Time is not on South Africa’s side. The country – and its key social partners – must get to grips with the hard choices in the labour market. If massive interventions are not made, and soon, the vortex of rising unemployment and its accompanying social unrest will drag down the economy and, with it, the foundations of our young democracy.
Few people need further convincing that 46.6% unemployment (12.5 million people) is a dangerous and unsustainable path. Since early 2020, the total number of employed people in the country has decreased from 16.4 million to 14.2 million. Recession, Covid-19, and an unfavourable business environment have seen business closures and cutbacks result in more than two million fewer jobs. This unemployment trend, while it has accelerated recently, has been in motion since 1989 when South Africa breached unemployment rates akin to the US Great Depression.
The latest official data reflect that two out of every three young people (under 35 years) in SA are unemployed, and this rises to three out of four of the under-25s. We need to remember that these are the future customers for businesses, the workforce and the voters and politicians to underpin our democracy’s future. If they cannot find employment or hope for themselves and their families, what does that foreshadow for the country’s future?
These facts are surely not lost on President Cyril Ramaphosa, who understands perfectly well the implications of these for the economy and democracy. Further, there is unlikely to be a better-placed leader at this critical juncture to guide social compacting and collaboration as a route for national success.
The unemployment problem is, however, baked into our economic structure. It is a toxic mix of supply-side (eg, education and skills) and demand-side (eg, low demand) factors, requiring decisive action ill-suited to contested and complex policy processes. In response, South Africa has had an overabundance of big-thinking policies and a critical shortage of implementation.
Crucial are interventions that offer bang for buck and are explicitly designed for the execution capacity we have now (rather than for the capacity we wish we had). This includes the fact that some stakeholders (even within the same constituency) are guaranteed not to cooperate with each other, and the country cannot wait for complete consensus.
Lessons must be learned from disastrous experiments of the past, such as Outcomes-Based Education in the 1990s, which collapsed the public schooling system when it was realised too late that the cutting-edge global theory did not have the prerequisite actual teacher capacity in our government schools.
But there are also examples of programmes that have worked. From my own experience, I have seen enough stakeholders work well together to agree and implement a Health Roadmap to virtually solve the HIV/Aids crisis in 2008 (remember what a mess that was?). Similarly, South Africa has emerged as a world leader on the renewables/global climate change agenda, as witnessed at the recent COP26 in Glasgow.
But, with regard to employment, we remain a country adrift.
The state of affairs now is analogous to what we faced with HIV/Aids just over a decade ago.
Can we achieve a similar Employment Roadmap for South Africa?
Yes, we can – but only if we accept that achieving our employment goals requires economic growth that will, in turn, grow the private sector.
There are many possible combinations for an Employment Roadmap, depending on likely impact, affordability and ease of implementation. Some of the more obvious interventions are labour reforms to make it easier and less risky to employ people, tackling critical infrastructure bottlenecks like the ports, specific measures to boost future-facing sectors such as ICT and renewables, and allowing high-skilled immigration (which, in turn, allows companies to expand their operations). A roadmap must also consider how basic income grants (or other forms of income distribution) could be structured to boost consumer demand and counterbalance a future full of insecure, gig work.
To sift out the good from bad reforms, we need to use an employment litmus test. Will the reform create more employers in the private sector? And will the reform significantly motivate employers to employ more people (especially youth)?
All stakeholders benefit if South Africa succeeds in finding a path to growing private sector jobs.
First, more jobs in the private sector mean trade unions will have more potential members – and can thereby reverse their decade-long membership decline.
Second, the private sector will benefit, as more young people in jobs means more potential paying customers to underpin longer-term market demand for their goods and services.
Third, the government and all political parties will benefit as the population in general and youth in particular get to witness a “return on democracy”.
However, with the doomsday clock showing five minutes to midnight, South Africa cannot wait years for drawn-out negotiations on a New Deal and then (possibly) implementation. Initiatives that can massify employment in the short term must be accelerated.
One example of a stakeholder initiative is the Youth Employment Service (YES). YES is a non-profit established in 2018 by the private sector to create job opportunities for unemployed youth. Under adverse conditions of recession and now Covid-19, YES worked with 1,700 private companies (mostly large companies) and numerous implementation partners to sponsor nearly 70,000 young people. Salaries of R4-billion were paid to young workers (60% women, and 90% from grant-recipient households), who also acquired invaluable formal work experience. In exchange for their sponsorship of youth jobs, companies that achieve a good outcome boost their BBBEE scores and, increasingly of importance, their environmental, social and governance credentials.
As a 100% private sector funded initiative, YES is the largest private sector funded jobs impact programme in the country.
To achieve bigger national outcomes, different organisations, each with their own comparative advantages, must work together. YES has therefore increased its collaboration with other high-impact organisations, such as Harambee, the Jobs Fund, and the Presidential Youth Employment Initiative (covering large-scale public employment initiatives), to build a youth employment ecosystem.
As the July riots and looting demonstrated, South Africa is fast running out of time to solve the unemployment crisis. While all efforts must be made to settle on a long-term path to economic growth, other job interventions that are ready to forge ahead must be massified and accelerated immediately. The countdown has begun. DM