions of jobs|
|EU-28 plus Norway and Switzerland||1.64|
Data: Progressive Policy Institute, Indeed, public job postings
For this study, a worker is in the App Economy if he or she is in:
• An information and communications technology (ICT)-related job that uses App Economy skills—the ability to develop, maintain, or support mobile applications. We will call this a “core” App Economy job. Core app economy jobs include app developers; software engineers whose work requires knowledge of mobile applications; security engineers who help keep mobile apps safe from being hacked; and help desk workers who support use of mobile apps.
• A non-ICT job (such as human resources, marketing, or sales) that supports core app economy jobs in the same enterprise. We will call this an “indirect” App Economy job.
• A job in the local economy that is supported by the income flowing to core and indirect app economy workers. These “spillover” jobs include local retail and restaurant jobs, construction jobs, and all the other necessary services.
To estimate the number of core App Economy jobs, we use a multi-step procedure based on data from the universe of online job postings. Our first observation is that online job postings typically describe the skills and knowledge being sought by the employer. For example, if a job posting requires that the job candidate have experience developing apps for iOS—the iPhone/iPad operating system—then we can reasonably conclude that the posting refers to a core App Economy job.
In practice, we compiled a short list of key words and phrases that would generally be associated with App Economy-related skills. These include iOS, Android, Blackberry, “Windows Phone,” “Windows Mobile,” and app. We applied these search terms to the real-time database of job postings developed by Indeed, which gave us an unadjusted count of job postings for core App Economy jobs.
However, that’s only the start. Job postings for an occupation are only a fraction of the number of people employed in that occupation, since most positions are not empty. We develop an estimate for the ratio between the number of job postings for ICT jobs and overall ICT employment. This ratio is applied to the number of app economy job postings to generate a provisional estimate of core app economy employment. Crucially, we use a validation procedure to ensure that we are actually counting job postings that correspond to core app economy jobs. We use a conservative estimate of the indirect and spillover effects.[iv]
App Economy Jobs by European Country
As noted above, one of our goals is to develop a measure of App Economy jobs by country, in order to assess the relationship between government policies and innovation-driven job growth. Table 2 below provides estimates of App Economy employment for the top European economies. The United Kingdom ranks first, followed by Germany and France.
Table 2: App Economy Jobs by Country, January 2016
|Country||App Economy jobs, thousands|
Data: Progressive Policy Institute, Indeed, ILO
Before Apple opened the App Store in July 2008, there was no such thing as an App Economy job. No employer was posting want ads looking for iOS or Android developers; no one was talking about the shortage of mobile app coders. This has been an incredibly rapid transformation of the job market, paralleling the astounding growth of smartphone usage.
What’s more, the explosion of App Economy jobs came during the deepest recession in more than 75 years. Indeed, these 30 countries are now just making it back to the level of employment that existed in the middle of 2007. The demand for App Economy skills drove companies to hire new ICT workers–and retain the ones they already had–even during the depth of the recession and the sluggish recovery that followed.
How important has the App Economy been for the European labor market? That is a tough question to answer quantitatively. But we do note that France has 229,000 App Economy jobs, only slightly less than the 289,000 net new jobs generated in the country between 2007 and 2015.
A globally consistent methodology is makes it easier to do comparisons across countries. Let’s start by comparing the United States with the EU-28 plus Norway and Switzerland. As noted at the beginning of the study, Europe has generated App Economy jobs at roughly the same pace as the United States, 1.64 million vs 1.66 million.
In other ways, however, Europe still lags behind. We define ‘app intensity’ as App Economy jobs as a percentage of all jobs. The United States has an average app intensity of 1.2%. By comparison, the European app intensity is 0.7% (Table 3)
Table 3: App Economy Matchup: Europe vs the US
|App Economy Jobs (millions)||App Intensity *|
*App Economy jobs as a share of all jobs.
**EU-28 plus Switzerland and Norway
Data: Progressive Policy Institute, Indeed, Eurostat
We can do a similar comparison ranking European countries by app intensity. Table 4 ranks European countries by app intensity. Finland takes top place with a 1.9% app intensity, showing it to be a small country with a big presence in mobile apps, led by world-class companies such as mobile game makers Rovio Entertainment (maker of the mobile game hit Angry Birds) and Supercell. Norway ranks second, followed by the Netherlands. By way of a measuring stick, the top U.S. state by app intensity is California, at 2.4%.
