Jobless crisis not all doom an

Jobless crisis not all doom and gloom says World Bank

With unemployment higher than at the end of apartheid, South Africa should embrace and educate its demographic ‘window of opportunity’ to show growth.

Jobless crisis not all doom an

Even though unemployment in South Africa is now higher than it was at the end of apartheid, the country stands at its demographic window of opportunity with its expanding working population ready to harvest and boost growth. Yet, the burden will be on government to spruce up education first.

This is the finding of a new World Bank report which says South Africa’s demographic opportunity for super growth will last at least for 50 years. The report entitled South Africa economic update: jobs and South Africa’s changing demographics says since 1994 – at the end of apartheid – the country’s working-age population (15–64 years) has increased by 11 million.  In the next 50 years, it will grow by another 9 million.

Since 2000, only one-third of the 8.5 million additional working age found jobs, mainly in the services sector. Many new entrants were unskilled or lacked basic education qualifications, and they joined the workforce when labour-intense sectors such as agriculture, mining, and manufacturing shed jobs.

Unemployment is now higher than it was at the end of apartheid, with almost one-third of the labour force out of work or discouraged. At a time when almost half the population is under 25, unemployment among the young (15–24) is almost 50%, double the national rate. At least 60% of the unemployed have not achieved a matric qualification.

Yet, says the report, it is not all doom and gloom. Having such a high share of its population – 68.3% at its peak by 2045 – in its working prime presents a tremendous opportunity for the country to boost its growth and raise living standards. It also presents tremendous challenges. In the next 15 years alone, the working-age population will expand by 280,000 a year. These people will have to find productive jobs if South Africa is to harvest the potential boost to growth and living standards before it faces the rising burden associated with a rapidly growing elderly.

According to the report is seems that the South African education system have left the young unemployed ill equipped for a labour market that demands more skills. More job-intensive growth would help tackle unemployment and create jobs for many new labour-force entrants in the coming 15 years, allowing South Africa to take the first step in harnessing its favourable demographics.

But simply increasing the number of jobs will not be enough to allow South Africa to boost savings and derive the second demographic dividend. More job intensive growth needs to be accompanied as a first priority by improving the quality of education so that better educated youth are entering the workforce.

This needs to be complemented by efforts to improve the productivity of existing workers and the unemployed through better skills development and training. By creating a virtuous circle of job intensive growth, improved productivity and educational attainment, and higher savings, growth could accelerate to 5.4% a year and per capita incomes could double by 2030, which would virtually eliminate extreme poverty and begin to reduce inequality.

Changing the growth and jobs dynamics will require urgent action on several mutually reinforcing fronts. The government has already introduced an employment tax incentive to encourage firms to hire young workers. Through its Industrial Policy Action Plan, it is also offering incentives to promote potentially labour-intense sectors like manufacturing and agriculture. Faster and deeper global and regional integration in trade in goods and services would bolster this effort. Nonetheless, low-cost, labour-intense production is unlikely to be the main engine for job creation for South Africa, given how these sectors have shrunk over the past two decades.

The report concludes that that the greatest priority should be to improve levels of educational attainment in South Africa. “Getting basic schooling right is the first step to ensuring that school leavers and graduates have the foundational skills necessary to function in the modern workplace. Educational attainment not only shapes employment opportunities, but also provides the foundation for further on-the-job learning and training. This will not be an easy task. South Africa has already achieved almost universal school attendance and the challenge now is to improve learning outcomes by better training and support of teachers.”

The report also encourages government to harness the knowledge of the private sector. “Designing training programs in consultation and partnership with the private sector will ensure that they are high quality and better geared to the needs of the labour market. Employers can also provide internships and other opportunities for practical training to help overcome new entrants’ lack of work experience.