Executive summary
SMEs account for 99% of all businesses in Moldova generating 60% of total employment, but only 39% of turnover. Despite considerable policy efforts, their potential remains largely untapped: SMEs remain concentrated in low-value-added sectors such as retail and wholesale trade, and still lag larger firms and EU levels in terms of productivity.
Successive crises have posed additional challenges: Moldova was one of the countries hit most severely by COVID-19, taking a significant toll on individuals and firms alike: 70% of small and medium-sized enterprises reported being affected by the COVID-19 pandemic, e.g., experiencing decrease in market demand, supply chain disruptions, and partially or fully stopping operations. Survey data from the World Bank on the impact on business operations by size class show the disproportionate impact borne by SMEs. This is partly explained by the over-representation of SMEs in the sectors hit hardest (wholesale and retail commerce and agriculture). Russia’s full-scale invasion of Ukraine put additional strains on the economy, creating an urgent need for humanitarian assistance for large numbers of Ukrainian refugees, as well as causing trade disruptions and sharp rises in transport, energy and commodity prices.
The digital transformation offers numerous opportunities and benefits that could help businesses tackle some of the challenges they encounter. Digital tools can help firms improve processes and lower costs by adopting Enterprise Resource Planning (ERP) and/or Customer Relationship Management (CRM) systems, for instance, while the use of social media or websites, combined with big data analytics, enables businesses to reach new markets and gain better understanding of customer needs. These technology-induced improvements result in higher productivity, increased export and investment potential, and higher wages for employees. Digitalisation can also help enterprises better weather economic crises, as digitalised firms have proved more resilient to disruptions.
Digitalisation has already brought significant benefits to Moldova: ICT has been one of the most dynamic and fastest-growing economic sectors in the country over the past years, now amounting to 7.6% of GDP and close to USD 400m of export revenues. The Government of Moldova supported this rapid growth via dedicated policy actions, implemented in co-operation with a very active private sector. However, Moldovan SMEs in non-IT sectors remain stuck at the beginning of their digitalisation journey: in 2020, less than 17% reported having successfully integrated digital tools in their activity. This is closely linked to persisting skills shortages and mismatches, which pose, inter alia, a major barrier to SME digitalisation: 20% of firms see the lack of an adequately educated workforce as the main obstacle to doing business (vs. 11% in Europe and Central Asia), and employers cite the lack of skills and experience as the main cause of labour shortages. This issue particularly affects SMEs, which encounter more difficulties in attracting and retaining skilled workers, as well as up-skilling or reskilling their workforces.
Building on Moldova’s existing policy efforts, the OECD supported the country in designing policies to equip individuals and firms with the digital skills they need, taking stock of the progress achieved and identifying key challenges. Looking at the four main categories of digital skills, the OECD provided policy analysis and recommendations to feed into the new National Digital Strategy and upcoming policy initiatives. The resulting report is built around three main components:
The institutional and policy framework for digital skills: Moldova has been making significant efforts to develop digital skills. The topic has been included in several policy documents, such as the previous National Digital Strategy (NDS) Digital Moldova 2020, which set digital literacy as a key objective and resulted in improvements in the education system. Nevertheless, previous policy documents left some aspects of digital skills policies unaddressed, such as lifelong learning and digital business skills. The previous NDS reportedly suffered from implementation gaps due to a lack of project implementation capacity, economic and political instability, and insufficient budget allocations. The new Digital Transformation Strategy 2023-2030 should therefore be more comprehensive and set clear policy objectives, associated with measurable targets and budgets, to improve both implementation and monitoring. As for the digital skills ecosystem, Moldova has drawn on a strong and institutionalised public-private co-operation, with private sector initiatives complementing the policy approach and offering a wide range of additional services. Future policy initiatives would benefit from a whole-of-government approach by involving all relevant governmental actors, including the Ministry of Labour and the National Employment Agency who have been less involved so far, and other stakeholders outside the government (e.g., employers and teachers). The collaboration among relevant stakeholders could be facilitated by the creation of a National Digital Skills and Jobs Coalitions, also with a view to bringing Moldova closer to EU standards and practices.
Measuring digital skills and anticipating future needs: this report provides, inter alia, a gap analysis of Moldova against the indicators included in the OECD’s Going Digital Framework, showing that Moldova has been collecting data on digitalisation, but that intelligence on digital skills remains limited. Skills anticipation tools also remain at a nascent stage, and firms still lack awareness of their skills levels and needs. Moving forward, Moldova could complement existing assessments with dimensions on digital skills (data collection, digital skills framework, self-assessment tool for digital skills), and strengthen skills needs anticipation practices, including at company-level.
Providing targeted support for SMEs to develop digital skills: Moldova’s SME agency ODA (formerly ODIMM) has been developing programmes to support SME digitalisation, which included training and mentoring components, and plans to incorporate digitalisation as a crosscutting component in existing trainings. Digital skills training opportunities were further enhanced by public-private sector co-operation. However, the range of support to improve SMEs’ digital skills specifically remains limited. Moving forward, Moldova should assess the quality of trainings offered so far and step up these initiatives, while helping SMEs overcome barriers to digital skills development by raising awareness of the support available, strengthening incentives for on-the-job training, and building SMEs’ capacity and learning culture through peer-learning between SME managers and entrepreneurs, including with the Moldovan diaspora.