EHANCING JOB CREATION ANDYOUTH EMPLOYABILITY IN GAUTENG
MEC M. XAYIYA
SMS CONFERENCE-BIRCHWOOD
14 NOVEMBER 2013
Problem statement
•South Africa and Gauteng has been experiencing high levels of unemployment,which has been on average 25% since the global recession in 2008.
•The figure reflects a narrow definition of unemployment, that is only those whohave been actively seeking employment.
•With the broader definition, which includes discourage work seekers,unemployment figure rises to 36%.
•The youth cohort (18-24 years) are worse affected, as close to 48% of youth areunemployed nationally.
•The youth unemployment rate rises to a staggering 54% when taking intoaccount those who have lost hope of finding employment.
•Of the nation’s 9 million young people aged between 15 and 34, about 3.2 millionare unemployed and looking for work.
•Gauteng’s situation is compounded by in-migration from other provinces and therest of the world.
•The problem of youth unemployment is a global norm, with the European Unionon average 24%, and its members such as Greece, Italy, Portugal and Spainhave above average of 45%
Trends in youth unemployment, 2002-2010 (extrapolated for 2012)
•The Unemployment; youth male (% of male labor force ages 15-24) in SouthAfrica was 44.60
•The Unemployment; youth female (% of female labor force ages 15-24) in SouthAfrica was 52.50 in 2009
Youth unemployment exhibit a trend (declining) over a period of 10 years (2002-2012). The decline over the years can be attributed to programmes introduced toreduce unemployment around 2005. According to the World Bank report(Corroborating Statistics SA), youth male unemployment in South Africa is 45% whilethat of female is 55%.
Causes of Youth unemployment
•Youth unemployment is part of overall unemployment in the economy, which ison average 25% for the last five years.
•Skills mismatch resulting from inadequate skills planning (no synergy betweenindustries, academia and government).
•Private sector not committing, forcing the government to redirect funding fromother priorities to youth subsidy and wage guarantee programmes.
•More young people outside learning institutions resulting in high unemploymentthose who just past matric
–In contrast to Europe, Japan and other advanced economies whereincentives keep youth longer in post-matric education.
Benchmarking solutions to youth unemployment
•Countries have embarked on the following programmes to reduce youthunemployment:
–Strong linkage between curriculums (from school levels and beyond) withindustry requirements (Germany)
–Incentivize youth to stay longer in learning institutions beyond matric-universal access to bursaries and scholarships (Organisation for EconomicCooperation and Development - OECD).
–Youth wage subsidy, which makes it cheaper to employ the youth cohort(Scandinavia)
–Employment guaranteed scheme, in which companies and the private sectoris forced to employ the youth cohort (EU)
–Support for R&D outputs to encourage commercialisation of idea (OECD)
–Ring-fencing enterprise funding for youth groups (OECD)
–Creation of two-tier labour market, in which the Labour Law regime is flexiblein the youth tier.
Increasing Youth employability in Gauteng and South Africa
•The following are the proposed solutions to increase youth employability:
–Reduce the number of matriculants looking for work-encouraging youth toembark on higher education and/ or post-matric technical vocation training.
–Incentivizing commercialisation of R&D - increase funding for venturecapitals – enterprise development
–Promulgation of the Employment Tax Amendment Bill - Youth Wage subsidy
–Enforcement of Joint skills planning between government, Academia,Training authorities in a consortia format as it increases absorption aftertraining
–Enforcement of employment guarantee scheme beyond the stateinstitutions-PRIVATE SECTOR MUST PLAY PART to ensure that youth inGauteng and RSA have experiential training/on-the-job-training.
–Strategic procurement by the state to support industries to procure locally –incentivise manufacturing
Overall Questions
•Youth employment is also intricately tied to the creating of jobs on massive scale
•Without this, we might be resolving one problem and creating a new one(substitution)
•This is one of the problems associated with the Youth Wage subsidy where itsbeen implemented in other parts of the world. It has no direct link with theexpansion of productive industries and creating new ones
•The nature of economic growth and investment is also important for job creation
•Labour intensive industries like manufacturing are very important. We have torestore the sector’s competitiveness in Gauteng and SA generally
•The tertiary sector (finance and services), which is increasingly becoming adominant sector of the GP economy, is not particularly renowned for creatingjobs on a massive scale, especially in developing countries with low skills base.
•Enterprise Development is also linked to the existence of a domestic market –which means we must think more carefully about the relationship between growthand wages or consumer buying power and aggregate demand
Examples of Practical Steps pursued by GPG
•Research & Development – The Innovation Hub has a range of programmessupporting young people to enter the science and technology space
•The Coachlab programme prepared ICT post graduate students to enter the jobmarket as industry ready workers
•TIH has sourced funding from the Jobs Fund to absorb 100 unemployedgraduates and 50 matriculants, who will receive on the job training
•Enterprise Development and Support – a range of programmes are targeted atsmall businesses, especially those targeting young people
•These include :
-The GEP Start-Up Fund for new businesses
-Township Business Renewal Programme
-Captive and Micro-Finance Funds – business loans for small businesses
•Improving the competitiveness of local industries through among others usingpublic procurement as a pillar of support for local industries
•The Private Sector has an important role – Youth Placements in the privatesector, training for apprenticeship.
•Incubating small businesses by established corporates to train them to meetindustry standards while giving them access to reliable markets. The automotivesector is a good case in point.
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Thank you
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