South Africa has a unique opportunity to spearhead growth, create jobs and improve social stability in the decades to come. Like other countries in sub-Saharan Africa, South Africa is experiencing rapid population growth. The region already has the world’s highest proportion of people under 25. By 2025 it will be home to around a quarter of the global population aged 24 and younger.
This growing and increasingly youthful population is a great asset, presenting South Africa with the opportunity to gain the “demographic dividend” that other parts of the developing world have experienced.
The dividend comes when the growing workforce is successfully employed, directly raising per-capita income and, since working-age people typically save more, greater domestic savings become available to fund investment, boosting current and future growth.
Significant opportunity
The UN estimates that South Africa’s population will increase to 66 million by 2050, presenting significant opportunity. An important complement to this demographic opportunity is South Africa’s robust country development plan, the National Development Plan (NDP) or Vision 2030.
The NDP seeks to unlock country-specific and Africa-wide socio-economic drivers such as regional integration, intra-trade among African countries, skills development, SME development and increase export earnings. All of these will be needed if South Africa is to overcome its current unemployment rate and shift the tide towards growth.
Unlocking the potential of the demographic dividend requires investment in skills to develop infrastructure and bolster the manufacturing and services sectors. In order to build faster, more sustainable job creation, we need to consider a three-pronged strategy based on:
- A stronger education system with closer links to industry.
- More open and flexible labour markets and a broader talent localisation strategy pursued in partnership with global companies.
- The pipeline of skills needed to leverage the technological advances of tomorrow.
A stronger education system
Education systems need strengthening through greater investment and closer links to industry to better align the demand and supply of skills.
Specifically, more students should be steered towards STEM subjects – science, technology, engineering and mathematics – which are necessary to speed up the development of infrastructure.
Equipping students and workers with the right skills is the first step towards creating more sustainable jobs with higher remuneration and better career prospects.
Labour market flexibility and talent localisation
While meaningful progress has been made in improving the business environment, more is needed. Policymakers should focus on creating a level playing field, removing regulatory burdens and red tape, simplifying and streamlining administrative procedures and further improving transparency. These advances would allow global companies to scale up their operations more rapidly and to localise production, accelerating the transfer of technology and skills.
Multinational companies must act as a strategic and value-adding partner in pursuing this strategy. Importantly, the joint efforts of government and private companies are beginning to bear fruit.
Training and technological transfers in areas such as transportation and health care have begun to accelerate the creation of necessary skills. Through our partnership with Transnet, General Electric South Africa Technologies, a joint venture with the Mineworkers Investment Company, has provided training in both technical and non-technical skills, which has created thousands of new employment opportunities and sustained existing jobs in the locomotive industry and beyond.
We’re also developing our local supply chain through supplier development programmes, which include skills training, financial assistance and incubation of black-owned small- and medium-sized businesses. The business development services focus on strengthening business acumen, as well as operational and financial management skills, while the technical development services include engineering support and technology transfer.
This support is aimed at helping emerging young SMEs from their early development stage, the time at which they are most vulnerable, right through to ensuring a sustainable and growing business.
We believe that skills training and development must happen at all levels of the economy – from our existing employees, to our suppliers and our customers. We also invest heavily in early-career development to ensure that young people are prepared to lead our economy into the future.
A pipeline of skills for tomorrow
It’s critical that skills development focus not only on the jobs of today, but also tomorrow. Digital technologies are beginning to permeate the industrial world, triggering a new industrial revolution that will transform the way we work and redefine the competitive environment for companies and countries. At General Electric (GE), we call this the Future of Work.
Changes to our education and training systems should be geared to shaping the workforce of tomorrow. This would enable local skills to quickly adapt to the changing demands of industry. Government should also encourage and leverage entrepreneurial and innovative spirit. In Kenya, for example, the mobile payments system M-Pesa has bypassed the traditional banking system, transforming financial transactions and boosting economic activity.
Similar thinking could be applied in other areas where lack of infrastructure is an especially acute problem, such as power generation and distribution, and health care. GE has invested R500m in a customer innovation centre in South Africa that will be a centre of excellence for innovation and technology transfer.
New innovations provide a huge opportunity for South Africa, and indeed the continent, because they can allow the region to leap-frog existing industrialisation models. For companies and individuals alike, the Future of Work brings tremendous opportunity for South Africa. Through the power of both minds and machines, it can allow the country to build a range of manufacturing and services activities that will remain competitive for decades to come.
The key to realising this is investing in people.
* Jay Ireland is the chief executive of GE Africa. Parts of this article are adapted from a new GE white paper titled Building strong workforces to power Africa’s growth.
BUSINESS REPORT