South Africa

Details

  • Industry: Public Sector
  • Type: Business and industry issue
  • Date: 2014/06/09

Human & Social Services

KPMG’s Human and Social Services (HSS) practice works with governments and public sector organisations to help develop programmes and strategies, facilitate and improve service delivery, and evaluate results and outcomes achieved.

You can’t do it alone: Partnerships are the only way to solve youth unemployment 

As leaders and young people around the world are acutely aware, youth unemployment levels are already disturbingly high and the problem is getting worse. In South Africa, the unemployment rate among youth increased from 32.7% to 36.1% between 2008 and 2014; in the post recessionary period, the unemployment rate has been consistently higher among youth than among adults by more than 20 percentage points. This is according to a report released by Statistics South Africa which examined in detail various aspects of the situation faced by youth aged 15–34 years in the South African labour market.

An exploding youth population [1] and lag in job growth (demand) are key causes. Population pressures from increasing numbers entering the labour market every year, particularly in Africa and Asia, create opportunities for ‘demographic dividends’ but in turn, will only continue to drive the need for higher levels of job creation. Other factors such as the global financial crisis, the 2009 Eurozone crisis, and longer term trends in global trade, technology, and competition, have also played a key role in this critical issue.

 

A complex issue of epic proportions

 

  • Out of 1.2 billion youth aged 15 to 24, 30% are not in employment, education, or training (NEETs)[2] . This translates to 357.7 million young people. Of these:
    - 341 million are in developing countries, and 220 million are in Asia[3].  
    - 12.5% or 75 million are unemployed (looking for work)[4] .
  • Every year, it is estimated that over 120 million adolescents reach 16 years of age and are looking to enter the labor market[5] .
  • This is a global concern:
    - In Namibia, Saudi Arabia and South Africa, nearly nine out of every ten youth is outside of the labour force [6].   
    - But this is not an issue just for developing countries. Greece and Spain had youth unemployment rates of over 50% in 2012 [7].
  • 200 million young people in employment earn less than US$2 per day [8]
  • In 25 of 27 developed countries, the highest unemployment rates are for people with primary education or less [9].

 

Seeking solutions at the nexus of government, the private sector and civil society

 

”At some point we've got to modulate our approach to ensure that we don't just lose a generation who may never recover.”  Barack Obama

 

In the developing countries,  where the vast majority of youth live, economic growth, stability, and social progress all depend on young people having the opportunity to play their part in society. The United Nations is currently leading the effort to articulate sustainable development goals that “will leave no one behind”. However, this is not just an issue for developing countries. Across the world, governments, employers, and civil society organisations have recognised the need to take action on this problem and are currently pursuing a wide menu of ‘supply’ and ‘demand’ policy and programme options.

 

The supply interventions include improving the quality of skills and attributes of those seeking work and the demand includes increasing the provision of quality jobs for young people. Action can be taken simultaneously on both as Figure 1 illustrates.

 

Measures such as improving general skills within the education system, providing apprenticeships, creating employer incentives and encouraging entrepreneurship can play a part. Regardless of the direction, one thing is clear: these parties must work together to create meaningful change.

 

Figure 1: Measures to address youth unemployment

 

 

Supply measures

Demand measures

Evidence of success

Government

·          Job search

·          Conditionality on unemployment benefits

·          Measures to improve job and life skills of young people

·         Tailor training more closely to the labor market

·          Employment guarantee programmes

·          Exemptions from labor regulations and taxes for hired youth workers (e.g minimum wages, labor taxes, job security)

·          Financial incentives for job creation for youth

·          Expand public sector recruitment of young workers

·          The Government of Canada’s Economic Action Plan includes a range of strategies such as skills training and apprenticeship grants to equip Canadians, including youth, with the skills they need to get high-quality, well-paying jobs.

Private sector

·          Provide financial and business development services to young entrepreneurs

·          Invest in upgrading skills of young employees

·         Expand opportunities for work experience placement and traineeships

·          Develop innovative training and apprenticeship schemes to bridge the move into work

·          Create more opportunities for flexible piece and part term work for young people

·          Redesign work practices so that older workers are mentoring new recruits

·          Historically, apprenticeships have helped avoid the youth unemployment gap. Germany, for examples, operates a highly developed apprenticeships system and boasts the lowest youth unemployment rate in Europe in 2011 at 7.7%.[12] More recently, the UK government’s focus on apprenticeships saw them reach almost 1 million apprentices in 2013.[13]

·          Many corporations are opening up their own training schemes for employees including Reliance Industries Limited in India and Tata Steel. The Tata-Dhan Academy targets young graduates specifically.

Civil society and NGOs

·          Provide job search advice  and counseling of youth

·          Support to youth in self employment and business start-ups

·          Work with schools and universities to strengthen education to work transition and better skills

·          Offer more volunteer roles with skill development for young workers

·          Create more jobs in the 3rd sector which are suitable for young workers and young professionals

·          Work with business to help private sector overcome real and perceived barriers to employing young workers

·          Facilitate and offer more secondments roles for young workers

 

·         Civil society has undertaken many initiatives to encourage skills transfer. The Network for Teaching Entrepreneurship, for example, teaches young people, particularly those in underprivileged areas, to create their own job openings.

