Pretoria - Millions of young South Africans were jobless and searching for work but they could not be employed because they lacked the requisite skills for the modern day work environment, the World Bank said on Monday.
“Without enough jobs being created, South Africa is left with many of its unskilled and young facing the prospect of unemployment. The unemployment rate is the highest in all the middle income countries at 25.4 percent, or a third if you include discouraged workers,” World Bank Lead Economist for South Africa Catriona Purfield told reporters in Pretoria.
She said, with the 25 percent unemployment rate, school leavers were the hardest hit.
“They are young people and 40 percent of them are new entrants who have never worked before. Basically, they are school leavers who leave the school system and can’t find jobs. More interestingly, 60 percent of them do not have a matric qualification even,” said Purfield.
“In other words, the school system is putting out school leavers who do not have the necessary education attainment levels at a time when the workforce and employers are demanding more skilled and higher educational attainment of new employees. There is clearly a mismatch,” she said.
Purfield said, if the youth could find jobs, the South African economy could win big.
She said: “If these people can find jobs, the second step in this will accelerate economic growth and yield what we call a first demographic dividend. It doesn’t stop there, when there are more people working in the age bracket 15 to 64, there are less children, less old age people to support, people are working and there is more space for savings.”
Purfield noted the youth unemployment rate in South Africa was at 50 percent – double the national average rate of unemployment.
“If you actually look at the number of young people in this country, 10.2 million are under the age of 24 and a third of them are not looking for jobs and are not in school. More than three million people in that age bracket are not doing anything,” she said.
The World Bank released its seventh edition of the South Africa Economic Update, which focused on the implications of South Africa’s changing demographic profile on growth and employment needs in the country. The report also examined “simulated scenarios” on what would happen if South Africa could not create the required jobs over the next 15 years.
“We focus on the next 15 years because that is the period of the National Development Plan. In that period alone, each year the working age population will expand by 280 000 new entries [and] that’s huge. If South Africa cannot generate jobs and the unemployment rate remains high, there isn’t much of a dividend. Growth does improve but it’s still relatively low at 3.7 percent a year. Poverty and inequality will remain a problem,” said Purfield.
She went on to state that, in such a scenario, South Africa “would lose another generation of young workers”.
“Imagine if South Africa could generate jobs. We looked at a scenario where the unemployment rate fell to 5.8 percent. That would mean generating 5.8 million jobs by 2030. Just by generating jobs, by how much could growth improve by? It would average 4.6 per year and incomes would rise over 11 percent. That could allow improvements in savings as well,” she said.
Among other policy recommendations, the Bretton Woods Institute recommended that South Africa pulled its socks on when it came to education and that the country needed to stimulate the private sector to create jobs.
“To me, I think the greatest priority is getting basic education right. It will ensure that school leavers at least have the foundational skills necessary to work and function in the modern workplace. That is not enough. One needs to complement better education with policies that look after the existing skilled [workforce]. They need expanded access to better vocational education and training,” Purfield said.
She said the private sector could also join the party by providing internships to the school leavers.
Purfield was accompanied by the World Bank’s new Country Director for South Africa, Guang Zhe Chen.
The report indicated that, since 1994, the working age population expanded by 11 million and comprised 65 percent of South Africa’s population of 54.9 million in 2015. Since 2000, the number of jobs in South Africa grew only by 2.8 million, mainly in services sectors. Agriculture, manufacturing and mining sectors shed jobs in the same period with the result that total jobs created fell short of the booming labour supply.
The report’s forecast for real gross domestic product was at 2 percent in 2015, and envisaged a slow strengthening to 2.4 percent in 2017. Largely, the Bretton Woods Institute predicted that growth in South Africa would remain largely below the average growth rate of 4.2 percent and 4 percent for Sub-Saharan Africa in 2015 and in 2016 to 2017 respectively.