Germany, which ranks highly on total App Economy jobs, is only average when judged by app intensity. Italy, which is fifth in total App Economy jobs, falls to the bottom of the app intensity listings with 0.4%.
Table 4: Ranking European Countries By App Intensity
|*App Economy jobs as percentage of all jobs|
Data: Progressive Policy Institute, Indeed, Eurostat
We estimate that the European Union plus Norway and Switzerland has 1.64 million App Economy jobs—does this number make sense? This figure corresponds to roughly 547,000 core App Economy jobs. By comparison, we estimate this 30-country area has roughly 5.9 million workers in all ICT occupations.[v] As a result, roughly 9 percent of ICT jobs in Europe are associated with the App Economy.
A similar calculation for the US shows roughly 11 percent of ICT jobs associated with the App Economy. Based on informal discussions with tech executives, neither of these numbers seem out of line. They suggest that Europe is developing a vibrant App Economy, just at a somewhat slower rate than the United States. Moreover, there is plenty of room for the number of App Economy jobs to continue to rise as apps take a central role in the Internet of Things.
Mobile Operating Systems
Many App Economy job postings list a mobile operating system or multiple mobile operating systems that the job candidate is expected to be familiar with. This allows us to assess the distribution of mobile operating systems in the European App Economy.
Table 5: European App Economy Jobs by Operating System
|App Economy jobs (thousands)||share of all App Economy jobs|
|Windows Phone/Mobile ecosystem||150||9%|
Data: Progressive Policy Institute, Indeed
Here’s how the App Economy job numbers in EU-28 plus Norway and Switzerland break down by operating systems. As of January 2016, we estimate that 75% of App Economy workers in Europe (1.2 million jobs) belong to the iOS ecosystem. This includes iOS specific jobs as well as jobs supporting a combination of iOS and other platforms. The Android ecosystem also accounts for 75% of App Economy workers in Europe (also 1.2 million after rounding). The Blackberry ecosystem accounts for 6%, while the Windows Phone or Windows Mobile ecosystem accounts for 9%.
The numbers sum to more than 100% because some jobs specify more than one operating system—say, both iOS and/or Android skills. From a policy perspective, the iOS ecosystem is likely to have a larger impact on entrepreneurship and the economy in Europe. That’s because iPhone owners in Europe typically have higher incomes, and iOS apps tend to generate higher revenues for developers.
We can also estimate the number of jobs associated with major mobile operating systems across different countries in Europe. Table 6 is in alphabetical order.
Table 6: App Economy Jobs by Country and Major Operating System
|Total App Economy jobs (thousands)||Jobs belonging to iOS ecosystem (thousands)||Jobs belonging to Android ecosystem (thousands)|
Data: Progressive Policy Institute, Indeed
Our analysis shows Europe’s companies and workers have been able to take advantage of the App Economy boom. Using our new globally-consistent methodology, we estimate that the 28 countries of the European Union plus Switzerland and Norway have been able to generate nearly as many App Economy jobs as the United States since 2008, when the App Store was introduced. This suggests a positive role for innovation in producing new jobs and new opportunities around the world.
[i] With research assistance from Michelle Di Ionno. Indeed bears no responsibility for the analysis in this report.
[ii] For the sake of clarity, this section repeats much of the material in the post “App Economy Jobs in the United States”
[iii] Steve Lohr, “Google Flu Trends: The Limits of Big Data,” New York Times (March 28, 2014).
[iv] We assume that each core app economy job is associated with two additional jobs (combined indirect and spillover). This assumption is low compared to the typical job multiplier found in the literature, which can go as high as 5 or even higher. See, for example, “Job Multipliers: Silicon Valley vs. The Motor City,“ http://www.economicmodeling.com/2012/08/31/job-multipliers-silicon-valley-vs-the-motor-city/
[v] This figure includes ICT managers, ICT professionals and ICT technicians. We derive it from Figure 2.8 in OECD Digital Economy Outlook 2015.