Incentivising technical and vocational education and training (TVET) colleges to partner with business and scrapping the country’s sector education and training authorities (Setas), should be key steps in addressing SA’s “catastrophic” unemployment crisis.
This is according to a new report released on Tuesday by the Centre for Development and Enterprise (CDE), which paints a stark picture of the joblessness crisis and sets out practical recommendations to steer the country onto a more employment-rich path.
“The [jobs] situation now can only be described as catastrophic ... a complete failure of government,” said Ann Bernstein, executive director of the CDE.
She noted in 1994, 3.7-million people were unemployed, compared to 12.6-million today.
“Fewer than four in 10 working-age adults are employed, and we are a complete global outlier. Upper-middle-income countries like ours employ about 60% of their adult population,” she said.
This means that about 1,000 South Africans have joined the unemployment queue every single day for the past 17 years, according to Bernstein.
She also criticised the ANC’s 2024 election manifesto promise of 3.5-million “work opportunities”, arguing such terminology disguised the true scale of the crisis.
“The truth is that work opportunities are not real jobs. These are mainly state-funded employment in temporary, sometimes part-time employment. We calculate that it takes 2.8-million work opportunities to result in 250,000 full-time jobs ... 300,000 if some of these are part-time,” she said.
“The government has failed to address the structural causes and depth of mass joblessness. They have failed to act with urgency or to mobilise a coalition for the changes that are desperately required.”
Failed and expensive Setas
To help address mass unemployment, the CDE called for the scrapping of the Setas, describing them as a failed and expensive experiment that has done little to improve workforce readiness.
“Let’s stop mulling about, they’re not performing their function,” said Bernstein.
Setas were established in the late 1990s to boost workplace skills and align training with industry needs, funded through a compulsory levy on employers. Each Seta oversees a specific economic sector, from manufacturing to finance, and is meant to identify scarce skills, accredit training providers and allocate grants for learnerships and apprenticeships.
However, the system has long been dogged by controversy, with repeated auditor-general findings of poor governance, irregular expenditure and weak financial controls. Despite billions of rand collected annually through the skills levy, critics say the system has done little to reduce unemployment or close SA’s widening skills gap.
In their place, the CDE proposes a skills development system driven by private companies, with TVET colleges incentivised to partner with business. The CDE also recommends shifting from “bums on seats” funding to results-based funding and requiring instructors to have industry experience, alongside mandatory work-based learning components.
Labour market reforms topped the list of CDE’s proposals, aimed at encouraging firms to hire more workers. These include a 12-month probation period without special dismissal protections, ending the extension of collective bargaining agreements to non-parties, lifting restrictions on labour brokers and experimenting with labour market reforms in a special economic zone.
To unlock small business growth, the CDE urged the introduction of a regulatory impact test for SMEs and a radical shift in red tape reduction.
“Let's ask small firms themselves, what holds you back? What are the regulations that prevent you [from] employing a few more people or expanding?” Bernstein said, calling for transparent, quarterly progress reports from the government.
The report also recommends redirecting half of the roughly R6bn the state spends each year on small business support to private institutions that would compete for funding based on demonstrable results.
Lastly, the CDE urged the government to facilitate rather than hinder the informal sector, proposing measures such as zero-rated trading licences for street vendors, urban densification to increase foot traffic and transport subsidies to help traders reach economic hubs.
“So to pull this all together, mass unemployment requires a new approach altogether,” Bernstein said.
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