The holiday season gives us a rare opportunity to take a break from our hectic work schedules and spend time with our families and friends. Those of us who hail from far-flung rural areas get to leave the big city and make the annual journey to our places of origin.
There, we have the opportunity to attend weddings and imigidi (homecoming celebrations following a rite of passage for young Xhosa men) and many other such festivities, where we get to connect with people who have also travelled from around the country to celebrate with their loved ones.
Though this is supposed to be a period for celebration and festivity, these days there is an air of anxiety for many as their economic misfortune is exposed for all to see. It is clear that only a small percentage of South Africans have access to formal jobs capable of lifting them into the comfortable middle class. Far too many of our compatriots are either unemployed or unemployable, trapped in low-paying jobs or dependent on social grants.
This rising economic inequality is being worsened by escalating living costs and deepening structural unemployment, caused by a mismatch between the skills workers have to offer and those employers need to grow their businesses.
The widening skills gap is not only driven by technological advancement but also decades of deindustrialisation in our economy, whereby millions of jobs have been lost in the manufacturing and mining sectors as these industries’ contribution to GDP declined.
In 1981, manufacturing contributed 25% of GDP and mining 21%, but this has since fallen to 13% and 8% respectively. Given the shortage of skilled labour, electricity outages and water supply bottlenecks constraining the economy, SA is highly unlikely to boost its industrial capacity any time soon.
Interestingly, the deindustrialisation and structural unemployment SA has had to endure have not slowed down urbanisation, as people continue to relocate to big cities in search of greener pastures, putting pressure on urban infrastructure and resulting in a proliferation of informal settlements. At the dawn of democracy in 1994 about 54% of SA’s population lived in urban areas and cities, compared with almost 68% today.
In the third quarter of 2022 the expanded unemployment rate stood at 43.1%, meaning about 11.2-million potential workers could not find jobs, a figure that is not far off the number of employed people in SA, estimated to be about 15.8-million at the last count. In 1994 the expanded unemployment rate, which includes discouraged jobseekers, was about 31.5%.
As a country we are slightly more urbanised than China, the world’s second largest economy, where about 64.7% of the population lives in cities. But we are far less urbanised than the US, the biggest economy in the world, whose population is 82.5% urbanised. And unlike SA, both China and the US can provide employment for their citizens, with the unemployment rates in those countries at just 5.5% and 3.7% respectively.
During the festive season I encountered many young people who told me they were job hunting but cannot find work. Some dropped out of school before completing matric, while others studied beyond matric but have realised the skills they have acquired are not in great demand in the economy. They are stuck in structural unemployment.
While our grandparents and parents found employment in manufacturing, mining, railways, road works and agriculture, the current generation of young adult South Africans must find work in an economy that is dominated by knowledge-led and service-orientated industries.
This generation has not latched onto the reality that SA is a post-industrial economy that is similar to economies in more advanced regions such as North America, Western Europe and parts of Asia. These economies have made the transition from the production of goods to the production of services, and blue collar manual labourers have largely been replaced by technical and professional workers such as software developers, engineers, doctors, accountants, lawyers, real estate managers, bankers, fund managers and other professionals.
In SA you see the evidence of this post-industrial economy in commercial and financial hubs such as Johannesburg, Cape Town and Durban. Mines and factories have largely been replaced by office buildings, warehouses and shopping malls, with consumer products such as clothes, appliances, computers, smartphones, and television sets increasingly being imported, primarily from China, which has become the manufacturer for the world.
American sociologist Daniel Bell coined the term post-industrial society in 1973 in his book The Coming of Post-Industrial Society: A Venture in Social Forecasting. In it he described this shift from manufacturing to services and predicted the rise of new technical elites, such as we now see in Silicon Valley and other parts of the world.
SA’s economy, which was originally based on agriculture and mining, experienced a structural shift to being driven more by manufacturing, then in the early 1990s there was a rise of wholesale and retail trade, tourism and communications. Today, our economy is driven by knowledge industries, financial services, technology and e-commerce. Finance is the largest contributor to GDP at about 23%, followed by personal services at 17% and trade at 14%.
Unfortunately, the skills base has not kept up. When we are sitting around braai fires having a beer with friends, or at the dinner table with our families, we ought to be discussing these structural shifts in the economy to help us develop deeper understanding of what skills young people need to enable them to participate in a post-industrial, knowledge-based economy.
Sadly, while I was back home in the Eastern Cape I realised there is a lack of awareness about these structural shifts, which explains why so many of my compatriots remain trapped in unemployment, low-pay jobs or are dependent on state handouts. Our education system needs to step up and prepare young people to meet the needs of the 21st century, the modern economy of the future that Bell outlined so eloquently 50 years ago.
The structural reforms the government is embarking on to make our economy globally competitive must go hand in hand with fundamental changes to the education system to prevent the majority of our people continuing to fall into economic hardship and structural unemployment.
• Ntingi is founder of GetBiz.
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