Opinion: Interlocking strategies needed to cut youth unemployment

Opinion: Interlocking strategies needed to cut youth unemployment

Publishing Date: 3/9/2018 12:00 AM

This article first appeared in Business Day on 09 March.

When President Cyril Ramaphosa announced in his state of the nation address that youth unemployment was "our most grave and most pressing challenge" and that it was for the government "a matter of great urgency that we draw young people in far greater numbers into productive economic activity", he placed a simmering crisis at the centre of the national agenda.

This is good news for the millions of young people who face unemployment and underemployment, and for researchers, policy makers and nongovernment organisations who have long grappled with the issue.

Over the past two years, researchers at the University of Johannesburg’s Centre for Social Development in Africa and the University of Cape Town’s Southern African Labour and Development Research Unit have been collaborating on a research project that asks this exact question.

The team has reviewed thousands of articles, policies and evaluation reports to systematically assess what drives youth unemployment, how the policy environment has responded to it in 24 years, and whether the interventions implemented so far have worked.

They identified several priorities that the government, business and civil society partners need to consider if SA is to move beyond rhetoric on this issue.

First, there are macroeconomic factors such as sluggish economic growth. Although there is debate about the extent to which economic growth creates jobs in SA, it is noteworthy that the only time since 2001 that SA was able to reduce youth unemployment was in the sustained period of economic growth between 2005 and 2008. So economic growth is necessary, but can only make a real difference if it is inclusive.

One way in which the state sought to encourage the inclusion of youth in the labour market was through the employment tax incentive. While there is mixed evidence about its success, the incentive seems to have had a positive effect in smaller companies where most young work-seekers have found jobs. Policies that help small businesses grow and employ youth are important.

Still at the macroeconomic level, SA’s economy has shifted over the past two decades from one that was mainly driven by primary (agriculture) and secondary (manufacturing and industry) sectors to one with a stronger tertiary sector (financial and other services).

Jobs in the tertiary sector require different, higher levels of skill. However, the failures of the basic education system and the difficulties young people face in accessing further education and training mean that most of them enter the labour market with limited skills.

This mismatch between the skills required for jobs and the levels of skills with which young people leave school is one of the main reasons for the high youth unemployment rates: in the last quarter of 2017, 49% of young people were without a job (using the broad definition of unemployment).

The move to progressively fund further and higher education for poor youth is to be commended but, without significantly improving the quality of basic education, will remain insufficient to provide long-term job prospects for the majority.

Inclusive economic growth and the promotion of quality basic education for all require urgent policy attention today; in the long term, SA will reap the benefits. But even if these key challenges are tackled, evidence indicates many young people will still be locked out of the labour market because of inefficiencies in how employers and employees connect.

Some of these may be easier to tackle in the short term but are often overlooked. For example, because employers distrust the quality of the matriculation certificate, they rely on other "flags" regarding a young person’s competencies. This might mean that they increase entry-level requirements and demand higher certifications, even for entry-level jobs.

Employers may also resort to referrals, which means that young people need to have access to social networks that can connect them to the labour market. One of the main entry points into the labour market is through social networks.

Yet national census data show that more than 42% of young people aged 15 to 24 live in households where nobody is employed. Youth Explorer data show that this proportion increases to well over 70% in some areas. Many young people therefore have limited access to these "productive networks". Relying on referrals is not the most efficient way of making a good match for employers, since they have little to do with a young person’s competencies.

A further inefficiency is the high costs of work-seeking. One study in the review shows that young people spend as much, if not more, than their monthly per-capita household income on looking for work. Distance to major metros and associated transport costs as well as high prices of mobile data contribute to these costs.

Young people struggle with a lack of information. Career guidance at school is limited and often ill-informed, leaving pupils with scant information about what they can expect in the labour market and what skills it demands. These challenges are the "low-hanging policy and programmatic fruit" that can and should be tackled in the shorter term.

More integrated systems should be developed that can provide up-to-date information about economic growth areas and associated skills, as well as details on training options and pathways available to young people who wish to pursue particular career options.

Making such information accessible through mobile platforms (which requires access to free Wi-Fi or low-cost data and increased IT literacy among youth), and community-based "touchpoints" such as youth organisations, labour centres, schools or libraries, may begin to mitigate the information paucity and high costs of work-seeking that so many young people face. There is also a need for better bridging options between young work-seekers and employers. Novel ways of demonstrating competencies and making connections with employers are needed.

While the Youth Employment Service initiative, which aims to place 1-million young people in internships in businesses over three years, is commendable, innovative thinking is needed to tackle the multiple drivers, at the macro and micro levels, that fuel unemployment.

Ramaphosa’s commitment to move young people "to the centre of our economic agenda" is a message of hope to young people. Its success will be tested by the government’s ability to harness the same commitment from a range of social partners, including those in labour and in the private sector.

Without that, many young people will continue to face a grim future in the country of their birth.

Graham is associate professor and deputy director at the Centre for Social Development in Africa at UJ and De Lannoy is a chief researcher at UCT’s Poverty and Inequality Initiative, based at the Southern Africa Labour and Development Research Unit.