Scary truth about SA unemployment: Half of young adults can’t find jobs – new researchwhatsapp
Have South Africans have become inured to the high unemployment rate just as we ignore high crime? The scary truth about unemployment is that pretty much half of all adults under the age of 35 are unemployed. While many will be poorly educated, anecdotal evidence indicates that this problem cuts across the education divide. Black economic empowerment legislation also means that many educated young white people are also unable to find work. With a staggering unemployment statistic like this, it is not surprising that many young people look beyond the country’s borders for employment opportunities. This is very sad for their families because global job hunting en masse ultimately breaks up communities. It is also a disadvantage for the country, with millions poured into the education system going to waste as young people take their talents elsewhere. Youth unemployment is a massive problem requiring structural changes to the economy, note Lauren Graham and Ariane de Lannoy in a research paper. They don’t even touch the other side of the unemployment problem: The burgeoning population aged 35 and above who are also struggling to find jobs as the economy remains under pressure. Private sector players are encouraged to do their bit to take a chance in hiring individuals who might not obviously be employable. But with business conditions generally tough and no sign that the ANC is planning to stimulate the economy to the benefit of entrepreneurs and private enterprise, that solution is unlikely. Expect higher crime and rising political tension as more people find themselves stuck in a hopeless cycle of poverty with no real options to fend for themselves in the formal economy. – Jackie Cameron
By Lauren Graham and Ariane de Lannoy
A longer version of this article was first published on the ECON 3X3 website. Lauren Graham, Senior Researcher at the Centre for Social Development for Africa, University of Johannesburg and Ariane De Lannoy, Senior Researcher: Poverty and Inequality Initiative, Southern Africa Labour and Development Research Unit, University of Cape Town. This article was originally published on The Conversation.
South Africa’s youth unemployment rates are now considered to be chronic. The latest figures show that about 48% of South Africans between 15 and 34 were unemployed in the third quarter of 2016.
The situation has worsened over the past eight years despite a great deal of policy attention and the implementation of a range of public and private interventions.
If not addressed as a matter of urgency, the situation is expected to increase levels of frustration and impatience among the youth. In addition to this, the situation will contribute to a cycle of chronic unemployment and poverty: these young people are likely to become the parents of children who will then also grow up in a context of poverty.
Our paper provides an overview and assessment of the problem and discusses some of the structural features that drive youth unemployment in South Africa. We argue that focusing solely on the structural, long-term issues may prevent the country from considering important aspects that could be addressed more speedily, including local level barriers that constrain young people’s entry into the labour market.
Disturbing trends
Apart from the very high jobless rate, the other particularly disturbing trend is that more and more young people have given up looking for work. Between 2008 and 2015, the number of youth who have become discouraged has increased by 8%.
When focusing on 15 to 24 year olds – those who would ideally be finding their first jobs or continuing their studies – just under a third are “not in employment, education or training” (NEET). This group is arguably the most vulnerable to chronic unemployment, poverty and social exclusion, as they are neither improving their skills through education nor gaining the work experience needed to progress in the labour market.
Racial and gender inequalities continue to play a significant part in the youth unemployment landscape in South Africa. African and colored youth are far more vulnerable to unemployment than their white or Indian counterparts; young women are more likely to be unemployed and to be NEET than their male counterparts. (Apartheid era racial classifications, under which all South Africans were designated African, colored, Asian and white descriptors, are still used for official purposes in the country.)
Tackling Youth Unemployment
South Africa’s youth unemployment rates are now considered to be chronic. The latest figures show that about 48% of South Africans between 15 and 34 were unemployed in the third quarter of 2016.
The situation has worsened over the past eight years despite a great deal of policy attention and the implementation of a range of public and private interventions.
If not addressed as a matter of urgency, the situation is expected to increase levels of frustration and impatience among the youth. In addition to this, the situation will contribute to a cycle of chronic unemployment and poverty: these young people are likely to become the parents of children who will then also grow up in a context of poverty.
Our paper provides an overview and assessment of the problem and discusses some of the structural features that drive youth unemployment in South Africa. We argue that focusing solely on the structural, long-term issues may prevent the country from considering important aspects that could be addressed more speedily, including local level barriers that constrain young people’s entry into the labour market.
