The Digital Economy and its Impact on the Characteristics of the Labor Market in Saudi Arabia

Prepared by the researcher

• Maryam Ibrahim AL Hababi, Imam Muhammad Ibn Saud Islamic University, Saudi Arabia
• Rochdi Ali Taher Feki, Imam Muhammad Ibn Saud Islamic University, Saudi Arabia

Democratic Arab Center

International Journal of Economic Studies : Twenty-four Issue – February 2023

A Periodical International Journal published by the “Democratic Arab Center” Germany – Berlin.

Abstract

The digital economy is considered a potentially key driver of economic growth. It is changing the labor market in an important way and exposes developed and developing economies to significant challenges. In Saudi Arabia, major structural reforms have been initiated as part of Vision 2030, aiming to create an attractive investment environment and diversify its economy. This important national transformation program identifies digital transformation as a key to realizing sustainable economic development and enhancing innovation and values and is necessarily accompanied by large-scale structural changes in the Saudi labor market. This study examines the impact of the digital economy on the labor market in Saudi Arabia. Results establish that the volume of e-commerce and subscriptions to mobile cellular services significantly affect the unemployment rate. This study also reveals that the Saudi labor market is going through a transitional phase in response to the digital economy, which is expected to result in a model that improves employment opportunities and thus contributes to reducing the unemployment rate.

1. Introduction

Continuous technical innovation within the digital economy is changing labor markets around the world. In the digital age, the general character of the labor market may put middle-skilled workers at risk of being replaced by computers and robots that perform tasks more efficiently and professionally. Saudi Arabia is one of the world’s economies seeking to make progress in digital transformation that is necessarily accompanied by large-scale structural changes in the Saudi labor market, especially considering Saudi Arabia’s Vision 2030, which draws plans to achieve economic diversification. Therefore, this study is concerned with discussing and analyzing the impact of the digital economy in Saudi Arabia on one of the most important macroeconomic variables, the unemployment rate, one of the most prominent issues of the labor market.

The importance of this study comes from the great attention directed towards the digital economy and the role entrusted to it to contribute to enhancing the elements of economic growth and supporting the labor market, especially considering the need for Saudi Arabia to face the challenge due to the continuous change in the composition of the Saudi labor market with the presence of unemployment.

The research problem stems from the great interest in digitizing the economy and its role in reducing the level unemployment rate in Saudi Arabia, during the period in which digitization was applied in the Kingdom affected the size of the labor market, and there are indicators and statistics that prompted the researchers to feel that there is an impact on the size of the labor market through what the Saudi General Authority for Statistics issued for the estimates of the labor force survey for the first quarter of 2021, the rate of The total unemployment rate for the entire population decreased to 6.5% compared to 7.4% in the fourth quarter of 2020. The Saudi population’s unemployment rate decreased to 11.7% in the first quarter of 2021 compared to 12.6% in the fourth quarter of 2020. Considering the decrease mentioned in The Saudi unemployment rate index, however, is accompanied by the repercussions of the Covid-19 health crisis; This means that this matter related to the decline in the Saudi unemployment rate is due to several factors, the most important of which is the digital transformation that the Kingdom witnessed in the last decade and its impact on the size of the Saudi labor market.

This study tries to answer the research question: What is the impact of the digital economy on the unemployment rate in Saudi Arabia?

The study aims to shed light on the changes that have occurred in the Saudi labor market after the application of the concepts of the digital economy in the business sectors and the economic and social fields, by estimating the relationship between the digital economy and change in the labor market (focusing on the unemployment rate).

The study uses the descriptive approach to review the concept of the digital economy and its indicators and uses the standard approach to estimate the relationship between some indicators of the digital economy represented by the number of subscriptions to mobile cellular services and the volume of e-commerce and the unemployment rate in Saudi Arabia using the method of ordinary small squares (OLS) during the period 2000-2019.  The source of the data used is the World Bank dataset.

After the introduction, the second section reviews the most important previous studies, the third section deals with the theoretical framework of the concept of the digital economy, the fourth section deals with the characteristics of the digital economy and the most prominent issues of the labor market in Saudi Arabia, the fifth section is devoted to extrapolating the state of Saudi Arabia in the most prominent indicators of the digital economy and its role in reducing Saudi unemployment, while the sixth section discusses the results of the standard analysis of the impact of the digital economy on the unemployment rate in Saudi Arabia, while the seventh and last section presents the final results of the study and the recommendations emanating from it.

2. Previous studies:

Several studies have examined the impact of the digital economy on macroeconomic variables associated with the labor market.