 

Source: KPMG International
 

Similarly, governments can take action to encourage increased hiring of youth by offering employment guarantees or reducing the costs and risks to employers of hiring young workers.

 

The South African government is implementing a number of initiatives across policy domains and sectors to counter this trend.  For example, government-funded public works initiatives have targeted youth participation by setting quotas (e.g. 40 percent for the Expanded Public Works Programme, a funding initiative to increase the amount of service jobs across all sectors of government. Introduction of the youth employment tax incentive which in its first month recorded 56 000 beneficiaries.

 

While these tactics are effective means, they must be considered in light of available public funding, which continues to constrain governments.

 

“Findings suggest that youth guarantees can be effective in achieving the primary objective of ensuring a smooth transition of young people into the labour market. They can play an important role in keeping young people connected to the labour market or in education, thereby preventing the scarring effects arising from long-term unemployment, including those related to negative wage effects.”[14]

 

Young people can also directly contribute to addressing the challenge. In Burundi, for example, 94% of jobs for young people come from the informal private sector (e.g. agriculture, trades and sole traders). These jobs are often not sustainable, temporary and don't provide a livable wage and worse, they hide the true level of unemployment. In response, young people created Burundi 3.0, a mobile phone service that makes it easier for young people to find work by providing daily job alerts. This is just one example of young entrepreneurs not just creating jobs for themselves but also helping others with their job search.

 

The importance of the right education

 

On the supply side, measures to improve the skill set of those entering the labor market are an important part of tackling youth unemployment. Many countries have sought to improve the quality of their education system to equip students of today with the right skills, including crucial numeracy and language skills, to be the workers of tomorrow.


Education that equips youth for the job market is fundamental. While there are examples in some developed countries of young people being overqualified, on a global basis the bigger issue is lack of appropriate education. As such, there is a growing focus on basic skills and equality. Vocational training, such as apprenticeships, can also be effective in helping to provide young workers with appropriate skills, but this will require sustained investment [15] and employers to offer employment opportunities. 

 

Fundamentally, the task is to find solutions which are scalable to reach substantial numbers rather than just a lucky few, particularly in countries facing high levels of unemployment. For countries in the developing world that are currently experiencing a youth explosion, this is critical to capitalizing on their ‘demographic dividends’.

 

In summary:

 

Youth unemployment is an acute global endemic that requires a mix of global and local solutions. Governments, the private sector, and civil society and equally important, the young people and parents themselves, must all work in partnership to develop innovative solutions to ensure that we offer hope to the world’s young people.

 


[1] United Nations Department of Economic and Social Affairs (UNDESA). 2012. “UN World Youth Report 2012”. http://www.unworldyouthreport.org/  
[2] World Bank. 2012. “Youth Employment in the Developing World – A profile: Data from World Bank Micro Surveys.”
[3] World Bank, 2012. 
[4] International Labour Organization. 2012. “Global Employment Trends for Youth 2012”.  http://www.ilo.org/global/research/global-reports/global-employment-trends/
youth/2012/WCMS_180976/lang--en/index.htm
 
[5] Isabel Ortiz and Matthew Cummins. 2012. “When the Global Crisis and Youth Bulge Collide.”UNICEF. http://www.unicef.org/socialpolicy/files/Global_Crisis_and_Youth_Bulge_-_FINAL.pdf  
[6] Ibid.
[7] Eurostat. 2012. “Unemployment rate by sex and age groups – annual average, %” via Data Explorer. http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=une_rt_a&lang=en .
Accessed 6 February 2014.
[8] International Labour Organization. 2012. “The Youth Employment Crisis: A call for action”. http://www.ilo.org/wcmsp5/groups/public/@ed_norm/@relconf/
documents/meetingdocument/wcms_185950.pdf
   
[9] International Labour Organization. 2011. “Key indicators in the labour market”. http://kilm.ilo.org/kilmnet/  
[12] Eurostat. 2012. Labour Force Statistics.
[13] UK Government. “New figures show record numbers of apprentices”.
https://www.gov.uk/government/news/new-figures-show-record-numbers-of-apprentices .
Accessed 4 February 2014.
[14] International Labour Organization. 2012. “Youth Guarantees: A Response to the Youth Employment Crisis?”  http://www.ilo.org/wcmsp5/groups/public/---ed_emp/documents/publication/wcms_209468.pdf  
[15] OECD. 2011. “OECD Reviews of Vocational Education and Training – Learning for Jobs”.
http://www.oecd.org/edu/skills-beyond-school/LearningForJobsPointersfor%20PolicyDevelopment.pdf  
 

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Lisa Gahan
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Tel: +27 (0)82 719 3031
Lisa.Gahan@kpmg.co.za