How does the development of the Internet and mobile communications reduce unemployment?
Tashkent, Uzbekistan (UzDaily.com) -- ICT opens up new opportunities for creating jobs that can help solve the problem of global unemployment. For example, the development of the mobile phone application industry has created new opportunities for small and medium-sized enterprises (SMEs) in developed and emerging countries.
The Institute for Forecasting and Macroeconomic Research (IPMI) assessed the contribution from the development of the Internet and mobile communications to the reduction of unemployment in Uzbekistan. Based on the results of the analysis, the following results were obtained:
An increase in the length of the fiber-optic Internet by 100 km contributes to a decrease in unemployment by 0.04 p.p.
Growth in the number of Internet users by 1 p.p. will reduce unemployment by 0.02 p.p.
The construction of 100 new cellular base stations will reduce the unemployment rate by 0.05 percentage points.
According to a study led by the Harvard Business School, The Economic Impact of the Internet Creating a Marketplace for Advertising, Content, Commerce, and Innovation: Contribution to US Employment and GDP, it was found that:
In 2020, more than 17 million U.S. jobs were created by the commercial internet, up 7 million from 2016.
Small firms and individual entrepreneurs create more jobs on the Internet than the largest Internet companies - 38% vs. 34%.
McKinsey notes that under the influence of the development of digitalization, some jobs are losing their significance and relevance, which leads to their gradual replacement with new professions. However, in return, the Internet space creates many more new professions and jobs. For example, in France over the past 15 years, as a result of the development of the Internet and e-commerce, 500,000 jobs have become unclaimed, while 1.2 million new vacancies have been created. Thus, the magnification factor is 2.4, i.e. 2.4 new ones are created instead of one not relevant workplace.
There is also another channel for the development of ICT to reduce unemployment. So, at the present stage of economic development, employment problems can be solved through a new, progressive form of employment - remote work or freelancing.
Freelancing provides an opportunity not only to form your own career growth, increase your personal income level, but also solve the problem of employment on a national scale, thus increasing the number of employees without special costs for creating jobs, since the population is “self-employed”.
Many types of work today are done remotely using online freelance platforms. Based on data from iLabour, the ILO report shows that the largest share of online classes in the world is in the category of software development and technology jobs. The share of this category in all online freelance jobs has increased from 39% in 2018 to 45% in 2020.
In Uzbekistan, the number of people employed in the ICT sector is steadily growing. If in 2015 33.4 thousand people worked in the sphere, then by 2021 this figure increased by 161% and amounted to 53.8 thousand people. At the same time, the average nominal salary in the ICT sector in 2021 amounted to 5.6 million soums (the average salary in the country in 2021 was 3.2 million soums).
Today, a number of digital freelance platforms operate in Uzbekistan. Among them are Info shop, UzFreelance, Giglancer, 2Work, and others. According to the State Tax Committee of the Republic of Uzbekistan, in 2020 the number of registered self-employed people was 547.6 thousand people, and in 2021 - 1.2 million.
Moreover, online educational platforms operate in Uzbekistan that teach young people modern and in-demand digital professions. According to the Upward online platform, the most demanded digital professions in the international labor market are data entry and analysis specialists, video editors, developers, and content writers.
To analyze the impact of the development of the Internet and mobile communications on the unemployment rate in Uzbekistan, econometric models were built based on statistical data of the State Committee on Statistics of the Republic of Uzbekistan by regions (12 regions, the Republic of Karakalpakstan and the city of Tashkent) for the period 2015 - 2020 (84 observations)
To build econometric models, panel data analysis methods were used, taking into account robust errors and clustering by region (LSDV), as well as Driscroll-Cray robust errors (DKSE). These models are the most effective in the presence of cross (regional) and temporal dependencies. In other words, these models make it possible to obtain the most accurate results if there is a relationship between variables from region to region and from previous values (the influence of the results of past years on the present).
Based on the results of econometric models, it was revealed that the length of the fiber-optic Internet and the number of Internet users are significant at a 1% significance level, and the construction of new cellular base stations is significant at a 10% significance level.
Thus, the construction of new base stations for cellular communications has the greatest impact on reducing unemployment - 100 new base stations will reduce unemployment by 0.05 percentage points. In turn, a decrease in unemployment by 0.04 p.p. will contribute to an increase in the length of the fiber-optic Internet by 100 km. Considering the impact of the growth in the number of Internet users on the unemployment rate, it can be noted that the growth of this factor by 1 p.p. will reduce unemployment by 0.02 p.p.
The low effect of the development of ICT on reducing unemployment in Uzbekistan is explained by the fact that today the processes of digitalization in all sectors of the economy and the life of the population are only beginning to become increasingly important. The subsequent development of ICT and digital professions, services and opportunities will increase the effect on reducing unemployment.
Summing up, it can be noted that information and communication technologies have a positive impact on reducing unemployment in Uzbekistan. The high-speed Internet factor stands out especially, which allows you to process a large amount of data. Also, the growth in the number of Internet users helps to reduce unemployment through two channels: it is easier for people to monitor vacancies and find suitable jobs through online platforms or work directly in online platforms.
The second direction is more promising, since today the demand for digital professions is steadily growing on the international labor market, almost all types of activities are undergoing automation. For Uzbekistan, employment via the Internet is a promising resource for economic development, since the export of digital services negates the restrictions associated with the delivery of goods in traditional exports. Thus, employment in the Internet environment can raise the income of the population, and, consequently, improve their consumption, access to medical services, the quality of recreation, education, etc.