Situational Analysis
Contents
Acronyms
1.Introduction
SECTION ONE
2Underlying determinants of youth unemployment in the country
3Bottle necks with respect to young people accessing the labour market
Bottlenecks when seeking employment
Bottlenecks related to self employment
Bottlenecks related to social factors
4Current legal framework regarding employment creation
Overarching strategies & plans
Strategies & Plans linked to Small Business Support
Strategies & Plans linked to Employment Creation
Strategies & Plans linked to Training
The BBBEE Code and the Charters
Other possible sources of funding
Other policy options to
A summary of the array of policy and programmatic options
SECTION TWO
5Best practices in youth employment programmes globally
6Review of the types of interventions generally used to link young people to employment in South Africa
a.Interventions: Programmes to address the transition to the labour market
i.Secondary School Interventions
ii.Work Readiness and Placement programmes
iii.Occupational Programmes
iv.Entrepreneurial Development Programmes
v.Public Employment
b.Learning emerging from the SA experience
i.Recruit young people who have the competence to cope with the programme
ii.Offer information and guidance to learners on what the programme will provide and what opportunities may exist beyond the programme
iii.Recruiting young people who are interested in and motivated to take part in the programme
iv.Address the relevance of learning programmes
v.Providing support to enable young people to access formal employment
vi.Providing support to enable young people to initiate an enterprise
vii.Ways to design Public Works programmes that meet the needs of youth
7Institutional Landscape
8Proposal for a possible project
References
Annexure A: learning for future design of youth employment programmes
Include Annexure A
Acronyms
Acronyms
ABET -Adult Basic Education and Training
ALMP - Active Labour Market Policies/Programmes
CA - Chartered Accountant
CRM - Customer Relationships Management
CV - Curriculum Vitae
CWP - Community Work Programme
DFI’s - Development Finance Institutions
DGMT - The DG Murray Trust
DOE - Department of Education
DoH - Department of Health
DoL - Department of Labour
DPRU - Development Policy Research Unit
DPW - Department of Public Works
DSD - Department of Social Development
EMS - Economic Management Sciences
EPWP - Expanded Public Works Programme
ESSA - Employment Services of South Africa
ETDP -Education, Training and Practices Sector Education and Training Authorities
FET/FETC - Further Education and Training/ Certificate
FIETA - Forest Industries Education and Training Authority
GDP - Growth Domestic Product
GED - General Educational Development
GIZ – German Development Cooperation
HR - Human Resources
HSRC - Human Sciences Research Council
IDC - Industrial Development Corporation
ILO - International Labour Organisation
JASA - Junior Achievement South Africa
JET - Joint Education Trust
JIPSA - Joint Initiative on Priority Skills Acquisition
MATRIC - Matriculation (school completion certificate)
MGNREGA - Mahatma Gandhi National Rural Employment Guarantee Act
NARYSEC - The National Rural Youth Service Corps
NEETs - Not employed and not in education and training
NGO - Non Governmental Organisation
NYDA - National Youth Development Agency
NYS - National Youth Service
PES - Public Employment Services
RDP - Reconstruction and Development Programme
SAGDA - South African Graduate Development Association
SAICA - South African Institute of Chartered Accountants
SAIE - South African Institute for Entrepreneurship
SEFA - Small Enterprise Finance Agency
SETAs - Sector Education and Training Authorities
SMME - Small Medium Micro Enterprises
TTO - Triple Trust Organisation
TVET - Technical Vocational Education and Training
UNDP - United Nations Development Programme
UNISA - University of South Africa
UYF - Umsobomvu Youth Fund
YAC - Youth Advisory Centres
YIEPP - Youth Incentive Entitlement Pilot Project
YPED - Youth Professional Entrepreneur Development
1.Introduction
UNDP has undertaken considerable work in the area of youth unemployment in South Africa as well as globally. This learning and research, as well as other relevant research, is analysed and underpins the proposal for a programme to be facilitated by the UNDP to address the issue of youth unemployment.
This paper has the following structure:
Section One
- Identifying underlying determinants of youth unemployment in the country
- Identifying bottlenecks impeding youth employment
- Assessing the current legal framework regarding employment creation in South Africa
Section Two
- Best practices in youth employment programmes over the world, especially in countries with similar GDP/youth employment ratios to South Africa.
