SA’s youth unemployment crisis is a ticking time-bomb that could trigger an uprising such as the Soweto riots of 1976 or the Arab Spring of the early 2010s. The latter was a wave of protests in North Africa and the Middle East that toppled governments.
Except for a brief period from 2003 to 2008, the government’s economic policies have done nothing for youth unemployment. The truth is that it does not care.
According to Stats SA’s quarterly labour force survey for the fourth quarter of 2022, there were 12.6-million young people (15 to 34 years old) in the labour force, equivalent to 45.3%. Of these, 5.6-million young people accounted for 35% of the 15.9-million South Africans who had jobs.
But there were also 7-million unemployed young people who accounted for 59% of the 11.8-million South Africans who did not have work. The unemployment rate for young people was 55.6%. A total of 9-million who were not in education, employment or training.
There was a time when the economy created jobs. From the first quarter of 2003 to the fourth quarter of 2008 it created 1.4-million jobs for young people. This was equivalent to 45.8% of the 3.1-million jobs that were created in the economy. There was no jobless growth.
The youth employment multiplier, which measures the relationship between GDP growth and jobs, was about 0.9. GDP grew 4.5% a year during this six-year period and employment expanded about 4% a year.
Everything changed after the mini-boom as young people suffered disproportionately from the economy’s failure to create enough jobs for new entrants into the labour market and the stock of previously unemployed people. They were the first group to be pushed out of the labour market and replaced by older people. From the fourth quarter of 2008 to the fourth quarter of 2022 the economy created only 1.2-million jobs as total employment increased to 15.9-million from nearly 14.8-million.
If one disaggregates this headline number, the economy created 2.1-million jobs for older people (aged 35-64) as their employment increased to 10.3-million from 8.2-million. Their share of total employment increased to 64.9% from 55.8%. But 934,000 young people lost their jobs as their employment fell to 5.6-million from 6.5-million. Their share of total employment fell to 35.1% from 44.2%. The frightening implication is that the youth employment multiplier was negative during this 14-year period.
Over the past decade the government has implemented numerous mostly supply-side policies to deal with youth unemployment. The youth wage subsidy has paid employers R32bn since 2013/2014. But the number of unemployed young people has increased by 1.5-million since then. The subsidy is wasteful spending since it clearly does not create jobs for young people.
In 2018 President Cyril Ramaphosa launched the Youth Employment Service, a private sector initiative to create 1-million internships in three years. Five years later it has created only 100,000 “work opportunities”. In October 2020 the government launched the Presidential Employment Initiative with a budget of R9bn for 2023/2024 to create 500,000 short-term jobs. But the initiative will end in February 2024, a few months before the national election.
The policymakers who designed all the supply-side measures — the youth wage subsidy to reduce the cost of hiring young people, the job-matching databases to increase the efficiency of the labour market, and skills development and work readiness programmes to improve the employability of young people — must confront the painful reality that there are no jobs for young people.
SA needs new policies that will boost the demand side of the economy. The government must abolish the youth wage subsidy and use its R7bn a year budget to expand public employment programmes and introduce other measures that improve the absorption of young people into the labour market.
• Gqubule is research associate at the Social Policy Initiative.
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