YES to job creation initiative? No? Maybe?

Despite the Department of Trade and Industry (Dti) scrapping some onerous Black Economic Empowerment (BEE) requirements to encourage companies to participate in a youth work experience initiative, the initiative’s take-off has been stunted by the department’s delays in signing and publishing it into law.

The Youth Employment Service (YES), an initiative that has the ambitious goal of providing one million South Africans with paid work experience over the next three years, faces growing risks of not receiving adequate support from the private sector.

This is until a gazette, in other words, a law governing the business-led initiative with the government, is not only signed but also published.

YES CEO Tashmia Ismail-Savill says she has been told by the Dti that the gazette has been signed, but will believe it when the gazette is eventually published.

“The signing of the gazette means that we can start getting commitments from companies on paper,” Ismail-Savill told Moneyweb. “Most of them will only commit to the initiative when they see the law.”

The Dti hadn’t responded to a request for comment regarding the gazette’s signing by the time of publishing.

The delays surrounding the YES gazette underscore the bureaucracy of government and risk undermining the job creation initiative in the face of a youth unemployment crisis in SA. Statistics SA recently revealed that the unemployment rate rose to 27.2% in the second quarter of 2018 (6.1 million people). Include the ‘discouraged workers’ category, and the unemployment rate swells to 37.2%.

Arguably, government has been the biggest stumbling block for YES.

The Dti initially imposed a requirement for companies participating in the initiative to invest 2.5% of their payroll in bursaries for black students at higher education institutions before they can qualify for BEE points.

Ismail-Savill believes this requirement has placed an unreasonable financial burden on companies, saying that 2.5% of payroll for a company would, in many cases, exceed the required investment in YES. “It would mean that all that money would have gone to bursary funds and none of it would have been for unemployed youth.”

Through a consultation process, companies successfully convinced the Dti to scrap the 2.5% payroll investment clause.

Delays

A consultation process between Dti and companies participating in YES for the signing and publishing of the gazette was meant to be completed by the end of May 2018. This means the Dti has delayed the publishing of the YES gazette for nearly three months – or longer, considering that the initiative was conceived 23 months ago.

President Cyril Rampahosa, who officially launched YES in March, has targeted the creation of 330 000 jobs a year under the initiative.

Outgoing Investec CEO Stephen Koseff, who co-leads the business plan for YES, said Rampahosa’s target is a “pipe dream” considering that the initiative is nearly two years late.

Speaking at the Gordon Institute of Business Science panel on job creation and economic growth on Tuesday evening, Koseff said: “There has been a slowness of government to get their act together. There is a lot of politics in the background that can get in the way of execution.”

Economic growth of more than 5% is required to create 300 000 new jobs a year, said Koseff. SA is far from that level of growth, with the National Treasury expecting economic growth of 1.5% in 2018, rising to 1.8% in 2019.

Ismail-Savill supports Koseff’s views, saying that the creation of jobs won’t happen overnight, as YES will have to go to communities where unemployment is high and canvas for investments if it is to reach small businesses and local economies.

YES has projected that it will take six years to create just 160 000 jobs, even though about 100 companies have already signed up for the initiative, among them Absa, Discovery, Exxaro, FirstRand, Woolworths, Investec, MTN, Nedbank, and Sasol.

“On paper, we probably already have 25 000 to 30 000 jobs,” says Ismail-Savill. “The jobs come in once the companies sign up.”