- Describes good practice youth employment programmes in South Africa
- Considers the array of institutions that are implementing and supporting youth programmes to address youth unemployment
- A proposal for a programme that could be supported and indicators potential partners in the implementation of this programme.
SECTION ONE
Section One of this paper considers the underlying determinants of youth unemployment, the bottlenecks impeding youth unemployment. It then considers the extent to which the legislative and policy environment that is place addresses these challenges and creates a framework for creating opportunities to address unemployment.
The importance of addressing this imperative cannot be overstated and is illustrated by the following graphic developed by the Department of Performance Monitoring and Evaluation[1].
2Underlying determinants of youth unemployment in the country
This section looks at the underlying determinants of youth unemployment, which are defined as the macro factors that are outside of our control and will not be able to be addressed by within the scope of interventions proposed within this paper.
The first and most important explanation for high levels of youth unemployment is slow economic growth in a context of high structural unemployment. Literature that attempts to explain the high overall rate of youth unemployment generally describe the main determinants of youth unemployment as being a lack of demand from the economy – that the level and growth of economic activity has been unable to cope with the supply of new entrants to the labour market (Budlender[2] citing Mlatsheni and Rospabé, Altman and Marock (2008); a study completed by the World Bank.[3] suggests that the lack of labour demand in markets where economic activity is too slow for job growth or where there is a demand for labour but employers choose not to hire the available labour pool is a key constraint to youth employment).
The extent that this poses a challenge for interventions addressing youth unemployment is therefore seen when reviewing thenature of the economy in South Africa, which is, at present, characterised by low growth and high levels of job loss. The unemployment Rate in South Africa averaged 25.27 percent from 2000 until 2015, reaching an all time high of 31.20 percent in the first quarter of 2003 and a record low of 21.50 percent in the fourth quarter of 2008. More recently, the overall jobless rate in South Africa increased to 25.5 percent in the third quarter of 2015 from 25 percent in the previous period and the number of unemployed rose 3.6 percent.
The disproportionate numbers of youth unemployed relative to overall populationis consistent with international patterns where it is also found that “unemployment among young people tends to be more sensitive at the economic cycles than the unemployment among adults, the number of unemployed youngmen (sic) tends to increase faster during the recession periods and to decrease, in the same way, during the periods of economic increase, than the number of unemployed adults. The most studies conclude the fact that the aggregated economic performance represents a decisive factor of the unemployment rate among youngmen. (Blanchflower și Freeman, 2000)[4]”.
The above-mentioned article suggests that, “the transition from school to the integration of young generation in the work force market represents one of the most critical and pressing problems of work force market functionality, with a significant economic and social impact”[5]. The import of the education system in determining access to the economy has also been highlighted by numerous research studies in South Africa as outlined below.
Bhorat[6] offers a graphical representation of the nature of these youth transitions across the schooling-labour market continuum in South Africa (Figure 1). Figure 1 illustrates that there are a certain number of youth within the education pipeline, and as they progress through this pipeline there are a series of different thresholds (represented by nodal points in Figure 1) where they either exit education and enter the labour market, or continue with their education. The chosen exit point from the education pipeline will ultimately strongly influence labour market outcomes. However, there are a range of factors that influence both the exit point and the labour market outcome.
The first transition point, represented by node 1 in Figure 1 represents the decision, while in secondary school, to either continue and complete high school or to drop-out from secondary school and enter the labour market. The article uses National Income Dynamics Study (NIDS) panel data, and estimates that between 2008 and 2012, 50.71% of the youth moving through this pipeline dropped out of secondary education[7]. A further 3.79% of the youth moving through the education pipeline, exit before completing their high school education but then re-enter the education pipeline (represented by node 2 in Figure 1. They enrol in either a National Technical Certificate (NTC) course or some other form of tertiary education that does not require a complete high school education.
