High youth unemployment is a burning issue this Youth Month. Creating jobs and economic opportunities for the youth has become a political, economic and social necessity. To develop appropriate policy responses, however, we need to understand the structural reasons behind the extraordinarily high level of youth unemployment.
The recent Stats SA Quarterly Labour Force Survey shows us that in the age category of youth (15-34) there are 20.4 million young people, and that 44% or approximately 8.9 million young South Africans are not in employment, education or training.
What is behind these numbers?
Part of the problem is that there is so little scope for self-employment in South Africa. In other developing countries, many more youth would be absorbed by smallholder agriculture and informal businesses, but these sectors have never recovered from the ravages of apartheid.
In any case, few urban youth want to become peasant farmers. Economic development the world over has seen a shift from rural to urban rather than the reverse. Further, the informal sector has not provided an outlet for these unemployed youth – poor incomes, limited growth prospects, and precarious employment in largely overtraded types of enterprises has not made the informal sector particularly attractive.
The formal labour market has, however, not been able to absorb the number of youth entering the job market each year. The labour market has been growing (outside of the period around the global financial crisis and COVID-19), but not sufficiently to absorb enough young people into the labour market. Until we address the factors slowing employment growth for all workers, we cannot hope to solve youth joblessness.
Still, formal small businesses provide some scope for the youth. The most successful enterprises are typically started by those who have some measure of work experience or technical skill, business knowledge and resources. Over a quarter of formal business owners have a degree and a similar share has some other form of post matric qualification.
But the persistent, profound inequalities of the education system deprive most of our young people of the skills they need to succeed in the modern economy. Many leave before matric, and most schools still do not focus on the competencies needed for today’s world of work – that is, excellent language and computer skills, basic maths, problem solving and design.
The higher education system, while not the only answer, most certainly has seen a large impact with a significantly greater proportion of graduates employed, and contributes significantly to the establishment and running of small businesses. In contrast, outside of some professional and artisan programmes, the TVET system does not provide the competencies that employers want.
The devastation on the economy caused by the COVID-19 pandemic has particularly hit labour absorbing sectors such as construction and services, further impacting on the job opportunities for young people.
What then is to be done? It is clear that the priority on gaining work experience and education are a core part of the solution. Further, strengthening the small business eco-system to support youth must be high on the agenda. This support must adapt to the specific needs of youth enterprises, and reach the scale required to make an impact.
The opportunities that democracy has presented us in opening up South Africa to the world should not be ignored as we consider that young people today have exposure to new technologies, new ideas, and are often digitally enabled. These opportunities, however, do not mean that young people are able to emerge out of poverty just because they live in a democracy.
There are no doubt individuals who have enormous self-drive and have been able to do so; but the deep inequalities and high poverty levels that still persist in South Africa highlight the key role that the state and institutions need to play in responding to the national crisis of youth unemployment.
Written by Saul Levin, the Executive Director of Trade and Industrial Policy Strategies (TIPS).
