The high number of young people not in employment, education or training, also known as ‘NEETs’, has emerged as South Africa's most urgent challenge, a World Bank official has warned.
Speaking at the Department of Trade and Industry's inaugural economic dialogue this week, the bank’s lead private sector development specialist for a number of Southern African countries, Dr Chunlin Zhang, likened the country’s youth unemployment problem to a 'bleeding', which required decisive intervention to stem.
Currently, 70% of the nearly 5-million South Africans who are currently unemployed are aged between 15 and 34. “So, when you talk about South Africa’s unemployment problem, we are already talking about youth unemployment.”
Higher levels of economic growth, Zhang argued, remained the primary instrument through which South Africa could address poverty and inequality, which was underpinned by high rates of unemployment.
Employment creation in the country was already more sensitive to economic growth and investment than is the case in the other countries making up the Brazil, Russia, India, China and South Africa (Brics) bloc of economies.
A study into the relationship between growth and employment in a range of countries between 1995 and 2008 shows that, for every 1% rise in South Africa’s gross domestic product (GDP), employment grew by 0.43%.
Partly owing to South Africa’s higher official unemployment rate, which currently stands at around 25%, the figure shows that employment creation has been more responsive to GDP growth than in other Brics countries, with Chinese employment expanding by 0.06% for every 1% GDP rise during the period.
“The point is that economic growth has a much higher job-creation potential in South Africa than in other countries. So, it is very clear that what is missing . . . is higher growth,” he said, while acknowledging that such growth should not be at the expense of inclusiveness, the environment and sustainability.
This growth should also create ‘low-skilled jobs’, or it would not help in solving the unemployment problem, as 60% of jobless South Africans did not have secondary-level education and had not worked for the past five years.
However, Zhang, who stressed he was talking in his personal capacity, said there was a pressing need to find and implement near-term strategies to deal with the 'NEET crisis', which he described as the country’s “most urgent challenge, with about 7.6-million South Africans currently falling into the NEET category.
Possible immediate remedies could include finding ways to reduce high-school dropout rates, particularly between grades 10 and 12.
Another could be to increase the capacity of further education and training colleges to absorb learns and/or building other 'second-chance' learning programmes, such as classes to improve the quality of English that young people speak and write.
There was also potential to expand youth-focused public works programmes.
Efforts could also be made to improve the environment for entrepreneurship, which Zhang argued required motivation, skills and opportunity.
He argued that the public and private sectors could do more to improve skills levels and create the market opportunities for entrepreneurs to develop, from the creation of ‘plug-and-play’ business parks, through to improving access to finance to small firms and start-ups.