The Impact of High Youth Unemployment Rates in South Africa

South Africa’s youth unemployment remains very high by any standard. According to the latest WOW report on youth employment trends in South Africa, South African youth (aged 15 to 34) accounted for 34.8% of the population or over 21.6 million of the 62 million South Africans, with the median age of the entire population being 28 years, according to Stats SA’s Census 2022. Of the 21.6 million youth, 51.52% are unemployed. These are disturbing statistics.

What is the cause of continued unemployment?

The accompanying table, which compares South Africa to its neighbours, illustrates what normal unemployment figures look like. The youth are the largest contributors to the labour force every year, and will obviously account for the highest unemployment rate. BRICS countries show relatively high rates in a wide range between 12% and 28.5%, while unemployment levels in low-income countries neighbouring South Africa are mixed, with low rates being of 10% to 12% and high rates of 37% to 40%. Zimbabwe and Mozambique statistics may look different if the definitions and measurements were standardised.

While there are several causes of unemployment in South Africa, the most glaring are:

• Disparities in the education system contributing to a mismatch between the skills young people possess and those demanded by employers;
• Delays in the implementation of policies aimed at addressing the scourge due to bureaucratic processes; and
• Neglect of infrastructure development and maintenance.

The ongoing question is why it takes so long for government to review progress and adjust initiatives to address this economic issue that leads to social apathy and possible unrest.

Unemployment initiatives implemented in South Africa

The WOW report describes various initiatives and proposals, some of which have been implemented with some success such as the Youth Employment Service (YES) and the Presidential Youth Employment Intervention (PYEI).

For the initiatives to be effective, the economy must function competitively and allow for value-added job creation. Well-meaning initiatives based on a sense of social responsibility and providing temporary jobs, do not, by themselves, grow the economy. Creating jobs like adding non-essential assistants to teachers for the sake of creating employment, does not positively contribute to the growth of an economy. The contribution to the growth per capita as representing economic value add needs positive and sustained growth. For instance, car idling in traffic congestion consumes petrol and adds to GDP, but not in a positive way.

A longer-term approach to youth unemployment

A comprehensive approach is required involving education reform, targeted skills development programmes, support for entrepreneurship and small business creation that will in themselves generate value and create jobs in an enabling environment for economic growth.

The single biggest driver would be growth, and any policy that contributes to sustained economic growth.

If South Africa could grow at 4% (about the average of emerging markets), it would produce additional value add of R227bn. The realisation of this amount of value add would require a corresponding input of human resources.

This graph shows South Africa’s extremely poor performance and the forever optimistic prognosis. As in the past, execution will be lacking, and recent economic news is all doom and gloom including low economic growth, continued loadshedding for the next five years, a bloated overpaid and inefficient public service, the dismal performance of all important SOEs, and public debt running away.

The WOW report does mention some measures that might set the employment train in motion. We all want minimal suffering, but we should not resist short term pain for long term gain. A dramatic situation as we have in South Africa needs drastic measures that cut across bureaucracy, slow and/or non-effective implementation.

There are no miracle cures to eliminate the high youth unemployment rate in the short term. Unpopular measures that will pay off in the long run need to be implemented pronto, before things get worse. Relaxing regulation and making it easy and efficient for entrepreneurs and the private sector to access initiatives will go a long way to create sustainable jobs. The education sector and companies need to collaborate to ensure that appropriate skills are developed to drive industries.

Suggestions are proffered regularly. Former Goldman-Sachs sub-Saharan Africa CEO Colin Coleman, proposes tax incentivised internships with a minimum single placement in the 2.5 million small and medium enterprises, solving half the problem of creating 5 million jobs. Thinking out of the box may help the country make headway to help solve this almost intractable problem.