by Piet Coetzer

Potential and explosive burden

Pressure on the middle-aged productive sectors in the economy

Mthuli Ncube
Mthuli Ncube
For South Africa, and the rest of the African continent, the youth population demographics should be a global competitive advantage. However, since the relatively high economic growth rate on the continent is mostly “jobless growth” the youth of the populations create socially explosive burdens for African societies and pressure on the middle-aged productive sectors in the economy. 
The fact that South Africa and most of Africa is experiencing jobless growth “is an unacceptable reality on a continent with such an impressive pool of youth, talent and creativity,” Mthuli Ncube, Chief Economist and Vice-President of the African Development Bank (AfDB) said last week.
Speaking at the launch of the Africa Economic Outlook report, he suggested that a substantial threat to social cohesion and political stability could result from an inability among policymakers to create sustainable jobs for the youth.
The report, co-written by the African Development Bank, the Organisation for Economic Co-operation and Development (OECD) Development Centre, the United Nations Economic Commission for Africa (UNECA) and the UN Development Programme (UNDP), focuses on youth as an opportunity for future economic growth.
Helen Clark, the Administrator of UNDP, said at the same occasion that “young people can be very important sources of innovation and growth, and enable Africa to enjoy a major demographic dividend.
“Because growth does not always result in employment, especially for young people, we need to adopt active labour market and employment-friendly macro-economic policies to improve labour market conditions. Employment policies must stimulate output in relatively high-productivity and high-wage sectors of the economy in particular.”
Mario Pezzini, Director of the OECD Development Centre said the private sector is Africa’s employer of tomorrow.
About South Africa he added that “in an economy traditionally dominated by large firms, the key for South Africa is to support small and medium enterprises and help them grow.”
The report finds that a government focus on the informal sector and rural areas, which contain immense entrepreneurial talent and on creating the skills for youths to compete in the job market, in agriculture and new technologies for example, can develop engines for inclusive growth.
Ncube said that youth unemployment was a burning issue all over Africa and countries needed to urgently realise the potential impact it could have on current high growth rates. While a majority of young citizens in countries such as Egypt, Tunisia, Djibouti and Algeria planned to look for work in the public sector there could be a dangerous mismatch between youth expectations and what was on offer in local job markets.
"We've got more than enough economists and engineers in Africa. What we need are people who can deal with our governance issues," he said.
In many parts of the world, including South Africa, high unemployment rates also create pressure on middle-aged parents, making it difficult for them, among other things, to properly plan for their own retirement.
According to statistics the rate of unemployment among South Africa’s youth aged between 15 and 24 is approximately 51%. If this problem persists, more than 50% of young adults are not going to be able to find employment after school and as a result will not be financially independent from their parents.
This is not a problem unique to South Africa or Africa for that matter. In the US 62% of young people between the age of 19 and 22 are financially dependent on their parents,  according to Jason Garner, a management consultant at Acsis.
In the meantime even young people who have received some post secondary school training are not suitably skilled for the job market.
It was reported last week that according to Sean Jones, a director of Ikhaya Fundisa Techniskills Academy, the training given to young people attending some further education and training (FET) colleges as part of a national programme does not enable them to obtain jobs in industry.
“We have witnessed cases where an institution has all the necessary equipment to train learners but lecturers don’t really know how to operate this equipment. So, while the necessary funds are being allocated to the institutions, in many cases this equipment is standing idle," he said.
The South Africa-specific section of the Africa Outlook report states that rapid economic growth in the country must be accompanied by policies to boost job creation and training opportunities, particularly among youths.
At the same time, however, the report found that unemployed young people in South Africa tended to be less skilled than in other emerging economies: almost 86% did not have formal secondary or tertiary education, while two-thirds had never worked at all.
The overall picture that emerges, when read with the apparent development of another round of tension between the ruling African National Congress and its Youth League, is that South Africa may be sitting on a powder keg with the growing young portion of its population.
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