The incoming administration faces several challenges. Arguably, the biggest albatross that hangs around our neck as a country is our high unemployment rate, particularly the two-in-three youth unemployment rate.
The government must clearly articulate, commit to — and implement — the ongoing reforms that will contribute to boosting economic growth and reducing unemployment, recognising how critical it is for the country's future. Failing to do so would risk widespread social instability.
South Africa’s labour force (those aged 15 to 64) makes up roughly two-thirds of the population. In some countries, this demographic profile is associated with rising incomes, productivity growth, higher savings and improving living standards. In other countries, South Africa being a case in point, it can lead to a destabilising environment where young people cannot find work, which results in a cycle of crime, violence, substance abuse and other social problems. The only difference between these two scenarios is whether a country can sufficiently grow its economy to leverage the advantage of having a large youth cohort who are willing and able to work.
With developed countries facing ageing demographic profiles, South Africa’s youth bulge gives us a potential “demographic dividend” — if we can unlock it. To maximise its benefits, the country’s youth urgently need improved educational standards, improved access to further education and facilitated entry into the labour market.
There is no doubt that fundamental structural interventions in the economy remain critical for sustainable economic growth and job creation. In partnership with government, Business Unity South Africa (Busa) is dedicated to achieving medium- to long-term economic growth by addressing binding constraints — such as those in energy, logistics and crime.
South Africa must achieve an average GDP growth rate of more than 5% to sustainably create the number of jobs needed to meaningfully reduce unemployment.
South Africa must achieve an average GDP growth rate of more than 5% to sustainably create the number of jobs needed to meaningfully reduce unemployment
However, achieving quick wins on unemployment, especially youth unemployment, will contribute to social cohesion and support medium-term growth in the domestic economy. Government is not a net job creator. Only business is creating jobs and providing tax revenues. But business can only continue contributing to the economy in an environment of certainty and stability. If companies do not know what the government’s policies are going to be in the short to medium term, they cannot invest for the long term.
The concerted mobilisation initiative currently under way between business and government is exploring possible areas of employment creation among youth, particularly in sectors where there could be demand for employment in the short to medium term, and in SMMEs. This includes:
- Optimising youth job opportunities by facilitating hiring and work experience through existing initiatives, such as the Youth Employment Services and SA Youth, operated by Harambee and situated in the Presidency in response to the Presidential Youth Employment Intervention.
- Demand-led skilling initiatives that produce work-ready talent in areas of existing demand — such as in the priority growth areas that have employment potential for young people. These include the renewable energy, ICT/digital, global business services, tourism, mining and beneficiation, agriculture, agro-processing and automotive sectors
- Scaling self-employment opportunities in the informal economy by re-allocating existing spend to support SMMEs and the township economy programmes, and supporting informal enterprises and SMMEs in business value chains.
It is up to business and government to support these endeavours. Government cannot do it on its own because it lacks the financial resources. However, it can provide an enabling environment for business to put its resources to the best use. The quality and skills of the learners produced by South Africa’s educational system are misaligned to business needs. This puts business in a position where we cannot wait for the government alone to fix the problem. The work Busa is doing from a policy perspective is to identify and address misalignment and gaps.
In addition, the value of some work experience cannot be overstated. Statistics South Africa’s 2022 labour market dynamics report found that youth with some work experience far surpassed other youth and adult work seekers in transitioning from unemployment into employment. The report found that the “experience dividend” resulted in youth with experience outperforming youth without experience by a margin of four to one. It is clear that initiatives such as workplace exposure, on-the-job learning and apprenticeships have significant and positive outcomes for youth.
Scaling up and better co-ordinating the existing interventions can create numerous opportunities for youth by 2026 and result in more young people being productive and feeling hopeful and vested in the economy. The business mobilisation initiative on youth employment has the potential to achieve meaningful short-term gains. It could unlock at least 150,000 new jobs (above the organic pace of job growth in the economy), ensure that new labour market entrants each year are productively engaged in learning and earning opportunities, stimulate the growth of the informal sector and improve the success of SMMEs in South Africa, and channel existing skills funding to those programmes most likely to unlock job creation.
Ultimately, we need to grow the economy if we are to address the youth employment crisis. Structural reforms to support economic recovery must be accelerated and obstacles or delays to policy execution must be removed. The incoming administration must turbocharge its efforts to implement the structural reforms needed to improve South Africa’s economic growth rate by reducing input costs, lowering barriers to entry, increasing our country’s competitiveness and creating new opportunities for investment. South Africa urgently needs to change its trajectory to one of high and sustained growth.
To build a truly successful and socially cohesive society, South Africa needs to reduce poverty and inequality by broadening opportunity and employment through boosting economic growth and providing the education, skills and opportunities to support it. Business mobilisation is key to this imperative.
• Mavuso is CEO of Business Leadership South Africa (BLSA)
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