A multifaceted challenge
Why is youth unemployment in South Africa such a seemingly intractable problem? The evidence suggests that it’s a multifaceted issue.
The biggest factors are the evolving nature of the labour market and mismatches between the skills needed in the labour market and those provided through the educational system. Research indicates that a key difficulty facing young work seekers, in particular, is the fact that South Africa’s labour market favours highly skilled employees.
The high demand for skilled labour is high. This means that those with a post-secondary qualification are far more likely to find employment than those with only a matric certificate.
In addition, South African employers, in their apparent distrust of the quality of education received by young people, have raised the bar for entry into low level jobs ever higher. But by escalating the educational requirements for entry-level jobs, employers are effectively shutting out a large pool of potentially good young employees.
The uneven quality of South Africa’s public schooling system further entrenches inequality in finding employment. Many of the poorer children at schools that are often under-resourced and ill-managed very quickly fall behind in their learning, later on drop out of school and then become part of the excluded groups.
Geographic location also acts as a barrier to employment. Young people living outside the major metropolitan areas have to spend more time and money on looking for work. Other barriers include limited social capital and limited access to information.
A recent national study of participants in a youth employability programme reported that the average transport and other work seeking costs for young people were around R560 per month. This stands against the average per capita household income for the same group of youth of R527 per month.
Poverty at the household and community level further complicates the situation. More than half of young people aged 15-24 live in households with a per capita monthly income of less than R779 (the “upper bound poverty line” as defined by Statistics South Africa). Many lack access to information as they are unable to afford the high costs of data so can’t use mobile phones or Internet cafés to search for job opportunities or for post-secondary education opportunities.
And, unlike their middle-class peers, poorer young people lack “productive social capital” – social networks that can be used for information about and access to the labour market. These are important for navigating entry into the labour market.
Short term interventions
It’s clear that the challenge of youth unemployment is a structural issue requiring massive policy investments, political will and time. But it’s equally important to concentrate on what can be done in the interim.
Ways must be found to shift the labour market to be more youth friendly. One option is “impact sourcing”. This involves employers being encouraged to review their recruitment criteria to reach candidates who might not normally be seen as employable. An example is the Harambee Youth Employment Accelerator (www.harambee.co.za) which involves working with employers across sectors to promote inclusive hiring practices that focus on young people.
Another solution could be a national transport subsidy for job seekers. A pilot study is being run by the Abdul Latif Jameel Poverty Action Laboratory. This is a simple solution with a potentially high impact.
Local-level youth employability programmes, often run through non-governmental organisations, are another possible intervention. They can help young people access information about jobs and support them to be more effective in looking and applying for jobs. But many operate on a small scale and are expensive to run. Evaluating their impact and finding ways to take the most efficient ones to scale could make a difference.
South Africa faces the risk of seeing the challenge as being insurmountable and doing nothing in the short term. The evidence suggests that, while there are major structural challenges, there are also some promising options to pursue.
Manufacturing stimulus is vital for job creation in SA
André de Ruyter is chairman of the Manufacturing Circle and CEO of listed packaging group Nampak
15 February 2017
There’s no need for new special economic zones with settled areas such as Vaal Triangle available.
Statistics SA said on Tuesday that unemployment was 26.5% in the last quarter of 2016. There had been a small fall in the total, with 44,000 new manufacturing jobs. However, the jobless number is still far too high.
Many young people have given up looking for work. From any number of perspectives, this is a crisis, and deserving of every bit of effort and attention that we as a country can throw at solving this problem.
Jobs cannot be created by legislation, however. They can only be created through growing our economy. And the employment opportunities we want are decent jobs that will contribute to social stability and cohesion through meaningful participation in the formal economy. These jobs can be created in the manufacturing sector, which at the moment is idling at 13% of GDP instead of revving at 30%, where comparative studies suggest SA should be performing for our stage of economic development.
If we could lift manufacturing output so that it does, indeed, account for 30% of GDP, we would give a major boost to the economy. Reversing the loss of close to 500,000 manufacturing jobs that has occurred since the early 1990s would be a first. The Manufacturing Circle estimates that getting manufacturing to 30% of GDP would create close to 1-million jobs.
