By Sharmi Surianarain, Chief Impact Officer at Harambee Employment Accelerator
Assumptions and speculations
There is an unspoken assumption that a rising GDP will lift youth boats: “Let’s grow the economy, jobs will follow, and youth will find work.” Growth is, of course, an important enabler of job creation, but our research shows that, since 2008, even when South Africa’s economy has grown, youth employment is decoupled from GDP growth.
The data is clear. Even in the good times, young people are being left behind.
We can speculate as to why – lack of skills, hiring biases, and structural barriers – but what is undeniable is that we have a generation of young people whose potential is being squandered. This is despite the scaling of many interventions in South Africa, including 1.4 million work opportunities that were enabled by SA Youth, of which 8% are net new jobs that have gone to youth.
So how can we reverse this crisis, and by when?
Evidence from experience
From its 13 years of experience, Harambee has assembled evidence for what ‘levers’, if applied at scale, could reverse this crisis:
- inclusive hiring of youth;
- unlocking youth jobs in new sectors;
- growing youth self-employment; and
- prioritising youth in work experience programmes.
The effect of all levers being pulled together could see the relationship between GDP and youth employment strengthening, with a total increase of three million additional young people in employment, and the youth unemployment rate declining from a projected 56% to 34% by 2030.
Finally, we need pathway management across all these levers to break barriers and support youth to access work and stay in work.
Lever 1: Drive the inclusive hiring of youth for jobs currently available, while also accelerating the creation of new youth jobs
There is space for youth in the economy, there are jobs they can do, and by targeting growth sectors and incentivising youth hiring, both the sectors and youth will benefit from inclusive hiring.
Scaling and amplifying work with partners
We need to make it simpler for business to hire youth by giving them better information and more inclusive assessments of youth abilities. Over the years, Harambee has done this with partners such as First National Bank, Hollard, Nando’s and Telesure, to name a few. If we scale and amplify these efforts, we could collectively reduce the youth unemployment rate by 10% by 2030, enabling 1.36 million more young people to access employment.
Our model of inclusive matching has enabled, through the SA Youth Platform, the placement of youth into 1.5 million earning opportunities and of these, 66,181 are spread across 20 private sector companies in high youth-absorbing sectors.
The intentional hiring of youth in these sectors directly strengthens the relationship between GDP growth and youth employment. The top four youth-absorbing sectors – finance and business services, wholesale and retail, community and personal services, and construction – already employ 4.1 million youth but trends since 2008 show that youth employment has not followed sector growth. However, in the finance and business services, and wholesale and retail sectors, youth jobs have collectively declined by 175,000 compared to a total job growth of 1.4 million amongst non-youth jobs. The good news is that youth have done these jobs in the past and can do them again! If all jobs added from now until 2030 in these sectors were to go to youth (while taking no jobs away from non-youth) the impact on youth unemployment would be larger than if the economy were to grow at more than 4%.
Optimising opportunities in ‘sunrise’ sectors
South Africa’s ‘sunrise’ sectors, such as digital, Global Business Services (GBS), and green/renewables, also offer huge potential for youth employment. Targeting these high-growth sectors and adding between 50,000 and 75,000 youth jobs annually could create an additional 375,000 youth jobs over six years, reducing the youth unemployment rate by 3% and contributing to long-term economic growth.
With these numbers, there is no question that growth can address youth employment, but only if we target sectors that are growing and structure incentives to promote the inclusion of youth in them. This has already been done in the GBS sector with the establishment of a sector master plan and a newly renewed GBS incentive for inclusive hiring. By using these instruments and nurturing strong sector coordination between government, industry bodies, and Harambee, over 148,590 new jobs have been created in the sector since 2010, contributing $2.367 billion in export revenue. Of these jobs, 89% have gone to youth and 16% have specifically gone to inclusive hires.
While creating new jobs may be the hardest lever to pull, it has the most outsized impact with an impact on indirect jobs, as well as attracting investment, and driving innovation. It also offers roles to young people that are sustainable, future-proof, and aligned to global trends.
Lever 2: Grow the informal economy for it to absorb youth and generate earnings
Sunrise sector jobs are ‘the holy grail’ but they are incredibly hard to unlock. Expanding the informal sector’s share of youth employment from 20% to 30% could result in 900,000 additional youth jobs by 2030, reducing the youth unemployment rate by 6%. It would also unlock an engine of growth in value chains like last-mile sales and delivery, mobility, and agriculture.
Youth and the formal economy
But we need to de-risk the entry of youth into the informal economy, otherwise, they are doomed to precarious incomes. Most business ideas pursued by youth are temporary and uncertain, leading to inconsistent incomes and financial instability. Operating outside legal frameworks can also leave youth vulnerable to being exploited and many self-employed individuals find the costs of formalisation prohibitive. On top of this, a lack of formal financial services hinders young people from saving or investing, which perpetuates cycles of poverty. All this naturally means self-employment opportunities tend to be the last resort for young people. While we cannot expect youth to ‘entrepreneur’ their way out of poverty with side hustles, we can support them more, which could lead to economic resilience and community upliftment.
We have done this before, with partners such as Qwili and Green Riders, who offer access to markets, financing, skilling, and assets. Opportunities unlocked through them generate higher incomes ranging between R3,000 and R5,000 and keep excluded youth engaged for significantly longer, estimated at an average of 12 months. This translates into an additional R33,200 – R56,400 in earnings per opportunity over a year.
Emerging opportunities
The last-mile delivery sector is emerging as an exciting zone of opportunity for excluded youth to make their own money, and organisations like YourBikeClub and Green Riders help young people to cut down the operating costs of running their own delivery business. Through support such as access to markets, monthly gross earnings for drivers are estimated to reach between R3,300 per week to R14,000 per month.
Self-employment and entrepreneurship are key levers for reducing youth unemployment, but they can only be maximised if they operate in a more supportive ecosystem for youth-led enterprises.
Lever 3: Sustain work experience programmes to create an economy that moves and keeps youth engaged
In the absence of a growing economy, we need to create an economy that moves. We must forge on with work experience programmes – like the Department of Basic Education’s (DBE) School Assistants programme and YES programmes which offer 12-month work experience programmes in the private sector – for the most excluded.
Stepping stones towards long-term work
These present stepping stones to long term work. In an economy that does not offer nearly enough full-time jobs, the availability of part-time or occasional opportunities that can provide young people with the chance to work at least once are enormously valuable.
This value has reached far and wide as reflected by the 477,857 public employment opportunities recorded on SA Youth. The DBE School Assistants programme has collectively provided over 1.2 million young people with work experience across South Africa, and the privately funded YES programmes have created over 158,000 quality 12-month work experiences.
Inclusivity and sustainability
What shines brightest about these programmes, however, is their inclusivity: 74% of YES participants come from households receiving social grants, which has been shown to drop off substantially as individuals transition into long-term employment. The programmes also reach rural and peri-urban locations characterised as job deserts since youth are less likely to transition to formal sector jobs.
By optimising these programmes, an additional 200,000 youth that might have never worked are given a chance at short-term work each year. This reduces the number of people who have never worked by 1 million by 2030 and in the long run, this number could even be reduced to zero. Over and above potentially reducing the youth unemployment rate by 3%, these programmes create hope.
Conclusion
Tackling youth unemployment demands that all levers – the adoption of inclusive hiring, sustained work experience programmes, and meaningful support for youth entrepreneurs – be executed in the best way possible. There is no single lever – and no single organisation, no matter how ambitious – on its own can tackle South Africa’s unemployment challenge. By firing on all cylinders, each lever complements the other and together they can form a powerful engine for sustainable change.