Opinionista Mzukisi Qobo 5 June 2018

Social challenge requires collaborative effort by government and business

June, which is dedicated to youth, offers us an opportunity to reflect on the state of youth in our country, and what needs to be done to build momentum for positive change.

Young people bear the brunt of socio-economic challenges: their prospects in life are undermined by structural barriers to learning in many townships and rural communities, they are vulnerable to diseases, and they make up the significant proportion of the unemployed.

Roughly, 5.9 million young people are unemployed, and are not participating meaningfully in economic activities. They may never in their lifetime enjoy the privilege of gainful employment or participate meaningfully in any economic activity. Their voice in public policy is often silent, especially in our septuagenarian government.

Because their productive capabilities are limited, our youth may also never fully realise what it means to exercise economic power through consumption, buying a home for themselves, or empowering others financially. Many of these young people are at the bottom of the social rung, and there are very few people who consider seriously how these young people survive on a daily basis.

Their absence in economic activities robs society of a critical human capital needed to spark growth and innovation. Their plight tells a story of lost dreams and crippled self-esteem. It is a miracle that the South African society still hangs together despite condemning 50% of its economically active youth to unemployment.

Early in 2018, President Cyril Ramaphosa launched the Youth Employment Service as part of initiatives aimed at boosting job creation. This initiative targets job opportunities that will absorb over 300,000 young people every year, and with the ultimate goal to employ 1 million youth over a three-year period. This flickers a positive light for many young people who could easily live their lives without ever entering the labour market.

The Youth Employment Service seeks to engage young people at ages between 18 and 35 through placements in the private sector. The programme is multifaceted. It encourages private firms to create opportunities for young people who would otherwise not be employed in a stagnant economy, in exchange for receiving BEE recognition.

In those cases where the absorptive capacity of big firms is low, young people would then be placed in small and medium enterprises with their costs covered by big companies for a period of one year. This creates a three-way benefit: it helps to strengthen productive partnerships between big business and government, with the private sector helping government to address a socio-economic challenge while also earning some BEE recognition in return.

The second benefit is that this creates positive linkages between big business and small and medium enterprises in a way that boosts the capacity of smaller firms at a low cost, while enabling big firms to earn a BEE recognition. Managed successfully, these relationships could very well graduate to getting big business and small businesses work together in strengthening supply chains and nurturing conditions for inclusive business, especially given the high levels of concentration in the South African economy.

Third, this initiative helps government to reduce the scope for social instability in the short to medium term. Youth unemployment is a powder keg waiting to explode if left unattended to.

As Tashmia Ismail, the CEO of the Youth Employment Services (YES) once pointed out, unemployment levels among youth in South Africa are higher than they were in Tunisia at the outbreak of the Arab Spring uprising. Social decay does not always announce itself in the form of a storm, but cracks can develop, normalise, and deepen in critical dimensions of the social fabric over time. The kind of marginalisation experienced by the youth in South Africa today should be regarded as an abnormality and an emergency.

There are obvious limits to programmes such as youth employment services. This includes their sustainability beyond the three-year initial commitment. There might also be questions asked about the extent to which they will equip young people with skills that create immediate value in the economy or that are needed in the fourth industrial age. There are many who would highlight the importance of start-ups and small businesses as engines for value creation in the economy. What is more important, however, is to get young people engaged in apprenticeship-type economic activities, where they develop self-esteem, find role models, gain exposure, and learn in a practical environment – precisely what a programme such as the Youth Employment Service seeks to achieve.

The reality we are faced with at the moment is that the economy will not grow at the rate at which joblessness can be dented in any meaningful way any time soon. The structural challenges facing the South African economy run very deep. Getting around the problem may require confidence-boosting measures that are aimed at absorbing youth in the labour market, even if at a cost. Waiting for trickle-down effect from growth is a luxury we cannot afford in a crisis moment. Apart from considerations of generating economic dividend through productivity growth, youth participation in the economy should be considered as a key pillar of social policy, as a price to pay for long-term social stability.

The social partnership between government, business, and labour exemplifies the type of stakeholder capitalism built on enlightened self-interests, where companies get involved in co-creating solutions to complex social challenges. For a long time, there has been a lack of social and institutional framework around which key social actors could coalesce and work together in advancing social and economic change.

For many years, the relationship between government and business has been very adversarial, and characterised by mistrust and mutual disdain. This has also been the case in the domain of industrial relations. It is important that at a period of low growth and high unemployment, various agencies in society come together on a shared platform in search of lasting solutions.

Creating platforms on which key stakeholders in society collaborate is good for social progress. It helps to uplift the public mood. In such a climate, governments learn that they do not possess all the wisdom to create social change; they need to lean in on other stakeholders, especially business, in order to gain quick wins. On the other hand, collaborative platforms help companies to become better at realizing greater role for themselves as a critical stakeholder that are attuned to the challenges of society.

One of the lessons we can take from the Youth Employment Service is that the condition for success in reforming the economy lies in collaborative relationship between key stakeholders in society, especially government, business, and labour to create small wins in the short to medium term.

Failure to build a strong social compact would prolong uncertainty, intensify economic strain, and contribute to conditions that generate social instability. The month of youth presents an opportunity to solidify the social compact and to demonstrate a greater level of seriousness towards addressing socio-economic challenges facing young people. DM

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