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Youth unemployment needs jump-start

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File photo: Simphiwe Mbokazi.

Youth unemployment is one of the global issues that needs resolution sooner than later. The government debt crisis in Europe has escalated the youth unemployment problem within Europe and has impacted other countries that trade with Europe. The statistics cited at the recent World Economic Forum annual meeting show that 50 percent of the world’s people are under the age of 27. Furthermore, there are 1.5 billion people between the ages of 15 and 29 vying for only 300 million jobs.

An International Labour Organisation report released last month shows about 35 percent of unemployed young people in advanced economies have been out of a job for six months or longer. This absence directly affects their long-term career prospects as their skills deteriorate. Others get discouraged and leave the labour market altogether. With 74 million people in the 15 to 24 age group unemployed around the world, translating into a 12.4 percent unemployment rate for this subset. Job prospects for the world’s younger workers are looking increasingly bleak, says the report.

In Europe 14 million young people, more than 15 percent of European youth aged between 15 and 29, are estimated to be in this infamous new category called “NEET”, those neither in employment nor in education or training, those who have not found a job or have even given up looking for a job and lost interest in improving their skills. NEETs have doubled since 2010.

In South Africa we have a youth unemployment rate of 48.2 percent, according to rankings by Indexmundi website, which gives us a third place in rankings of country comparisons. Armenia and Macedonia have the first two places. When you delve deeper into the unemployment statistics you find that the African and Coloured population groups feel the brunt of unemployment – the especially women. This is a ticking time bomb for the stability of the economy.

The action that the government has proposed is the youth wage subsidy to incentivise the private sector to employ more young people. This has been opposed by Cosatu, who worries about the companies firing the older, more experienced workers. Indeed the trickle-down effect of firing older workers will be felt by many people who rely on them. And these concerns cannot be ignored. So the counter-proposal to the wage subsidy is to give an incentive in the form of a job-seekers allowance to young people. This is equally problematic as it is not financially sustainable and does not guarantee jobs. Young people also abuse the grant, wanting to continue receiving the allowance if it is higher than the net wages of a normal job with transport costs factored in.

So an alternative is to look at new productive areas that create jobs at a rapid rate. The Jobs Fund is meant to address this, but funds must already be committed to projects before benefits can be reaped. The matching of funds approach presupposes that the level of development is high but the reality is that the people that run projects and firms that could potentially benefit from the fund are still starting up and struggling to get that initial funding. The reality of the different interventions from the government cannot work in the absence of private sector involvement and a change of mindset from all involved.

The private sector is driven by self-interest and profit motive, so any solution should be tailored to address this. But the private sector needs to realise that profits are not created in a vacuum and if the whole country crumbles due to social unrest, no profits can ever accrue. Similarly, individuals can act by adopting a young unemployed person. We can copy the Adopt-A-School Foundation concept and expand it into a national campaign of Adopt-A-Youth where we can see what support can be given to avoid an impending revolution.

But unemployed young people must think to add value for the assistance they get. There is no such thing as a sustainable free lunch in life. Our crisis is serious. If we don’t act now it might be too late for all of us.


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