Youth unemployment is a national crisis

Youth day of course marks that dramatic time in 1976 when young people took it into their own hands to stand up against the Apartheid government. Yet last week I found myself reflecting on the challenges facing the youth of today. They are very different, but clearly we need to be focused on solving them.

The statistics are often talked about, which makes them somehow feel more normal.

But there is nothing normal about the fact that 65% of youth aged 15-24 were unemployed in the first quarter.

Even among young graduates, the unemployment rate was 33%. The trend has been exacerbated by Covid which has significantly added to the numbers of unemployed.

This is a national crisis, and I know that many people are seized with the challenge. The presidency’s youth employment initiative is tackling the problem on multiple fronts. Business is working with government through the Jobs Fund and the Youth Employment Service. The employment tax incentive provides a tax benefit for companies that employ young people. These are all worthwhile endeavours, but the numbers remain shockingly high, exacerbated by the number of young people joining the labour force every year.

Business Leadership South Africa (BLSA) is working with USAID through the Beyond Advocacy Fund on the problem too, partnering with Afrika Tikkun Services to alleviate unemployment, focused on developing digital skills among young people.

Fundamentally, the youth employment problem is a component of the wider unemployment problem. The economy simply does not employ enough people of any sort. Things have been better in the past – the lowest post democracy unemployment rate was in 2008, when it reached 21.5%. Still far too high, but much better than the 36% reported for the last quarter. The year 2008 held another record, too: it was the culmination of four years of economic growth above 5%. In those four years, the economy grew 25% bigger. Alongside that growth, unemployment fell from 28% to its record low, after two million more people were employed.

This should make it obvious that the one sustainable solution to unemployment is growth – sustained growth, year after year. The economy’s expansion was halted in 2008 because of the global financial crisis, which triggered a worldwide recession that we were not immune from. But while the rest of the world recovered, we did not.

For a while we called that period the “lost years” when the progress we had been making stalled. But that term is less in vogue as we have struggled to get beyond them. The deep dysfunction that arose during that period has blighted us with myriad ills, principally our grossly underperforming state-owned enterprises.

The lack of reliable electricity kills economic activity and chases away investment. The capacity problems on our railways and ports snarls up our logistics systems, compounded by disruptions on our roads. Others, from the Post Office to the SA Nuclear Energy Corporation, are failing the economy while imperilling government’s finances. In government itself, particularly local government, good governance has become a distant memory. Many of our municipalities have become so deeply dysfunctional that businesses cannot operate and are being forced to relocate.

The good news is that many in government and business are focused on addressing these and other problems. We use the term “structural reforms” often, but these really are how we can get the economy back on a high growth track. We have to fundamentally change the way the economy works – how electricity is generated, how goods move around it, how we access data services, how we access skills from across the world, and much else. Business and government is working hard together to deliver these reforms and there are several areas where progress has been made like the ability for companies to build electricity plants of up to 100MW without a licence.

Many in the public sector are also working hard to fix government and business is committed to supporting the process. Though structures like Tamdev (Technical Assistance Mentorship Development programme), business mobilises skilled individuals to support the public sector with capacity in key areas. Voluntary efforts like Business for South Africa have also been key to supporting government in the fight against Covid and now in determining priorities for future reform.

So while our young people face an economy that is not providing space for them, I have some hope that we are beginning to turn the situation around.

We need to keep intensely focused on following through on those structural reforms, repairing the state and getting the economy growing. If we get that right, we will be able to start seriously changing the outlook for our youth.

Busi Mavuso is CEO of BLSA