Every year in South Africa, around 1 million young people enter the labour market, but two-thirds of them are not in education, employment, or training (NEET). Of these young people, only 20% will find employment in the formal sector, while 20% will go on to pursue further education.  

Youngsters who are unemployed by the age of 30 have a slim chance of ever being employed for the rest of their lives – and this is one of the many reasons why we need an urgent response to the youth unemployment challenge, according to Nicola Galombik, executive director at Yellowwoods Holdings and keynote speaker on the second day of the Trialogue Business in Society Conference.

The magnitude of the problem requires companies and non-profit organisations to “do new things, and do them together”, Galombik told delegates. She noted, however, that it would be impossible to create sustainable jobs without growing the economy.

“Our growth rate needs to get to 5% over the next few years to produce 2.5 million jobs by 2030,” she pointed out. “We have to deal with binding constraints to growing the economy, getting business to invest, and using company value chains – not corporate social investment – to create jobs.”

Unlocking pathways

Of the 1 million learners starting Grade 1 every year, only around 2 out of 5 complete matric, and only a third of those take maths as a core subject. Only 1 out of every 5 children doing maths will get more than 50% for maths when they matriculate.

Because many employers require their employees to have math skills, the barrier for entry to the job market is high. For this reason, we can no longer think in traditional ways about young people’s potential, as “this doesn’t conform to any of our fantasies of what we think of as the pathway from learning to earning,” Galombik noted.

Harambee Youth Employment Accelerator has developed an assessment tool that allows young people to discover their capabilities beyond the classroom. The tool measures their “learning potential” – their capacity to acquire new information and apply it to solve problems.

The tool revealed that 20% of people on the South African Youth platform, which connects job seekers to opportunities, met or exceeded expectations in terms of cognitive capability – but this had little to no correlation with their qualifications.

The National Pathways Management Network helps to bridge this gap. A “network of networks” that is part of the Presidential Youth Employment Intervention (PYEI), it currently links around 4 million young people with opportunities that may lead to paying jobs.

“The platform allows young people to ask questions like ‘What is the next move that brings me closer to a paid opportunity?’ and ‘What am I capable of?’,” said Galombik.

She noted that R200 billion is spent every year on post-school education and training.

“Our problem is not a lack of money – but we need new skilling solutions that build on the potential of our young people, find out what they are really good at, and bridge them quickly and effectively into jobs the economy actually has, with the skills and competencies our economy actually needs,” she said.

“We need more money spent on the right things.”

Sunrise sectors in the economy

Although South Africa’s economy is not growing, there are “sunrise sectors” that are, and which require young talent, Galombik pointed out.

These include global business services, the green economy and energy transition, and the digital sector. Two years ago, there was a significant mismatch noted between the 40 000 entry-level roles in the digital sector and the 20 000 candidates completing a digital skills qualification at all institutions. This has led to offshoring jobs, rather than creating them in the country.

However, because there is a limit to how many jobs can be created in the formal sector, we need to grow our informal sector, which is currently smaller than in similar middle-income countries (around 10% of the economy).

A key priority is to grow informal and township economies and sell their services locally to people in their communities as well as into corporate value chains. To do this more effectively, we need to “democratise debt” – consider what funding is available to small businesses, either through procurement value chains or financial services – and invest more in digital platforms that can help to aggregate markets.

However, access to broadband is a key enabler, and only 3 in 100 people in South Africa have a broadband connection, which means we need to roll this out cheaply.

Solutions to the jobs crisis

Galombik highlighted four solutions to the crisis:

1. Unlock jobs, with a focus on sunrise sectors.

2. Employ young people enrolled in the National Pathways Management Network to feed an inclusive economy.

3. Invest in demand-led skilling

4. Enable people to self-employ.

Exciting national initiatives are already making a difference, but companies should focus on organised collaboration to do more, Galombik concluded, which means working with competitors as well as partners.