Themoderneconomy, characterised by increasing connectivity, and rapid digitalisation is transitioning to wards a fast-evolving, data-driven driven digital landscape. This pervasive digital revolution has permeated nearly every sector, reshaping the labour market and business practices, while intensifying concerns about jobless growth and employment displacement. This study explores the dynamic relationship between digitalisation, employment, and other labour dynamics contributing to the ongoing global discourse on digitalisation’s impact. Utilising comprehensive panel data for 39 African countries from 1990-2023, the study employs robust econometric approaches, including the Panel Vector Autoregressive (P-VAR) model, the Dumitrescu-Hurlin (DH) causality test, and the forecast error variance decomposition (FEVD), complemented by the Impulse Response Function (IRF), and constructs a Digitalisation Index (DIGIX) using the Principal Component Analysis (PCA). The empirical results reveal a positive, unidirectional relationship between digitalisation and employment and the total labour force. Further analysis indicates bidirectional causal feedback between digitalisation and both human capital and economic growth. Overall, the findings suggest that digitalisation positively impacts employment creation in Africa by fostering new industries and sectors and by supporting existing employment generation tools and systems. The results also identify economic growth, physical capital, and human capital as the key determinants that influence employment levels in Africa. The study highlights that while digitalisation offers significant potential, its full impact is currently constrained by issues such as digital inequality and socio-economic disparities. These insights underscore the necessity for targeted policies to leverage digitalisation for inclusive labour market development across the continent.

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Keywords

Digitalisation, Labour Dynamics, Panel vector-autoregressive, Causality, Africa