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President of the Republic at the World Knowledge Forum

President Kaljulaidist sai Lõuna-Korea pealinna Seouli aukodanik. Korealaste rahvuspühal Hangulil andis selle tiitli üle Seouli linnapea Park Won-soon, kes on ise Eesti e-resident.
President Kaljulaid became an honorary citizen of Seoul city.
© Vabariigi Presidendi Kantselei

10.10.2018

Dear friends,

I am standing here representing the world's only digital society which actually has a State on its side – the Estonian digital society of 1.3 million people, our whole population, because in our case it is all-inclusive.

We have already gone through a societal disruption to make sure that our citizens and businesses have a digital environment to deal with both the State and with their private partners.

I would like to add two important notices – first it is very easy to design leapfrogging strategies and find ways to change your society if you have your partners and allies. Our multilateral cooperation, our international security architecture, which guarantees the right of small nations to exist.

Otherwise this could not have happened. So we have never been in this alone, never claimed that it was only us—Estonians—who made this possible. All our partners globally—in the United Nations, EU, NATO—you all have a part in making Estonia the digital society it is.

Second important notice: Estonia is not a technology developing country. At no point during digital transformation of our society has Estonia created cutting-edge technology. Tech-wise, all what we use is pretty mundane, it is commonly used by other actors, mostly private.

It is good, because it makes it cheap, it makes it reliable. Part of it is even open source, namely our e-voting system, so everybody can try to hack it, nobody has managed, but you can try, if you feel like doing it. We invite you all to please try.

Therefore, the difference in Estonian society compared to other developed societies, this disruptive innovation this is not technology itself, the innovation lies elsewhere – in the process of bringing businesses and government together to help all people, young and old, to benefit from technological developments invented by others.

1,3 million people and a small economy cannot create, but we can quickly follow. We are the quick followers, not creators of technology. I think this is encouraging to all similar nations.

Already for 17 years, Estonians have a digital ID and we can use this to sign and time stamp, very important – almost like block chain, but from the beginning of the century –documents, including private contracts, we can apply for different public services, pay fines and taxes on-line, query the registries, and simply send encrypted e-mails.

And we also use our private sector provided services on-line, on the same platform. This is important—everybody is on the same platform—government and businesses.

Estonian e-government is like an app store, everybody, you as well, can develop services on it: private companies, public sector, people-to-people. So welcome, you can too.

If you become an e-resident, you have access to this app store and you can use it for developing your business, but also your personal relations, because you and your colleagues and partners with the e-residency card can send encrypted emails between yourselves.

You can sign documents between yourselves. You can make e-residency the platform for your business globally. You would never again have to work hard to find yourselves in the same room. If you do this then the business you have created would be an EU business, you could actually do a lot of creative technology things on our app store. So welcome to our sandbox to experiment and try it out. The world can be like this in the future, this is the sandbox opportunity and you are very welcome.

Well, I said it is inclusive and it took some special effort to get all people in. Remember, we are talking about the beginning of the century. All generations of course needed to use our digital identity, because otherwise it will create division in the society, but we wanted social cohesion.

It does not happen all by itself and we did run quite expensive Tiger leap program, first teaching young people to use and stay safe in Internet, then teaching old people, because they are normally those who are most reluctant. I do not know why we called it Tiger leap—there are no tigers in Estonia, but it did sound very powerful. Of course, the government in Estonia did not do it alone. Our private sector was paying part of the costs—this means the government's reputation was online and the money of the private businesses was on the line if the project would have failed. Of course, we did not know and could not know that it would be so successful. Private sector played a part and they covered some of the costs and they created the incentives for those who were hesitant. For example, we identified the people near retirement age or retired as the most reluctant cohort to start using computer-aided services. Of course, they did not want to start using computers, they did not even have computers. We needed them to. Because we are not a densely populated country and we did not want old men and women wait for the bus, taking the bus to the centers to get services. It might also have been -30 degrees outside. We wanted them to enjoy the comfort of using these services from the nearest computer. At first, of course, at the turn of the century not every retired person had a telephone or a computer. However, the nearest computer normally was in the village library. And internet was a human right it was free to use. The village library was much closer that a town in the region.

So, we convinced elderly people, because e-service was closer, comfortable to use. The biggest incentive though was that banks offered their services for free for retired people and you know that they are careful with their money. Pensions in Estonia were maybe 100 euros at that time. So this made the system truly inclusive, all generations in.

