The effects of the fourth industrial revolution on employment in South Africa: Variance decomposition analysis.

Abstract

This study investigates the effect of the fourth industrial revolution on levels of employment in South Africa. The fourth industrial revolution is proxied by ICT development with the components of mobile telephony, fixed-line telephony and internet penetration. The data used in this study were obtained from the World Bank's World Development Indicator database spanning from 1980 to 2019, while the labour market data was obtained from Statistics South Africa for the same time period. The study employed the Johansen Cointegration test and variance decomposition techniques to determine existence of long run equilibrium and possible shocks impact respectively. The results indicated that there exists a long run relationship between employment levels and the hypothesised determinants. The ICT revealed a positive relationship with employment in both the short and long run which is an indication of importance of fourth industrial revolution to employment in modern society. Policy recommendation were provided for the South African policy-makers in line with further deployment of ICT tools that promote employment.