Zhang et al. (2022) analyze the ability of the digital economy to improve the structure of employment based on data from countries classified under Belt and Road from 2009 to 2019. Using a Panel Data methodology, they found that the digital economy improves the structure of employment and reduces the unemployment rate. Fodranová & Antalová (2021) examine how the digital economy can reduce unemployment and reshape the European labor market during the period 2008-2019. They argued that the digital economy has a major role in bringing about developments in the labor market and that the development of technologies is a key factor to meet these new changes. Lederman & Zouaidi (2020) explore the relationship between the unemployment rate and the digital economy of a sample of countries during the period 2000-2017. They found a negative relationship between unemployment and digital payments as well as direct correlations between unemployment and Internet use. AL-Mousawi, Al-Araji, and Nima (2016) examine the impact of e-commerce, the number of Internet users, the number of mobile phone users, and the number of patents registered on the GDP index and the unemployment rate index, in the United Arab Emirates from 1999 to 2013. Using the method of ordinary least squares delivered the existence of a direct relationship between the unemployment rate and those digital indicators.

3. The theoretical framework of the concept of the digital economy and the labor market:

This section reviews the scope of the definition of the digital economy and links the transactions arising from it to the issues of the labor market, where the concept of the digital economy is addressed as a modern problem that appears due to the successive digital developments and effects on the most aspects of economic and societal life.

• The concept of the digital economy:

The emergence of the digital economy is relatively new and was due to the many complexities imposed by digital technology that has caused a huge flow of data, so societies have become in dire need of a new economy to keep pace with this large flow of data because this data was considered the basis of the new economy and the base on which the operations of the economy as a whole of production, storage, consumption, and exchange are based.

Many factors have pushed the trend towards the digital economy, including information technology and technical development in the means of communication, where there is hardly a category of society that depends on technology and deals with it in all areas of life. The activation of the economy that employs technology in all its forms has great social implications, because it has become closer to all segments of society and not limited to specific people, and thus it has opened the door to new areas of work, employment, and innovation.

As with many economic terms that lack widely accepted definitions; the definition of the digital economy has not been conclusively agreed upon by governments and international organizations and this delay may reflect the speed of technological change, but there are clear concerns to reach a unified global concept of the digital economy and deal with its contents, especially in the fields of business and governmental organizations that have become dependent on the Internet and have adopted the policy of remote work to achieve their productive and economic goals that are accruing to the health of The economy of the country as a whole.

A digital economy refers to an economy based on digital computing technologies that involve running a business through Internet-based markets and the World Wide Web Chohan (2020). The digital economy covers all digitally enabled economic activities and all emerging digital business models Bukht & Heeks, (2017). This concept is a mirror of the OECD definition OECD (2020), that the digital economy encompasses all economic activities that depend on the use of digital inputs, including digital technologies, digital infrastructure, digital services, and data; it also refers to all producers and consumers, including the government, and all those who use digital inputs in their economic activities.

The digital economy may be expressed in two different concepts; first, it is a modern stage of development characterized by the dominance of the benefits of creative work and information, and second, it is a unique concept that targets the information society Makhmudovich & Ugli (2021). To address the consensus on the concepts of the digital economy, the Asian Development Bank is advancing its participation to define the digital economy as the contribution of any economic transaction involving both digital products and digital industries to GDP, ADB (2021). This definition revolves around the axis of the digital classification of industries and products and the identification of their nominal and real contributions to the economy; it is a significant attempt because the consolidation of the requirements of the definition must be based on formative boundaries (amounts) and known structures (methods).

However, these definitions lack an understanding of the cultural impact of digitization on society; not only in terms of consumption but concerning cognitive values that not only bring the problem of measuring the digital economy itself but also raise the question of functional analysis of the interdependence between the digital economy and economic growth Sergeeva & Safronchuk (2021). Accordingly, the digital economy defines the new stage of social and economic development, based on the knowledge that affects social relations and aims at further scientific and intellectual development.

From the above, the digital economy is referred to as an economy based on the production of goods and the provision of services through high-tech electronic digital structures through so-called e-commerce, it is an economic exchange activity resulting from Internet communications between customers by digital means.

The prominent importance of the digital economy lies in the generation and increase of wealth, and the development of the digital economy eliminates many of the problems facing the countries of the world such as the spread of poverty, unemployment, environmental degradation, and wars to which some countries are exposed, and for this reason, many countries have adopted plans and executive programs aimed at qualifying minds technologically and increasing the ability to achieve sufficiency in local production.

The importance also lies in improving productivity with the best quality and lowest costs using the technical means on which the digital economy is based in a way that contributes to improving the management of entrepreneurial projects, thus increasing national income, creating jobs, and contributing to the change of various economic activities Khaloufi, and Zaghlami (2020).

• The labor market considering the transactions of the digital economy:

The digital economy contributes to creating job vacancies and raising labor productivity, especially in ambitious economies that claim to have created 17 million jobs in advanced economies during the period 2009-2011 Bukht & Heeks (2017).

