South-Africa is currently struggling with a large unemployment amongst the youth. The National Development Plan has identified a number of policy interventions to improve youth employment. In your view, what are the causes of youth unemployment and what should government do to improve the levels of youth employment? Identify the pros and cons of each of your proposals.
“Give a man a fish and feed him for a day. Teach a man to fish and feed him for a lifetime” (Chinese proverb)
The ultimate dream: work hard in school, get a degree, get a job, make tons of money, buy a big house and a fancy car, get married, have children and live happily ever after. This dream of so many South-African citizens is being crushed by something - unemployment.
Unemployment can be defined as the number of people who are available for, and actively seeking work, but cannot find any (VAN DER MERWE, 2012). Several questions arise: Why is the youth unemployment level so high? Who is to blame? The government? The worldwide economic crisis? Poverty? The private sector?
Some shocking discoveries made by (DAN, 2011) is that the number of youths living in sub-Saharan Africa is expected to increase by almost 20 million. (NGUBENI, 2013) states that the youth unemployment statistics are very concerning. Statistics SA shares that in the third quarter of 2012 the unemployment rate of the youth was 36% and in that timeline, the youth (people between 15 – 34 years of age) was about 3.3 million in South-Africa. What is the contributing factor to this increase in youth unemployment?
2Causes of youth unemployment
One of the main causes of unemployment is poor education. Education fails because it cannot equip students with the necessary skills needed for their specific field of training. Now, the question arises, who is to blame for this failing in the education system? High schools? The tertiary sector, like universities or the private sector? (WEBER, 2012) is of the opinion that businesses, universities and schools, governments and non-governmental organisations fails to communicate about what they need and what they can deliver. He is also of the opinion that universities are to slow in adopting to change. He says that when a business says they need graduates with a certain skill, it takes them (universities) two years or more to change their course. With technology that is constantly fast changing, by the time the university changed its curriculum, the skills are not applicable anymore. (SERCOMBE, 2013) states that the youth should take charge of their own future, and not to expect the government to do everything for them. I think this is unfair. There are youth in South-Africa that have nothing, they were born in poverty and they grew up in poverty, how could one expect them to have a decent education without help from the government?
3Resolving unemployment among the youth
(NGUBENI, 2013) states that the unemployment among the youth is very serious, yet there appear to be no sense of urgency dealing with it. (NGUBENI, 2013) argues that community based projects can solve youth unemployment. 3.1Skill teaching
(Games, 2012) is of the opinion that the youth should be given the opportunity by teaching them communication skills, such as computer literacy, online journalism and creative writing. The pro of this solution is, through this, it provides them with a voice so that they can use it to improve their lives and increase their relevance in their communities. The con of this solution is that in order to teach, and be able to use modern day technology, one needs money. Money is scarce, so this proposal wouldn’t be as effective as one would wish. 3.2Developing entrepreneurial skills
Another way to decrease youth unemployment is to give attention, and develop entrepreneurship skills (MOKONYANE, 2012). (MOKONYANE, 2012) also states that entrepreneurship is an important part in the long term solution to fight unemployment is South-Africa. 3.3Funding
An option to relieve the high level of youth unemployment is through funding. Doing this, one can reskill the unemployed (OLIPHANT, 2011). With these resources the youth are skilled in professions like boilermakers, electricians and plumbers where there is a huge scarcity and therefore a high demand in these professions. The pro of this solution is that the gap in the market, due to these profession are being filled. The con of this solution is that not every youth citizen can work with his/her hands, so this solution can’t be applicable to them all. 3.4Boost economic growth
This is an interesting proposal. When the economy is being boosted through economic growth, youth unemployment would decrease (FOURIE, 2013). The con of this proposal is that economists and policy makers do not really know how to increase the economic growth (FOURIE, 2013). Humans are interesting creatures and the study of human behaviour is one of an ever changing theory.
Because of this, the expertise (economist) still have an incomplete understanding of the human behaviour, determinants and casual relationships behind economic growth processes and this leads to frustration because ordinary people have been led to expect that growth can be increased by pulling a few levers or by realising entrepreneurial spirit . 3.5Legislation
The government should force the public as well as the private sector through legislation to employ a minimum of ten unemployed youth citizens into employment. The company need to send these youth employees for training and skills development. The training will focus on specific needs and skills within the company. The pros for this proposal are that youth unemployment would decrease and a healthy leadership and entrepreneurial environment would be established. This positive working environment would rub off on the persons that have been recruited, and they would be role models in their home environment for younger children. Less tax could also be paid by the company that employs unemployed youth. These children would acknowledge the fact that they must study hard to gain good marks and obtain a decent job. The con of this proposal is that not every business in the private sector would adhere to the legislation for the reason of perhaps not having enough resources for more employees, and therefore not having the capital to pay more wages which can lead to retrenchment. 3.6Taxation
Now, this is a sensitive matter. The government could impose a higher tax level on businesses in the private sector to generate income for the unemployed youth. This subsidy would be used to pay for unemployed citizen training and/or university fee (these are just two examples). The con of this proposal is that business tax is already at a very high level. A higher level of taxation can lead to retrenchment and/or lessening employees’ income or wages. When this happens, more people become unemployed and this leads to higher numbers of unemployment - it is an on-going negative cycle.
