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Youth unemployment is 'SA's winter of discontent'

South Africa’s 21 million or so youth (aged 15-34) have never had it so bad, says the writer.

South Africa’s 21 million or so youth (aged 15-34) have never had it so bad, says the writer.

Published May 31, 2022

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Cape Town - South Africa’s 21 million or so youth (aged 15-34) have never had it so bad!

They constitute a third of the national population of 59.3 million, projected to rise to 61.9 million in 2022, with the gender balance slightly in favour of males.

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Through no fault of their own, they have been persistently living with the blight of joblessness with its despair, sense of hopelessness and trapped in their very own “lost decade”, only to be clobbered, yet again, in the last two years by the impacts of the Covid-19 pandemic, and since February, by the supply chain disruptions caused by the Ukraine conflict and its resultant inflationary pressures on energy and food prices, which have shocked the global economy.

With a youth unemployment rate at 66.5%, according to Stats SA - a world record - welcome to South Africa’s “Covid-19 or lockdown generation.”

As if this metric of national shame is not enough, It has attracted the attention of global media giants – BBC, CNBC, CNN, Al Jazeera – which in recent weeks have all devoted airtime to berate successive ANC governments’ failure in dealing with yet another entrenched national crisis.

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Compared to the UK, the youth unemployment rate there was 10.6% in January-March 2022.

Youth unemployment has the potential of being the trigger of South Africa’s own ‘winter of discontent’ if that despair transforms into frustration, desperation, and unrest, especially if what the IMF calls “youth-specific unemployment policy inertia” persists.

Whether it is a mere coincidence or a sop, President Ramaphosa will roll out his “Youth Month 2022” on 1 June - a month-long celebration of South African youth, highlighting the Presidential Youth Employment Intervention initiative and other measures aimed at supporting young people.

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Not that the 9 to 10 million unemployed youth have much to celebrate!

Pretoria, no doubt, points to the flagship Presidential Employment Stimulus (PES) programme, launched in October 2020. Its first two phases, Ramaphosa revealed in his February Sona speech, “supported over 850,000 opportunities.

More than 80% of participants were young people, and over 60% were women.” The last published data for PES is March 2021, when 700,000 job opportunities were “supported”, but 422,786 actual jobs were created.

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While any initiative in support of youth job creation is commendable, policy impact, however, is complex and difficult to achieve, especially in the context of South African socio-economic and political dynamics.

There is a consensus among international agencies that the ANC government’s jobs policy, in general, is fragmented, ill-thought out, badly executed, under-resourced and inextricably intertwined with the vagaries of policy deficits in other key sectors – very low GDP growth, high public debt and debt servicing burdens, low inward FDI, a serious deterioration of basic education standards which means job seekers are at an instant disadvantage in terms of employability, and a low capacity to absorb these youth in a deflated private sector job market already hit by the pandemic and global shocks.

South African socio-economic dynamics are caught in a Catch 22 situation because solving the various challenges is interdependent.

Any ideological posturing or attempt to resolve them through policy compartmentalisation is an exercise in futility and a waste of resources. There is also the misnomer of the public sector being the ‘employer of last resort’.

Absorbing some of these youths into government and public sector employment initiatives in an already bloated bureaucracy, may bring short-term relief.

What most young people aspire everywhere is a decent education (university, vocational or apprenticeships), with reasonable job prospects at living wages, with elements of continuous education, training and upward mobility, and chances at entrepreneurship and start-ups especially in a future jobs market defined by digitalisation and Fintech. They want job security.

During his Sona, Ramaphosa called for a new consensus “which recognises that the state must create an environment in which the private sector can invest and unleash the dynamism of the economy.”

After all, he confirmed that “around 80% of all the people employed in South Africa are employed in the private sector.”

He is even toying with adopting “the German model of dual education and how German firms integrate the training of young people in the working environment” as he mentioned during the visit of German Chancellor Olaf Scholz last week.

The cause of youth unemployment in South Africa is structural, reflecting a mismatch between existing labour supply and demand at prevailing market wages,’ and not cyclical, dependent on the fluctuations of economic cycles and market conditions.

As the IMF maintains, “repackaging” of policies that existed pre-pandemic would not work in the post-pandemic era.

South Africa’s jobless rate has never fallen below 20% during the last two decades and has steadily increased to over 35.3% at the end of 2021 - one of the highest levels globally.

Since the twilight years of the Mbeki administration, youth jobless has been on an upward trajectory due to structural deficiencies in government policies; institutional corruption and state capture that reversed the earlier gains in employment during the term of President Mandela; the shocking decline in the quality of education, and what the IMF calls the onerous collective bargaining system and burdensome employment protection legislation.

“The poor quality of basic education limits the youth's capacity to exploit further opportunities at post-secondary levels. As a result, existing skill deficiencies and mismatches are likely to persist in the form of high unemployment, particularly in poor black communities, and a scarcity of skilled workers,” observed the World Economic Forum Global Competitiveness Index report.

If Ramaphosa is serious about his new consensus, then it needs to go much further than the private sector. Bold reforms of labour market institutions in collective bargaining, labour protection legislation, minimum wage-setting and adoption of gender-sensitive policies would give firms greater workforce management ability and boost employment opportunities for the inexperienced and the young.

Measures to improve the quality of education, apprenticeships, and vocational training schemes would not only help tackle high structural unemployment but also support displaced workers via re-skilling and upskilling.

Parker is an economist and writer based in London

Cape Times

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