Figure NO. (1): Total Jobs in the Digital Economy, UK 2011-2014

Source: UK Government (2016)

In 2014, there were 2 million jobs in the UK digital economy, up 1.7% compared to 2013 and 7.1% since 2011, the year jobs expanded, with the number of jobs in the digital economy in 2014 accounting for 6.4% of the total of UK jobs that 1.3 million in 2011, as can be seen in Figure NO. (1).

The impact of the digital economy on the labor market can be summed up in four aspects: creating jobs, increasing access to jobs, diversifying job styles, and providing flexible work environments, The League of Arab States (2020). The first aspect: is attributed to the new sectors, products, services, or institutions based on the processes of the digital economy, and the second aspect: the digital economy facilitates job seekers the means to apply for various and many digital jobs that require knowledge of smart technologies and applications, while the third aspect: the digital economy has shown new forms of work and practices that are implemented online and contribute to the organization of work and administrative relations between the employee and the management of the work team, and in the last aspect:  The digital economy has resulted in media and platforms through which to operate as an accessible work environment without the constraints of time and space. There are, however, some downside concerns about the disappearance of some of the traditional jobs that may result from the automation processes that the digital economy requires to perform; however, devoting efforts to qualifying and training workers in the skills required by the digital labor market may mitigate those expected damages.

4. Characteristics of the Digital Economy and Labor Market in Saudi Arabia:

Today, the digital economy has become one of the productive aspects that play a leading role in the growth of the economies of many countries, so Saudi Arabia sought to make it within its ambitions to upgrade its economy to the top fifteen ranks globally in line with the directions of Saudi Arabia’s Vision 2030, and as an extension of its efforts to overcome obstacles and find solutions to the challenges facing the private sector and accelerate the growth of economic digitization, because of the promotion of investment, the flow of funds, the creation of sustainable digital jobs and the preparation for the next growth phase.

In this section, an overview of the characteristics of the digital economy in Saudi Arabia is addressed by highlighting some of its indicators expressed considering the diverse digital variables that represent the digital economy. In this aspect, work is also being done to identify the state of the Saudi labor market by focusing on the most important variables in it, which are related to the unemployment rate.

• Indicators of the digital economy in Saudi Arabia:

This aspect focuses on the state of Saudi Arabia in two main indicators to represent the digital economy: the number of subscriptions to mobile cellular services, and the exports/imports of ICT goods; noting that the source of these indicators is the World Bank website.

4.1.1 Subscriptions to Mobile Cellular Services:

Subscriptions to public mobile service, as the World Bank defines, providing access to the public telephone network using cellular technology. This indicator is calculated in total or per 100 inhabitants and includes the number of postpaid subscriptions, and the number of active prepaid accounts. The indicator applies to all mobile cellular subscriptions that offer voice communications. It excludes subscriptions via data cards or USB: Universal Serial Bus modems, subscriptions to public mobile data services, private mobile radio, telephone point, radio recall services, and telemetry.

The following figure NO. (2) shows the number of subscriptions to mobile cellular services during the period 2000-2020 per 100 inhabitants in Saudi Arabia.

In 1996, one in every 100 inhabitants in Saudi Arabia owned a cell phone and in 2000 approximately 6 individuals owned a cell phone out of every 100 members of the population, while the subscriptions of individuals to mobile cell phone services in total reached their maximum in 2011 with 54 million subscriptions and approximately 191 subscribers per 100 inhabitants of the Saudi Arabia. After 2012, the total number of subscriptions ranged between (52-53) million subscriptions for four years, followed by a gradual decrease in mobile subscriptions for phones. Overall, there has been an escalating increase in cell phone subscriptions until 2020; though it began to decline by slight thing in 2016.

Figure NO. (2): Subscriptions to Mobile Cellular Services 2000-2020

Source: by the researchers according to the World Development Indicators, World Bank Group

4.1.2 Exports/imports of ICT goods:

Exports/imports of ICT goods (% of total exports/imports of goods) as defined by the World Bank include computers and peripheral equipment, telecommunication equipment, consumer electronic equipment, electronic components, and other (miscellaneous) IT goods.

There was no data available to Saudi Arabia on whether it exported or imported ICT goods during the past millennium; that data was monitored at the beginning of the current millennium. The following figure NO. (3) shows that Saudi exports of technology are proceeding at a steady and weak pace while a convergent upward trend of Saudi imports of technology goods is shown. Perhaps the highest percentage of technical imports reached by Saudi Arabia was in 2011 and the lowest in the first millennium when it began importing them in 2000.

Figure NO. (3): ICT Exports/Imports in Saudi Arabia 2000-2019

Source: by the researchers according to the World Development Indicators, World Bank Group

The data indicate that the ratio of exports of ICT goods to the total exports of Saudi goods during the period 2000-2019 is almost non-existent, which indicates that Saudi Arabia is a non-exporter of technology and does not manufacture them locally but depends on the ownership of technology and information goods on importing them from abroad by less than 10% of the total imports of goods.

• Unemployment rate in the Saudi Arabia:

After Saudi Arabia achieved the lowest value of the unemployment rate in 1999 at 4.35% of the total workforce, and after witnessing an increase in the number of university graduates qualified for the labor market in recent years due to the increase in the absorptive capacity of universities and the high demand for university education from high school students; and despite the increasing revenues of oil that are employed in favor of technological projects and building smart cities with increased productivity and investment in technologies to achieve a prosperous economy and a vibrant society according to Vision 2030; unemployment rates continued to rise with the current millennium until they reached their maximum in 2020 by 7.45% due to the health crisis that affected the global economy and affected Saudi Arabia for its mutual and financial link with the countries of the world, especially with the coincidence of this crisis with the oil shock that occurred at the time and the closures that sometimes resulted in layoffs within some sectors, in addition to the expectations of the sovereignty of disguised unemployment and the influx of foreign workers despite the Emiratization policies in progress. It must be done inside the country, but its effects have not yet been seen and its positives have not been reflected in the state of the Saudi labor market until then.

Unemployment rates in Saudi Arabia during the period 1991 to 2020 can be tracked in the following figure NO. (4):

Figure NO. (4): Saudi Unemployment Rate 1991-2020

Source: by the researchers according to the World Development Indicators, World Bank Group

In the context of the above problems, the aim was to estimate the impact of the digital economy on the labor market by finding the correlation between the unemployment rate and several elements indicative of digitization in the economy, which gives an idea of the level of the digital economy in Saudi Arabia, especially since some of those variables act as a driving force for the economy and change patterns of production and exchanges.

5. Inductive Analysis of the Impact of the Digital Economy on the Saudi Unemployment Rate:

Unemployment is one of the most important social and economic manifestations that assess the level of progress of countries and the well-being of their residents, so the continuous research on the causes of the decline and rise in the unemployment rate is of value to those interested, studied and decision makers who may have some ideas that the digital economy due to its dependence on technology may reduce the labor force and increase the volume of unemployment.

 Some argue that technological progress is pessimistic because two-thirds of jobs are vulnerable to automation and their risks in the developing world that are mitigated only through wage cuts and slow technology; the pace of technological acceleration makes society skeptical of the production of new jobs Hernandez, Faith, Prieto Martín, & Ramalingam (2016).

On the contrary, the digitization of the economy has required highly qualified human resources at a high level of education and training, keeping pace with innovations and continuous professional growth, as the technical development of technological innovations has shifted the perception of employers towards employing workers with technical skills for professional integration events that support traditional artisans and encourage the development of their capabilities. This is confirmed by the aforementioned study Hernandez et al. (2016) on the different trends of technology on the global unemployment rate, which confirms that the Internet is the largest generator of jobs in developing and developed countries and that the increase in broadband penetration is associated with the growth of the employment rate and the reduction of the unemployment rate as the Internet created 85,000 jobs in 2012, and the numbers of employment in rural South Africa increased as a result of the expansion of network coverage.

The digital economy enhances the labor force and due to the fact of the work used in the digital economy, it comes to mind that the digital economy has increased unemployment in societies due to the lack of share of workers in the field of production and an increase in services, i.e. the replacement of labor with data, this is from the premise that the basis of the formation of the digital economy is the process of growth in the number of specialists in computer technologies, but it should be noted that the increase in the flow of data in the digital economy is not a purely quantitative factor; the essence of the economy Digital is the production of digital goods and services related to technology that has accelerated innovation processes and thus develops new solutions to address economic problems. Many governments are seeking to develop the digital economy to meet key challenges, including reducing unemployment, so national digital strategies are keen to deal with economic development issues by establishing pilot projects that seek to increase employment and form an effective public sector Aldhaify (2020).

The digital economy has contributed to the creation of new types of labor and has been keen to create capable human competencies capable of employing digital technology in the development of administrative systems and managing change towards the new digital economy Herzallah & Yusra (2018).

• The Role of the Digital Economy in Reducing Saudi Unemployment:

Unemployment and the implementation of the new digital economy are two main challenges for every country regardless of its economic and social situation, and there is no doubt that Saudi Arabia needs to meet the existing challenge of unemployment through the application of economic digitization and benefit from the innovations that underpin it.

According to what the Saudi General Authority for Statistics issued on its official website for the estimates of the labor force survey for the first quarter of 2021 and within the periodic labor market bulletin for each quarter, it turns out that the total unemployment rate for the entire population (Saudis and foreigners) decreased to 6.5% compared to 7.4% in the fourth quarter of 2020, and the unemployment rate of the Saudi population (males and females aged 15 years or older) decreased to 11.7% in the first quarter of 2021 compared to 12.6% during the first quarter of 2021. The fourth quarter of the previous year 2020.

Light of the mentioned decline in the Saudi unemployment rate index, but this is accompanied by the repercussions of the health crisis of COVID-19, which means that this matter related to the decline in the Saudi unemployment rate is due to several factors, the most important of which is the digital transformation witnessed by Saudi Arabia in the last decade and the digitization of economic institutions, through which the Saudi government faced the negative effects of the pandemic in addition to maintaining the progress towards the development awakening and future vision, which opened wide horizons for new job opportunities and jobs. New adapts to the requirements of the new era. This was a reflection of the great efforts exerted by the Saudi state in all its sectors to face the effects of the Corona pandemic, which reflected negatively on the situation of the workforce in most countries of the world, while the Saudi confrontation with those repercussions cast a positive shadow on the level of Saudi employment and the revival of the labor market to control unemployment rates, and the proactive decisions taken by the government had clear positive results in reducing job leakage and opening the way to various opportunities that contributed to achieving balance in the Saudi market and maintaining stability. Labor market and economic situation.

In a report published by the Saudi Communications and Information Technology Commission in 2015, estimates indicated that the ICT workforce in Saudi Arabia would reach around 230,000 professionals, but the market still faces a shortage. This highlighted the need to develop the skills of the current Saudi talent pool in ICT, encourage young people to specialize in ICT-related fields to participate in the sector, as well as increase their opportunities to obtain digital skills training through public-private collaboration Merheji, (2021). In 2019, the Ministry of Communications and Information Technology (MCIT) issued the “ICT Strategy 2019-2023”, which is in line with the Kingdom’s Vision 2030, It seeks to attract leading multinational technology companies to Saudi Arabia, develop the skills of the Saudi workforce with digital skills and technical knowledge to participate in it, and work in the ICT sector and the wider digital economy. The strategy also seeks to promote research and development in Saudi Arabia’s startup ecosystem Merheji (2021). The strategy concretely sets a goal of achieving 50% growth in the ICT sector, as well as raising the Saudi ICT workforce to 50% by 2023, along with attracting foreign investment in Saudi Arabia’s ICT sector and increasing women’s participation in the sector. These goals become even more important when considering that according to the World Economic Forum’s 2016 Future of Jobs report, too many Saudi nationals work in sectors of the economy that can be disrupted negatively through digital technologies World Economic Forum (2016). The 2020 strategy features more insights into the needs of the Saudi labor market as the six most important skills identified as being in great demand were complex problem solving, leadership, social impact, analytical thinking, innovation, and active learning strategies along with flexibility, stress tolerance, and critical thinking. “The use of technology, monitoring, and control” came in seventh place World Economic Forum (2016). This highlights that the Saudi workforce needs more than just digital skills to be equipped for such a transformation by reforming the education system to equip Saudi youth equally with the non-technical skills needed for the digital labor market.

• The Role of Digital Programs in Creating Saudi Jobs:

In recent years, the Saudi government has launched several initiatives and programs to provide training to Saudi citizens to equip them for the digital economy, ranging from basic digital literacy programs to programs that provide skills training to operate the latest digital technologies.  Close collaboration between the public and private sectors is essential to develop the skills and talents of the Saudi national workforce and ensure its ability to lead digital transformation.

The 2021 ICT Access and Use Survey for Households and Individuals published on the General Authority for Statistics website within the Knowledge and Digital Economy Statistics revealed that 17.89% of the total individual Internet users (15 years and older) at the level of Saudi Arabia are concentrated in their areas of Internet use in searching for a job or sending a job application. While the percentage of individuals using the Internet in Saudi Arabia was 5.11 positions on that purpose in 2018 according to the Access and Use of ICT Survey for Households and Individuals for 2018. The difference as shown in Figure NO. (5) between the two percentages is large and gives an indication that the indicators of the digital economy have had a role in opening up the fields of employment and job creation in Saudi Arabia, and also shows that there is a trend by individuals to search for jobs in digital ways offset by the orientation of establishments and workplaces to receive job applications in the same way and this enables to restrict unemployment rates caused by the difficulty of accessing work sites and knowing employment advertisements where the Internet and other digital means have become Able to provide access to job vacancies and their citizens easily and easily, which reduces the trouble of job seekers.

Figure NO. (5): Using the Internet to Search Jobs in the Saudi Arabia

Source: by the researchers according to data published by the General Authority for Statistics

6. Quantitative Analysis of the Impact of the Digital Economy on the Saudi Unemployment Rate:

The digital transformation that Saudi Arabia seeks under Vision 2030 necessarily comes with large-scale structural changes in the Saudi labor market. Therefore, in this section of the study, the standard (quantitative) approach is used to estimate the relationship that reflects the impact of the variables of the digital economy in Saudi Arabia on one of the most important macroeconomic variables, namely the unemployment rate, which is one of the most prominent issues of the labor market.

• Standard model characterization:

Within the framework of the characterization of the Standard Model for Estimating the Transactions/Variables of the Economic Model, which aims to find the impact of the digital economy on the unemployment rate in Saudi Arabia, the linear regression method was used by the method of ordinary least squares (OLS: Ordinary Least Square) and applied to the EViews-10 program. Data for model variables for the 20-year 2000-2019 time series were collected and sourced from the World Bank Data Collection within the World Development Indicators.

The standard model could be formulated as follows:

Whereas:

UN: A dependent variable representing the unemployment rate (% of the total labor force).

MOB: An independent variable that expresses the number of subscriptions to mobile cellular services (per 100 inhabitants).

ECM: An independent variable that expresses the volume of e-commerce (exports + imports), and has been calculated by adding exports of ICT goods (% of total exports of goods) to imports of ICT goods (% of total imports of goods), because the study is concerned with the volume of digital exchanges to express the digital economy and not the goal of the volume of trade (the trade balance) produced by export and import teams.

According to economic theory, the size and signals of the parameters are determined, while this can be predicted and the direction of the relationships between variables can be determined based on previous studies as well AL-Mousawi, Al-Araji, and Nima (2016). about the volume of e-commerce, the economic theory assumes that the signal of the export parameter is negative because the increase in exports leads to a decrease in unemployment, while the import parameter is expected to be positive because the increase in imports leads to more unemployment, especially if the quality of the resources that are imported are primary resources that can be used in manufacturing and re-export; the import movement here is considered an engine of the economy because it supports productive power, and therefore digital exchanges are a factor that works to reduce the unemployment rate. As for the number of subscriptions to mobile cellular services, it is expected that their relationship will be positive with the unemployment rate; the uses of digital elements, including the use of mobile cell phones – especially if the quality of uses is related to production and consumption – change the quality of the economy, because the high level of use leads to a decrease in the use of labor and thus an increase in unemployment rates.

• Descriptive statistical characteristics of model variables:

 The data of the model variables -see Appendix NO. (1)- can be described using the most common statistical descriptive analysis methods which are illustrated in the following table No. (1):

Table No. (1): Descriptive Statistics of the Model

Source: by the researchers based on the outputs of the EViews

The data of the previous table shows that the average of the three variables: unemployment rate, the volume of e-commerce, and the number of subscriptions to mobile cellular services (per 100 inhabitants) amounted to 5.5651, 6.8291, and 113.0269 respectively. The standard deviation value of each was 0.4264, 1.1576, and 63.7944 respectively; this means that there is a weak standard deviation for the previous three variables compared to their arithmetic average, and therefore the variance shows weakness at the level of values of those variables, which indicates that the changes that occurred in the three variables throughout the study period have no significant connotations.

To verify how close the data is to its Distribution Normal, the Jarque-Bera test shown in the previous table is considered, where the null hypothesis is that the data follows the normal distribution if the value of the P-Value is greater than 5%. It is clear from the previous results that the variables under study follow the normal distribution because the probability value of P is: 0.18, 0.25, and 0.38 for the unemployment rate, the volume of e-commerce, and subscriptions to mobile cellular services per 100 inhabitants respectively, all values greater than 0.05, and therefore the no-mantle assumption that the data follows the normal distribution and the rejection of the alternative imposition are accepted. Since the data follows the normal distribution, it is suitable for analysis.

• Analysis of the results of the regression estimation of the model:

The equation of the estimated regression model between the unemployment rate, the volume of e-commerce, and the number of subscriptions to mobile cellular services is as follows:

From the regression equation of the standard model, it can be concluded that there is a significant relationship between the unemployment rate and the volume of e-commerce and between the unemployment rate and the number of subscriptions to mobile cellular services per 100 inhabitants in Saudi Arabia.

It turns out that there is a significant relationship between the digital economy and the unemployment rate with an impact that varies according to the indicators of the digital economy, where the results indicate that the nature of the relationship between the unemployment rate and the volume of e-commerce as an indicator indicates the digital economy directly / positively, and the previous equation shows that the increase in the volume of e-commerce by 1% has a moral and positive impact by 0.5187 of the unemployment rate in the Saudi Arabia.