Digital ID. What does it look like? You had a video in the beginning of this conference. Digital ID is something we have on our ID card. Most European countries have their travel document, which is not the fat passport but a simple travel card, and we decided that we will put the digital chip on it, to make it possible for all people to start using digital services. Provided somebody is going to generate them. And, you know, this was the worry in the beginning for the government. I was there, I was advising the Prime Minister at that time, so I remember. The Minister of Finance wanted that we demonstrate what will be the benefits next year or the year after. Well, there are benefits now. In the first few years there were only risks and costs. The full benefits by now are 2 per cent of the GDP saved by simply signing digitally, 6 per cent of the GDP being generated from ICT and 4 or 5 working days per capita saved from not going and queuing in public offices. A lot of CO2 expenditure saved because you are not driving to these offices and a couple of little forests because you are not printing everything. We all have a century to live, why waste so many days in a year in public offices?

This is the story of the birth of a digital nation. But you know, government realized it is not going to create so many services so quickly.

We opened the platform for businesses. Not only because we think it is a good thing if government and businesses do things together.

Private-public-partnership has been a strong word, hardly executed anywhere. We truly needed it, because we wanted our people to use combined number of e-services, public and private, to they get used to and exercised in digital.

Our worry was that if we do not make the private sector use the same backbone of digital services, people will only maybe declare taxes on-line initially with their digital ID and this is too little. They will not get used to regularly using their card. So, we very much supported that private sector was on the same platform.

We also had to make some services more or less happen totally automatically, because people were refusing to push buttons. For example in Estonia, when a baby is born and the doctor enters the data of the birth – weight, length, everything – into the e-health system and in the background, without the doctor pushing one button, the digital identity is created for this baby. A new digital citizen is born.

This happens automatically because originally we wanted the doctors to push one button and say: this way I will create the registry for this baby. But they refused! They said: this is not my job, I am a doctor. We accepted. And therefore we created a system which automatically does it, in the background. So that the doctors even do not know that they are the civil registry managers. Quite efficient.

And of course, thereafter, the parents can name the baby online. You know, if you tell an Estonian parent, that you have to leave the hospital and go to the city office, and name your baby, they would be shocked and in horror. Because you can do it from your hospital bed, of course. Why would you go to the city office and risk maybe catching some virus while you have a vulnerable newborn? They do not want to do it.

You name the baby where you are. Register at the same moment the baby for social services, for kindergarten. You can do all that from your maternity ward if you wish.

It demonstrates that for a society as a whole high rates of technological penetration even when the technology itself is not at all cutting-edge, this may pay off better than something truly innovative in the hands of a selected few. For example, an analogy from the real world. How much did your life change when somebody landed on the Moon? Not much. How much did your life change, when the washing machine was invented? Women, hands up! Hundreds! So, you see, we have all experienced this also in the analog world. Technology what is inclusively used by the society brings much greater benefits to the society.

This 2 per cent which I mentioned is a huge amount of savings. However, you know, digital is also a great equalizer. Because the government also spends considerable amount on developing the e-services and maintaining them and protecting them. About the same amount actually. So you could say it is kind of neutral project. But this spending is heavily skewed towards the weaker in the society. In the business, the SMEs, because Estonian businesses of course also do not run to any offices, they do everything on-line. All the declarations you need to do: who is working within my company, their status, all the salaries, everything, one-line. If you are an entrepreneur, you pay somebody a salary, then this information immediately appears in the tax board, that you have done this, and also on the tax declaration pre-format of this person. So when you finally go to declare the taxes online, everything is already there, what you have been doing, you can just sign it off. Partially, your accounting is taken care of by the tax office.

The big businesses of course gain less than the small ones, because SMEs have no ways of managing the big bureaucracy. So the spending of government goes more towards helping the weaker ones in our business sector.

Also, if you think of it: who bear the burden of queuing for social services? Women, usually. Who bear the family life burden most? Women. Even if you try hard to make it equal, we know it is us, the women. So it is extremely important for women to have access to public services on-line early in the morning, late in the night when the babies are sleeping, not from 9 to 5. This way of thinking, once spread in society, creates quicker the jobs where it is not so important any more to go to work.

I have to say that one of our banks is now always when they advertise for a job – and it is our biggest bank and has the biggest market share – it has decided it will never say this job is in Tallinn or in any other particular town in Estonia. It says that it is a job in our bank. And when they find somebody to work this job, and these people do not move – they work from where they are. Totally possible.

Most of the banking work actually does not need any direct contact any more. There are therefore new possibilities for participation in the job-market for handicapped people, people in rural areas, again, women with small children who cannot displace themselves so easily. Digital is a great equalizer. And I think digital disruption has made our society not only richer, but also a better place, more equal.