So what is holding back South African manufacturing? Imports are one reason for the erosion of our manufacturing base and there is no shortage of examples
SA’s automotive industry has demonstrated that we can be globally competitive in manufacturing given the right regulatory structure and investment climate. Cars made in SA drive on roads all over the world. We need to replicate this success story across other sectors and it starts by making products consumers want to buy.
Indian Prime Minister Narendra Modi has realised that manufacturing is the key to growing his economy. His Make in India campaign puts focus and effort into attracting investors to set up shop in India. Trotting out the old mantra that SA is open for business is not enough to persuade international investors that we are the preferred investment destination.
So what is holding back South African manufacturing? Imports are one reason for the erosion of our manufacturing base and there is no shortage of examples where a boost in local manufacturing could not only reduce the volume of imports but give a boost to our exports as well. A recent statement by Department of Trade and Industry director-general Lionel October that SA is "naïve" to lower tariff barriers is spot on: there will always be a competing country where governments will give higher subsidies and where workers are prepared to work for lower wages.
So a race to the bottom to outcompete lowest-cost countries on an uneven playing field only leads to the decimation of your own manufacturing base and exporting of jobs.
Blunt protectionism is not the answer, but a carefully modulated import tariff structure, targeting tariff code evasion, quick responses to dumping and a full understanding of nontariff barriers, subsidies and support by their own governments for exporters to SA, will go a long way to helping local manufacturing to compete.
Raising a wall of tariff barriers to protect inefficiency and low productivity at the expense of the consumer clearly isn’t the way forward either.
Manufacturing in SA needs to invest in skills and machines to be globally competitive. It is my contention that the skills gap is not particularly severe at shop floor level, but rather at middle management. We need to get better at the hard-core skills of running a factory, planning production and optimising inventory, while meeting customer requirements.
The Department of Trade and Industry-led incentive scheme under section 12i of the Income Tax Act has been very successful in fostering investment in new productive capacity. Competing for scarce resources against other government priorities, however, has led to other incentive programmes, such as the Manufacturing Competitiveness Enhancement Programme (MCEP), to be suspended. The one thing investors crave above all is certainty and incentive programmes have to be sustained if they are to be effective.
Just as the fiscus giveth incentives, so it also taketh through taxes. While we understand that revenue is under pressure, the flurry of new taxes being considered (carbon tax, sugar tax, packaging tax) is not going to entice investment that, through job creation and company profits, enhances tax revenue in the long run.
When investments are made in new factories, billboards are put on lampposts, ribbons are cut and plaques are unveiled by dignitaries. When a factory shuts down it is very often not reported. Workers are paid severance packages, supplier contracts are terminated and products are imported from India or China.
Lots more work is necessary, but this is not a moon shot; the taxpayer will not be asked to invest huge amounts in infrastructure in the middle of the veld
And thus deindustrialisation happens. Not with a bang, but with a whimper. Driving through the Vaal Triangle, where job losses have been particularly severe, it is clear that the once proud home of some of our major industries is turning into a rust belt of disinvestment.
The government has published a policy on special economic zones (SEZs), which seeks to create new hubs where manufacturers can set up shop for exports. But what about stretching the concept to include the Vaal Triangle, where existing infrastructure is in place, where there is a large population of unemployed workers, where we already have schools, universities and hospitals and where we are on the doorstep of the biggest regional market in SA, Gauteng?
Work is already under way to prepare the groundwork for a Vaal Triangle SEZ. It’s one of the proposals being considered by the task teams set up by the Treasury to ignite job creation and growth. CEOs of large companies that have operations in the area have given their support to this initiative.
Lots more work is necessary, but this is not a moon shot; the taxpayer will not be asked to invest huge amounts in infrastructure in the middle of the veld, like an apartheid-era decentralization policy.
Nor will years of work be required to build new roads, pipelines and railway lines. It’s already there and by and large it is not used to full capacity. What we need is the package of investment incentives under the act that will allow investors to create growth and jobs. We don’t think government should pick industries and winners. That should be left to the market. What government can do is to create the ecosystem in which business can set up factories. The SEZ policy provides the ideal vehicle for this.
Aiming for 1-million new jobs by boosting manufacturing through a competitive and responsive global trade policy, improving competitiveness and making products in SA that consumers clamour to buy may seem like a pipe-dream. But surely the alternative of waiting for the decline and fall of industry through inaction is just not on? Business, labour and government can and must solve this equation in the national interest.