The following table NO. (2) shows the results of the estimation of the regression model:

Table No. (2): Results of Estimating the Regression Model

Source: by the researchers based on the outputs of the EViews

The statistical significance of the independent variable shows the volume of electronic commerce by the value of t calculated in absolute terms 4.34. Perhaps this result indicates that the revolution of digitization in the trade process resulted in a renewal of the economic system to become the general character of the labor market dependent on technical devices and digital innovations instead of labor. This is an interesting result and indicates that the support of e-commerce in Saudi Arabia gives the Saudi labor market a phased passage to move to a different formative structure in response to the digital economy.  It makes many jobs change in the trade sector. This result can be interpreted as temporary and occurs in the short term as a result of the transitional change like jobs, some of which may be replaced by electronic applications; while in the long run, digital innovations in various sectors may be a factor that can contribute to reducing unemployment rates and a source of employment; because they create jobs for skilled workers who participate in the process of digital development and continuous improvement in the labor market.

This conclusion reached by the researchers above is in line with the results of a study AL-Mousawi, Al-Araji, and Nima (2016) which concluded that there is a direct relationship between the unemployment rate and the volume of e-commerce in the United Arab Emirates during the period 1999-2013, but the relationship was weak by 0.0108% due to the low unemployment rates in the UAE and the weak role of e-commerce on it.

The results of the study in Saudi Arabia in the table above indicate that the nature of the relationship between the unemployment rate and the number of subscriptions to mobile cellular services is inverse/negative, as the previous regression equation shows that the increase in the number of subscriptions to mobile cellular services by 1% has a significant and negative impact by 0.0060% of the unemployment rate in the Saudi Arabia. The statistical significance of the independent variable shows the number of subscriptions to mobile cellular services through the value of t calculated in absolute terms 2.7725. This relationship expresses a significant and exciting role in the impact of mobile cell phones as an indicator of the digital economy and the practices of individuals and employers towards employment through this indicator as a digital method that enhances career opportunities and improves their outputs in the Saudi Arabia. Thus, it can be said that subscriptions to mobile cellular services represent one of the most important and strongest indicators of the level of the digital economy in Saudi Arabia; because it is one of the elements of the digital enabling structure that paves the way for moving the economy and changing the pattern of productive and reciprocal processes through it in the economy.

This latest finding of the inverse relationship between the unemployment rate and the number of subscriptions to mobile cellular services representing the digital economy is consistent and consistent with the conclusion of the study Zhang et al. (2022) on the ability of the digital economy to improve the structure of employment considering the growth of online consumption that creates more jobs and expands the economic scale. However, this finding is different from that of a study AL-Mousawi, Al-Araji, and Nima (2016), which concluded that there was a positive and significant correlation. A statistic between the unemployment rate and the number of mobile phone users.

The results of the overall regression estimate indicate that the standard model was significant and statistically quality, giving the probability of a value of f less than 5%, and the value of R2 shows that the model explains 57.85% of the changes that may occur in the dependent variable, which is small and may be due to the absence of important elements in the model that have an impact on the unemployment rate.

• Statistical criteria for the quality of the standard model:

To detect that the standard model is free of some common standard problems is of great importance so that the regression model is not estimated on inaccurate data.

Durbin-Watson can be looked at to detect a subjective correlation between random variables, showing a value of 1.42 which means that they are in the acceptance zone between values = 1.00 DL and = 1.68 DU according to the Durbin-Watson table. Thus, there is no problem of self-correlation between random variables, i.e., the results of the model estimate can be accepted and are valuable.

The table No. (3) shows the summary of the results of the test of the standard regression model between the unemployment rate and the volume of e-commerce with the number of subscriptions to mobile cellular services where it appears that it is free of standard problems associated with the difference in variance and self-correlation of the residues, and the problem of the lack of normal distribution of residues.

Table No. (3): Test results of the model free of standard problems

Source: by the researchers based on the outputs of the Eviews

7. Conclusions and recommendations:
   • The most important results of the study:

This research highlighted the study and analysis of the impact that the digital economy has had on the unemployment rate in Saudi Arabia during the period 2000-2019, and the theoretical results revealed that the Saudi Arabia’s workforce needs to hone its digital skills and equip it for a different digital pattern in the new labor market through the development of the education system. By estimating the regression model by the method of ordinary least squares (OLS) and using the EViews program to study the impact of the digital economy on the unemployment rate in Saudi Arabia based on two indicators of the digital economy, namely: the volume of e-commerce and the number of subscriptions to mobile cellular services, the results of the standard analysis resulted in a significant impact of the digital economy on the unemployment rate as follows:

1. The Saudi unemployment rate responds to the digital economy through e-commerce in the same direction so that it can absorb the structural change in the labor market, as the support of e-commerce in Saudi Arabia gives the Saudi labor market a phased passage to move to a different and renewed formative structure in response to the digital economy, and this makes many jobs in the trade sector witness interim changes to be replaced in the future by the applications of the electronic market, thus creating job opportunities with new and advanced patterns in the labor market.
2. The Saudi unemployment rate responds to the digital economy through subscriptions to mobile cellular services in reverse, which means that subscriptions to mobile cellular services are an indicator of the digital economy that enhances employment opportunities for employers in Saudi Arabia by reducing the unemployment rate.
   • Recommendations:

Based on the previous findings, the study recommends the following:

1. Creating an enabling learning environment for the growing modern trends towards the digital economy through innovative education policies and knowledge exchange to refine the digital capabilities supporting the qualification of the workforce for the requirements of the new labor market.
2. Developing the various vital sectors in the country with the emerging transactions resulting from the digital economy.
3. Train the workforce to enable it to deal with the rapid developments in advanced technology.
4. Adapting and harnessing modern technologies to ensure the creation of career opportunities consistent with new educational outcomes.
5. Provide the necessary data for digital variables in detail to help researchers use them in research and development.
6. References:
   • Arabic References:

• Aldhaify, M. (2020): The role of the digital economy in managing modern economic relations, Tikrit University, College of Nursing.
• Al-Mousawi, S. Kazem Al-Araji and Zainab Nima (2016): Analysis and measurement of the impact of digital economy variables on the economy of the United Arab Emirates for the period from (1999-2013), Journal of Management and Economics, 5 (18): 183-203.
• Herzallah, Muhammad and Osharif, Yusra. (2018): The digital economy and the characteristics of the new consumer behavior: an analytical study in the variables, returns, and challenges, University Center Abdel Hafeez Boualsouf.
• Khaloufi, Sufian and Rit, Kamal and Zaghlami, Maryam (2020): Assessment of Algeria’s Readiness to Access the Digital Economy – An Exploratory Study, Namaa Journal of Economy and Trade, 4(2): 73-96.
• League of Arab States. (2020): The Arab vision of the digital economy, Second Edition.
  • Foreign References:
• ASIAN DEVELOPMENT BANK (ADB). (2021): Capturing the Digital Economy: A Proposed Measurement Framework and Its Applications—A Special Supplement to Key Indicators for Asia and the Pacific 2021.
• Bukht, R., & Heeks, R. (2017): Defining, Conceptualising and Measuring the Digital Economy, Centre for Development Informatics, University of Manchester, UK. Working Paper 68.
• Chohan, U. W. (2020): Some Precepts of the Digital Economy. Critical Blockchain Research Initiative (CBRI) Working Papers, Social Science Research Network (SSRN).
• Fodranová, I. & Antalová, M. (2021): How Can Digital Sharing Economy Reduce Unemployment?, Journal of Technology Management & Innovation, vol.16 no.1 Santiago
• Hernandez, K., Faith, B., Prieto Martín, P., & Ramalingam, B. (2016): The impact of digital technology on economic growth and productivity, and its implications for employment and equality: An evidence review, EVIDENCE REPORT, No. 207, Digital and Technology, Institute of Development Studies 2016 (IDS).
• Lederman, D. & Zouaidi, M. (2020): Incidence of the Digital Economy and Frictional Unemployment International Evidence, Policy Research Working Paper 9170, WORLD BANK GROUP.
• Makhmudovich, M., & Ugli, A., (2021): THE IMPACT OF THE DIGITAL ECONOMY ON THE DEVELOPMENT OF THE WORLD ECONOMY, International Journal of Business, Law, and Education, 2(1).
• Merheji, K. (2021): DIGITAL Transformations in The Middle East and North Africa: A Review Of Egypt, Saudi Arabia, And The United Arab Emirates, Issam Fares Institute for Public Policy and International Affairs (IFI) at the American University of Beirut (AUB).
• OECD, (2020): A ROADMAP TOWARD A COMMON FRAMEWORK FOR MEASURING THE DIGITAL ECONOMY. Report for the G20 Digital Economy Task Force. SAUDI ARABIA, 2020.
• Sergeeva, M. V., & Safronchuk, M. V. (2021): The Concept of Economic Growth Through Digital Economy Perspective, In book: Popkova E.G., Sergi B.S. (eds) Modern Global Economic System: Evolutional Development vs. Revolutionary Leap, ISC 2019. Lecture Notes in Networks and Systems, vol 198. Springer, Cham.
• UK Government. (2016): Digital Sector Economic Estimates- Statistical Release. Department for Culture, Media and Sport.
• World Economic Forum. (2016): The future of jobs: Employment, skills and workforce strategy for the fourth industrial revolution, Global Challenge Insight Report.
• Zhang, J., Zhao, W., Cheng, B., Li, A., Wang, Y., Yang, N., and Tian, Y. (2022): The Impact of Digital Economy on the Economic Growth and the Development Strategies in the post-COVID-19 Era: Evidence from Countries Along the “Belt and Road”, Front, Public Health 10:856142.

9. Appendix

Appendix No. (1): Unemployment Rate and Volume of E-Commerce and Mobile Cell Phones Saudi Arabia 2000-2019

Source: World Bank Group, World Development Indicators

*Calculated by the researchers