The third transition point, represented by node 3 in Figure 1, refers to youth who once completing high school, either continue with higher education or enter the labour market. According to the NIDS data, between 2008 and 2012, approximately one in every four youth who were in the education pipeline in 2008, complete their high school education and then enter the labour market.The fourth transition point, represented by node 4 in Figure 1 represents those youth who continued into higher education after completing their high school education. According to the NIDS data, between 2008 and 2012, 19.27 percent of the youth who were in the education pipeline in 2008, entered into higher education. With regard to tertiary education, a distinction is made between youth who dropped out of secondary school before completion and entered into tertiary education that does not require a complete high school education (e.g. NTC), and youth who completed high school and entered tertiary education (e.g. university degree). We identify these separately, as the labour market outcomesdiffer across these two groups.
Figure 1: Education Pipeline - School to Labour Market
At each of the transitions points, youth move from the education pipeline to the labour market. The labour market outcome can be one of the following: wage employment, self-employment, unemployment and discouraged work-seeker. Ultimately one could then also consider the post-work transitions of the youth who obtain employment after their education. These transitions refer to whether young people can retain their jobs, and if they do, for how long, and whether this leads to occupational mobility and increased earnings (this is depicted in the block to the right of Figure 1)
Utilising this framework, the article suggests the e following summarised overview of youth transitions through the schooling system: Of the 100 young people who enter the secondary schooling system, 51 will drop out. In turn, 26 continue onto completing their matric and then enter the labour market. Finally, of the 100 secondary school starters 4 will enrol into the TVET system (without completing high school), whilst 20 of these starters will complete high school and move onto a tertiary institution.
It is expected that the labour market outcome is strongly determined by the level of education of the youth entering the labour market, and hence the point of exit from the education pipeline. This is illustrated in Figure 2, which shows lower unemployment rates for youth who exit the education pipeline at higher levels of education.
Figure 2: Unemployment Rates By Youth Cohorts
Source:NIDS Wave 1 and Wave 3. Own calculations
These finding are reinforced by numerous research papers, which highlight the relationship between education, skills and access to the economy. Rankin et al in their paper ‘Young People and Jobs during the Financial Crisis’ (Unpublished)show that the challenge faced by young people during the financial crisis is the growing skills bias (with Grade 12 increasingly utilised as a proxy for skills) in the South African labour market. Industries that have traditionally absorbed most unskilled entrants to the labour market now have a lower ratio of semi- and low-skilled jobs. The impact of the growing prioritisation of skills affects young people most adversely, because semi- and low-skilled jobs are natural entry points into work. They indicate that an analysisof Labour Force Survey data reveals that the industries that have traditionally absorbed high numbers of unskilled entrants to the labour market are increasingly shifting to hiring more skilled labour: this is illustrated by the calculations that Rankin et al (2012) make, which show that between 2000 and 2010, the ratio of semi- and low-skilled jobs to skilled jobs fell from 9.6 to 7.1 in mining and quarrying, 5.2 to 2.0 in manufacturing, 17.4 to 4.7 in construction and 7.3 to 3.7 in the wholesale and retail sector. It is indicated that the impact of the growing prioritisation of skills affects young people most adversely, because semi- and low-skilled jobs are natural entry points into work (Rankin et. al., 2012).
This section has highlighted that general unemployment can be determinant of levels of youth employment and that education is a key determinant of youth unemployment. This context needs to be borne in mind and it is recognized that if not addressed will continue to result in large numbers of youth being unemployed: however it is suggested in this paper that there are bottlenecks that can be addressed by interventions which would allow a greater number of young people to navigate the labour market. These are addressed in the following section.
3Bottle necks with respect to young people accessing the labour market
The previous section has highlighted the impact of the economy and education system on youth unemployment. This section focuses more on those barriers or bottle necks that face young people that could be addressed more directly address within the scope of the interventions outlined within this paper.
