The manufacturing economy – an unrealised opportunity for SA’s youth?

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Published Jul 7, 2023


By Tasnim Alli and Berniece Hieckmann

As the world’s population sees a demographical shift, the growth of South Africa’s manufacturing sector could present an exciting opportunity to address youth unemployment.

The global stage Is shifting in terms of regional demographics. In China, we see a population that is ageing – a result of the country’s low birth rate coupled with an extended lifespan – which will see almost 40% of Chinese over the age of retirement by 2050, according to projections.

Conversely, emerging economies such as India and Africa will soon hold the youngest populations in the world. South Africa, for example, sees a median age of around 27 years old, making us a babe-in-arms when compared to certain European countries such as Monaco (55 years), Germany (47 years) and Greece (45 years).

A young population sounds like a good thing but could prove to be a double-edged sword. On the one hand, a young population can offer what is known as a ‘demographic dividend’; a potential boost to the economy resulting from a reduction in youth dependency ratios and there being a good proportion of working-age people.

A young population could point to the kind of productivity that leads to economic growth – but here’s the kicker – if the landscape is conducive to human capital development.

On the other hand, a sizeable youth population – if largely unemployed – can contribute to social unrest, crime, violence and instability, which can negatively impact economic growth. In a country such as ours, with the second highest rate of youth unemployment in the world, a young population has the potential to be a ticking timebomb.

What’s to be done? According to a study by Wolfgang Lutz et al. (2019), to maximise the benefits of South Africa's demographic transition, improving education is far more important than changing the age structure.

Today, 81% of Grade 4 pupils in South Africa still can't read for meaning, according to the recent International Reading Literacy Study (PIRLS). Thus, the demographic dividend can only “payout” if associated with an investment in human capital.

In short, we need to educate and upskill our young people and get them into employment. And fast.

Hold that thought for a second, and let’s look at the manufacturing sector

According to a South African Reserve Bank (SARB) 2020 economic note, manufacturing comprised 42% of exports in 2019. The question is, how do we encourage the growth of our manufacturing economy so that we don’t export all our natural resources to other countries for processing?

The ‘Revitalizing SA Manufacturing Sector Report’ (2022) suggests that to re-industrialise, there needs to be an effective partnership between public and private sectors.

Much of our raw materials are exported due to a lack of knowledge and technological infrastructure. The emphasis should be on technological innovation and education so that we have the skills and technological know-how for the kind of manufacturing that takes issues such as climate change into account.

A thriving manufacturing sector will play a massive role in the growth of the South African economy. According to the same Revitalizing SA report, a 10% increase in manufacturing investment is projected to produce a medium-term GDP contribution of 13%.

And it is not only manufacturing that will reap the benefits but the entire ecosystem, positively impacting unskilled jobs while creating new jobs across different skill levels.

Let’s connect the dots

Manufacturing jobs require specific technical skills and training, and a gap very clearly exists between the skills we have and the skills we need. So, what is currently stopping us from upskilling our youth – a large portion of which are unemployed – to bridge this gap?

In South Africa, there are only 50 public training colleges (with 200 campuses across the country) and 350 private colleges. We need to increase their capacity so that these institutions are equipped to take on more students across more regions.

We also need to address the matter of access. As an example, three years of training to be a welder can cost up to R95 000, excluding the exams. While there are grants available, not everyone will make the cut. If youth cannot access quality, affordable vocational training, it will make it harder for them to pursue a career in this sector.

While manufacturing is one of several areas that government has committed to focusing on through its Nationals Skills Fund (NSF), more attention is needed. Collaboration between government, corporates and colleges must happen for South Africa to keep abreast of the technological innovation that is happening on the global stage. Young people will be more incentivised to pursue a career in manufacturing if they know they are “future-proofed” against ageing technology and automation. This collaboration also needs to incorporate a mentorship programme, which prepares graduates to enter the working world.

At the end of the day, the South African government wants to eradicate poverty and grow the economy while the private sector needs these technical skills. Partnering with this goal in mind will help drive momentum and get more youth into manufacturing jobs.

Finally, there needs to be more social awareness and a strong education drive about the opportunities that exist. This year saw a significant drop in registrations at technical and vocational education and training (TVET) colleges, with around 10 000 fewer students registering than in 2022.

Part of the reason could be that there is still a high societal value placed on careers within science, technology, engineering and mathematics (STEM) fields, even though in many cases, artisanship might be a better fit for certain individuals or offer more income-generating opportunities. Many young people are encouraged by their parents or family members to pursue a career in mathematics or science – especially if these family members didn’t have similar access to these opportunities.

Artisanship skills also create more opportunity for young people to learn as an apprentice or even venture out on their own as a small business entrepreneur – whereas STEM qualifications are more contingent on conventional employment opportunities, which we know are constricted at present.

Ultimately, more needs to be done to promote the exciting career paths that young people can pursue in this space. The manufacturing sector offers the opportunity to boost South Africa’s flailing economy, offering exciting, opportunities for young people while redressing the unemployment issue. Now, it’s up to us to realise this potential.

Tasnim Alli is the Insights & Innovation Lead and Berniece Hieckmann is the head of Metropolitan GetUp

** The views expressed do not necessarily reflect the views of Independent Media or IOL.