3.7Job searching subsidy
This is a subsidy that is used by unemployed people to help them to find work. According to (RANKLIN, How will a job-subsidy create jobs?, 2013) at least three criteria needs to be met to create jobs for those who receive a subsidy: 1.The subsidy needs to be used to search for jobs only, or to remove financial constraints that prevents people from searching for jobs; 2.Firms actually need to recruit through the channels which subsidy holders actually use to seek employment; and 3.The relative cost of labour needs to decrease.
This idea might look good on paper, but is it really practical? One of the concerns it that what is the guarantee that people would really use the subsidy to go job seeking? Another question that arises is what is the guarantee that the firms would recruit through this channel? Chances are that firms would rather recruit internally rather that externally. 3.8Communication within the Education system
One always hears “you must earn a degree to make a living”. How ironic. The education system in South-Africa is a mess and corrupt. The sad part is that the youth is the ones who suffer among these mistakes made by professionals. This misconception is mostly because of the lack of communication. Miscommunication between the Minister of Education and schools, miscommunication between high school’s curriculum and universities, miscommunication between universities and private sector are to blame.
3.8.1Miscommunication between the high school curriculum and the universities
Time and time again pupils are the ones being negatively influenced through miscommunication between the high school’s curriculum and the universities. When applying for certain courses, a Gr 12 learner needs to write tests like the National Benchmark Test, as well as tests focusing on the learner’s ability in a certain field of work. The work that the learner is tested on has not yet been done at school and this has a negative influence on the results of the tests and could lead to the learner not being accepted for a certain course.
3.8.2Miscommunication between the universities and the private sector of the economy
When a fresh graduate applies for a work one frequently hears that the person doesn’t have the minimum required experience or that he/she doesn’t have the needed skills etc. The transition takes to long because of a lack of job offers and skill mismatches between what education provides and what employers need. This is exactly where the problems start; it is the core of the problem - see appendix A (MOURSHED, 2012). Now, one can ask how can one reduce the large gap between the skills needed for a certain career, and the mismatch between what education provides and what employers need.
18.104.22.168Solutions to reduce the gap between the education system (universities, as well as technical colleges) and the private sector
One of the most practical, successful implementations I have seen and read about on what is used to reduce the gap between the educations system and the private sector, is the implementation of the BMI Centre of the North-West University.
This centre was established in 1996 through the North-West University (NWU) in partnership with ABSA. ABSA had a big need for students with the correct practical skills and brainpower to fit into their working environment. ABSA, together with the North-West University established a centre for students studying B.Sc. BMI.
ABSA and the North-West University created a curriculum based on the fact to stimulate students to think more logical and to learn them the skills that are most needed in the practical world. These students have an advantage over other students that weren’t trained by the BMI Centre. These students, when walking into the private sector, have the ability to incorporate their theoretical knowledge with their practical knowledge. Unemployment rate among these students are very low - practically 0%. Just because of their curriculum that is based on the correct line of what the private sector wants and what they need. As one can see this is beneficiary for the student as well as the private sector.
The main problem concerning unemployment under the youth is communication within the education system. The skills being learned to the youth isn’t what is being required by the employers. This is for the simple reason that employers, education providers and youth live in parallel universes - in other words, they have fundamentally different understandings of the same situations (MOURSHED, 2012). Major shareholders are not focusing on the same important aspects because they are not engaged with each other.
The structural side and the private sector should acknowledge the problem and start addressing it to build a better, prosperous future for the youth of South Africa. The youth unemployment rate will decrease, the economy will be affected in a positive manner and each citizen would have a better life.
“We need to revisit the nature of education, training and skills on offer, and equip people with the employability and entrepreneurial skills they need to make a difference.” (KIRK, 2012)
Figure 1: Shareholders with different views regarding readiness of graduates
Source: McKinsey survey (2012)
DAN, C. (2011). Weforum. Retrieved April 4, 2013, from Weforum: http://www.weforum.org/sessions/summary/jump-starting-job-creation?ol=1 FOURIE, F. (2013, March 2013). Reducing unemployment: Waiting for high growth? Waiting for Godot? Cape Town: ECON 3x3. KIRK, C. (2012). World Economic Forum. Retrieved April 4, 2013, from World Economic Forum: http://www.weforum.org/content/global-agenda-council-youth-unemployment-2012-2013 MOKONYANE, N. (2012, 21 June). Doing business in South-Africa. Retrieved April 4, 2013, from South-Africa.info: http://southafrica.info/business/economy/development/automotive-210612.htm MOURSHED, M. F. (2012, December 19). Education to Employment Designing a system that works. Retrieved April 4, 2013, from McKinsey&Company: http://www.mckinseyonsociety.com/education-to-employment NGUBENI, S. (2013). Youth Unemployment rate expected to rise. Johannesburg: Finacial Mail. OLIPHANT, M. (2011, December 5). Doing business with SA. Retrieved April 4, 2013, from SouthAfrica.info: http://www.southafrica.info/business/economy/development/skillsdev-021211.htm RANKLIN, N. (2013). How will a job-subsidy create jobs? Cape Town: ECON 3x3. SERCOMBE, H. (2013, March 2013). Doing business with SA. Retrieved April 4, 2013, from SouthAfrica. info: http://www.southafrica.info/business/economy/development/youth-200313 VAN DER MERWE, E. &. (2012). Monetary Economics in South-Africa. Cape Town: Oxford University Press: South-Africa. WEBER, T. (2012, January 28). Youth unemployment 'disaster'. Retrieved April 4, 2013, from BBC News Business: www.bbc.co.uk/news/business-16774301