Very often people say that digital takes jobs away and we should be scared. Quite on the contrary. Digital makes job-market more equal, more accessible. And you know, what? Also much bigger. Because you do not have to necessarily work in your own country. It is perfectly feasible to know Estonian tax-code and work from somewhere in Africa, if you are, for example an African girl, eager to learn bookkeeping online. Welcome! Estonia of course does not say that the underlying documentation always needs to be in the country of bookkeeping. Everything is electronic anyway, so you can manage it from Africa. See, our job-market, our salaries are extremely high now already, we are 32nd highest average salary country globally but job-market could be open, even without displacement – to make sure our companies can

save the cost.

I think it could solve a lot of our problems, if we all, collectively, in the developed world took this view that the job market is global. Not only market for trade but also the market for services. I know we do not today. It is a worrisome issue and I will tell you, why. I call this the Alice in Wonderland issue. You know Alice in Wonderland, yes?

There was a cat, it was called the Cheshire Cat, when he left, the grin did not leave, it lingered on. How is this linked to the job market? Well our job-market is changing. Industrial jobs are vanishing. Like the cat. Do you think that our social model of tax gathering and distributing it according to where people live and where they work, in a single place, will stay? It will linger on for a while, like in Alice in Wonderland, the grin. We know that finally also the grin packed itself up. We do not realize yet that more and more people work independently, we see the numbers growing everywhere, but we are not adapting. We still expect people to have a working address and one, or maybe two companies where they work. Or maybe they are an independent worker living in in this country registered in this address. But they want to work elsewhere at the same time. Then we tax them according to their work address and then we provide services to them according to their home address. This world is old.

This is not the way to go. More and more younger people opt out, because they can. Our citizens travel – you need to offer all public services globally. For example, a citizen must be able to vote wherever he or she finds himself or herself. We need to develop schools online where people can educate their children in their maternal language even if they are very far from home. This is an obligation for us, because the world is now global, economy is global. In Europe we have enhanced it by free movement of people in 28 states. Therefore it would be unfair if we will not provide state services to our citizens even if they are not physically in our state. They are exercising their right. Therefore we are taking a new obligation to ourselves.

People nowadays can be narrowly specialized, not join any company but work at their highly valued job in many places at the same time. Then the question is really persistent: who gets the taxes and who provides the social services? Logical answer is that we have some kind of a new contract where people pay taxes to the country they feel closest to, live in or are citizens of, and this country offers them services globally. Wherever they go, wherever their work takes them.

If I think about how we regulate for example tax distribution in

OECD agreements, this all flies into the face of this new world I am thinking of. We need to do something about it quickly.

In Estonia, we try not to just sit on our hands and complain about it. During our EU Council presidency we got officials from all ministries of finance together in Tallinn to discuss, what could be our global proposal to solve this issue that industrial jobs are vanishing, but our social system is based on our industrial model, not the new model.

If we are not quick to adapt, more and more people every day opt out of our social models. What about those who are less flexible? The changes happening are not smaller than the changes from agrarian society to industrial society. We are not reacting. We did not react then as well. Therefore poor people took the punch for the industrial change. We all know that the first decades of industrial development were not easy for workers who lost their agricultural jobs and gathered in cities.

Nowadays what we have we have our educational and social models which should protect people. We should not be talking about taxing robots it is no different than if we would have taxed tractors. We should instead support the change and make our people able to manage in this new world.

I think I have now tried to explain to you how a digital society happens and what are the challenges for a digital society alone in this world. It is a small society, 80% of our economy is outside of Estonia, we feel so constrained that this is not a global situation that we have created at home. We do everything to support networking and creation of similar digital societies everywhere. Because we need them. Because it is good for society, it is a great equalizer and it is a great opportunity, which you should not miss. However, it takes us all, together, rich countries above all, because they are more satisfied than developing countries with the status quo. To realize that this status quo is gone anyway. Industrial era is over, digital era is here. We all need to adapt and I do not even have time to go into the cyber security issue here.

Estonia tries to take responsibility there as well. We are running for United Nations Security Council non-permanent membership to bring all matters cyber and digital into that council. To discuss how our analog law applies in the cyber and digital world. Because we feel responsibility. If we help through UNDP to create digital societies globally, also in Africa, then we need to take responsibility for protecting these nascent digital societies as well and we do accept this responsibility, even if our resources are scarce. You can all help us to achieve that it would benefit our world, climate, our people, everyone. So please join Estonia in our digitalized world.

Thank you for listening!