This paper recognizes that there are a number of factors that could impact on the ability of young people to access work. Critically the data suggests that race, gender, disabilities as well as the urban/rural divide all impact on labour market outcomes. Whilst addressing aspects of this challenge may be beyond the scope of this intervention it is suggested that there are bottle necks that could be addressed that could enable the transition of these different cohorts of young people. For example, research suggests that one of the reasons that young Africans may take a longer time to be absorbed into the labour market than others) is because of their job search skills related to the spatial separation between business centres and the outlying areas where Africans reside as a result of Apartheid planning policies may explain this challenge. Transportation and the affordability thereof could further add to this problem (Banerjee 2008). Recent evidence reinforces this research and also points to the probability of finding employment being strongly linked to family-related characteristics (social networks and belonging to an employed household vs an unemployed household).This is closely related to the ‘insider/outsider’ issues dealt with in more detail in this section. Mlatsheni and Rospabé look at gender issues in the labour market, where they found that only 17-27% of the male/female gap in the likelihood of having wage employment or being self-employed was explained by observable characteristics, suggesting a large element of discrimination. Recent research conducted by the IYF (2015) resonates with these findings but suggest ways in which these attitudes can be addressed through interventions with employers. Similarly young people with disabilities struggle to access the labour market though again programme reports from the Department of Labour suggests ways to overcome these barriers. This is not to suggest that race, gender and disabilities are not critical factors in determining access to labour market, rather it is suggested that in considering other bottle necks there is a need to review these through the lens of these groups, and further that the barriers to enabling access for these groups need to be explicitly addressed within the design of any intervention.
It is also noted that labour law is often referred to as a bottleneck with respect to youth employment. This paper does not focus on the labour legislation per se though it acknowledges that this remains a heated debate. In the following section though there is a discussion about the policies that have been put in place to enable youth employment: many of which serve to address some of the concerns pertaining to existing legislation, for example the wage incentive addresses concerns pertaining to minimum wage for new entrants.
Bottlenecks when seeking employment
Other factors that create bottlenecks to youth employment are provided by Marock and Altman (2008) and the World Bank Study[8]. These Include:
- Skills mismatch are the lack of adequate general skills (literacy, numeracy), technical skills, or soft skills (behavioural skills), all of which are identified by employers as necessary for productive employment. It is acknowledged that formal education attainment has already been highlighted as a key determinant to youth unemployment and that these qualifications frequently also serve as a proxy for levels of skills. However it is recognised that there is also the concern that a specific obstacle facing young people is that even with formal qualifications they often lack the foundation skills such as mathematics and English, or other capabilities such as communication or personal presentation and work readiness.
- Youth lack job experience. Obtaining a first job is quite a challenge in any context. However, in South Africa it is especially so for historically disadvantaged groups who face the challenge of not having effective labour market networks that can help guide job search behaviour and skills acquisition choices. This issue has since been highlighted in other research documents including: National Treasury which has highlighted that inexperience is a key factor in employment prospects, and suggests that this may explain some of the implicit age discrimination in the labour market (National Treasury 2011).
- Job search constraints, including poor information about where the employers (or the employees), also called “matching” and a lack of tools that allow young people to signal their capacities to potential employers. Educational qualifications, such as a matric, operate as a signal for productivity levels in the absence of experience. Without the ability to signal their productivity levels to a prospective employer, young people have no way of showing their suitability for a job. Only completed matric and further qualifications are considered trustworthy by employers in South Africa, hence levels below matric serve no value (Wittenberg, 2002; Duff and Fryer, 2005; Levinsohn, 2007).Young people also lack job search capabilities and networks that are relevant to the labour market.
- Youth lack mobility and the resources to look for a job. Related to job search constraints, young people often stay close to home – because of a lack of mobility - where jobs may not be that readily available. Further, as indicated previously transport remains a major challenge for young people.
- Social norms, on the labour supply side, where young people may not pursue available jobs due to self-imposed or externally imposed constraints on the types of employment that are appropriate. Recent research by Harambee suggests though that with support young people are able to identify jobs for which they are more likely to qualify. Further whilst reservation wages are often considered a bottle neck to enabling young people to access employment recent studies suggest that these can be mediated and that young women have been particularly open to such feedback[9].
The key points highlighted above are given further expression in research about how young people navigate the labour market. It has been well documented that those who are most successful at finding employment have higher social capital (Kraak, 2013; Nudzor 2010; Schoer et al., 2012; Seekings ed. 2012). The concept of insiders and outsiders, and the implications for job search behaviour, is further nuanced in research from Seekings (2012a) where they suggest that in addition to insiders and outsiders there is also a category referred to as privileged youth. Considering young people in the urban areas, Seekings provides the following definitions in terms of each of these three categories: