Digital Transformation in Human Resource Management and its Implication for Youth Unemployment in Ethiopia

The Fourth Industrial Revolution integrates advanced technologies that significantly enhance organisational efficiency and productivity. While this transition has the potential to boost GDP, elevate productivity, and expand employment in developing economies, it may also intensify income inequality, displace workers, and exacerbate youth unemployment. This paper presents a comprehensive literature review on the digital transformation of Human Resource Management (HRM) and its implications for youth unemployment in the Ethiopian context. It explores both the positive and adverse effects of digitalisation on HRM practices and how these shape employment prospects for young people. Findings suggest that Ethiopia’s digital economy holds vast untapped potential to increase export, raise incomes, and generate jobs – especially for the youth. However, key impediments to effective digitalisation include inadequate ICT infrastructure, low digital literacy, limited financial capacity, and a shortage of skilled professionals. In addition, weak institutional commitment, complex regulatory environment, and resistance to organisational change constrain further progress. To harness the benefits of digital transformation, policymakers should prioritise strategic initiatives focused on strengthening ICT infrastructure, enhancing the digital competencies of youth, and promoting retraining of workforce to ensure the successful integration of emerging technologies into Ethiopia’s evolving labour landscape.