European Union
Percentage deviation in terms of labour – This
impact variable captures the variation of the labour
employed in each sector due to the breakdown
when compared to the situation under ‘normal’
circumstances. The percentage output deviation
in the case of an ICT failure is positive for some
economic sectors and negative for the others. More
labour, for example, is required in those sectors worst
affected by the incident in order to recover ‘normal’
productive capacity, while others sectors may lose
human capital as a result of the ICT breakdown. It
is, however, not possible with the statistics on labour
used to identify whether, for example, a percentage
increase in labour is due to increased efforts on the
part of employed human resources or because of the
hiring of more labour. In the real world, this depends
upon a large number of variables such as the severity
of the breakdown, the duration of the breakdown, the
recovery capacity of the sector and the flexibility of
the labour market.
Percentage deviation in terms of prices – This
impact variable captures the variation of the prices
necessary to restore the equilibrium conditions.
Prices variations are not in monetary figures but
rather are expressed as deviations in the sectorial
price indexes when compared with the equilibrium.
The percentage price deviation in the case of an ICT
breakdown is positive for all economic sectors, as the
reduction in production output in a sector directly
results in the increase of the price of its output.
Monetary value loss – This impact variable
captures the absolute variation of the value of the
sectorial production output caused by the ICT
breakdown. The value loss results from the absolute
loss of output multiplied by the real prices. The value
loss is, for all the economic sectors, negative or at
most zero.
Welfare loss – This impact variable aims at
synthesising all of the socio-economic effects due to
ICT breakdowns. The welfare analysis is performed
by defining a loss function (such as those applied
in the political economy studies for modelling
objectives of different institutional actors) having as
its ‘arguments output deviation, labour deviation and
prices deviation’. Because of its quadratic functional
form (for ensuring, for instance, that negative output
deviations contribute positively to the welfare loss),
the percentage welfare loss, for all the economic
sectors, is positive or at most zero.
These impact variables make it possible to
compare the effects of an ICT breakdown across
a number of different geographical areas and over
different time periods.
In the sample case study, the effects of the reduced
ICT performance were assessed in terms of output
loss, value loss, labour change, price change and
welfare loss for the top ten economic sectors (at
one-digit and two-digit NACE classification) for all
27 EU countries as well as at a European level. The
impacts from the incident were expressed both in
e
instantaneous variations and cumulated variations
(after 1 day, 1 week, 1 month and 1 quarter).
As can be seen from the sample tables, each
indicator enables comparisons between different
countries and economic sectors, while the final table
s
tockphoto.com/lorrainedark provides details of the impact of the ICT failure across
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all 27 EU countries.
January/February 2010  Continuity  2
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