Answer to unemployment is jobs with a multiplier effect down the line

Every 10 jobs created in skilled businesses such as hi-tech engender up to 25 jobs in local services

We’ve become so accustomed to SA’s unnaturally high unemployment rate that we celebrate when it declines to 34%. We’re unmoved by articles that talk of a “ticking time bomb” and “jobs bloodbath”. But behind the dry statistics and anguished analysis lies a human tragedy that will ultimately affect us all, whether we like it or not.

According to Stats SA’s quarterly labour force survey for the second quarter of the year, there was a slight decrease in the official unemployment rate, which now stands at 33.9%, with 648,000 jobs gained in the period. Though this seems hopeful, do not be lulled into a false sense of security: two out of three South Africans between the ages of 15 and 34 are still unemployed. Earlier this week, Stats SA reported a fall of 119,000 jobs in SA’s formal nonagricultural sector for the three months to end-June.

You have three children. Only one gets to go to school. Learns a skill. Gets a job. The other two are shut out from participation, learning and, ultimately, earning. That’s the reality we’re living in right now — unless we move, move now and move fast, to change it.

There are many reasons for the crisis. An education system that leaves most of our young people unemployable. A volatile, digitising global economy that has yet to work out how to take everyone along for the ride. Mostly, we don’t have an inclusive and growing economy that uplifts the people who need it.

The reality is that the ability of our economy to absorb the youth entering the employment market is declining. As a study by Brookings’ Africa Growth Initiative highlights, SA’s economic growth trajectory is not producing the volume and type of jobs required to reverse the unemployment trend.

Part of the problem is that our GDP has stagnated. The economic contraction in SA (-6.4%) during 2020 was far more severe than most other emerging markets and developing economies. And despite a moderate rebound in 2021, our GDP is still below the prepandemic level.

Increasing SA’s rate of economic growth is the single biggest factor that is going to create jobs. Organisations such as Business Unity SA (Busa) have been vocal about the fact that the only sustainable way to deal with unemployment is to enable businesses to grow and be profitable. This requires an environment in which businesses are confident enough to make long-term job-creating investments.

To achieve this, we’re going to need the government to make structural interventions in the economy to attract investment and make it easier for businesses to start, grow and employ young people. These include:

● Improving rail and ports for exports;

● Security of electricity supply;

● Changing labour regulations to make it easier to start businesses and employ workers;

● Providing greater policy certainty; and

● Creating an environment built on political stability and the rule of law.

Unprecedented levels of collaboration across the private and public sectors are needed to address the barriers young South Africans face daily, and to harness the power of the broader employment ecosystem that is trying to solve the joblessness crisis in numerous ways. Critically, we need jobs that have a multiplier effect down the line. We must find ways to turn one job into 10 or more.

What are some of these job multipliers? Research by UK-based think-tank Centre for Cities found that for every 10 jobs created in skilled businesses, particularly hi-tech businesses, up to 25 jobs are created in local services. So, importing critical skills into SA is actually good for creating local lower-skill jobs.

A recent study suggests that bringing in 11,000 skilled migrants would generate about 78,000 jobs for unskilled and semiskilled workers. And if skilled migrants could have that effect, imagine the benefits of growing our own cohort of young professionals and business owners.

That’s where programmes such as the Youth Employment Service (YES), a private sector-led not-for-profit CEO Initiative, come in. YES is a jobs pipeline for the most talented youth from the most disadvantaged backgrounds. As a 100% private sector-funded initiative YES and its partners have sponsored and placed more than 85,000 of the country’s most talented youth into quality jobs over the past three-and-a-half years, injecting R4.8bn in youth salaries alone into the economy.

In 10 years, there is a high likelihood that many of these YES youths will go on to become senior professionals in the private sector or proud owners of their own businesses. If each of those 10% can drive the creation of another 10 jobs, suddenly we’re looking at north of 800,000 jobs being brought into the system. It is these future professionals and entrepreneurs that will be SA’s real creators of jobs going forward.

Take the example of Noluthando Mokoena. She is a YES alumna who now owns a small company called EmpowHer, which helps young women get the skills they need to make careers in the IT sector, such as creating apps and coding. She has come full circle. She started with no funds to pursue her tertiary education and inadequate prior skills in IT. She then got an opportunity to become a YES youth, which gave her formal sector exposure to digital skills and the concept of purpose-driven businesses.

Noluthando is now a key player in our imperative of providing future-facing jobs at scale. “Our goal is to create nation builders out of the girls who use our app. I learnt many skills on the YES programme, but the most important one was being able to digitise my work and become computer literate,” she says. Her vision is growing and she is already employing her own staff.

The fact that many YES opportunities are being created in future-facing industries simply adds to the multiplier effect. These are industries that piggyback on the world’s inexorable move towards digitisation and technology. These include global business services (such as business process outsourcing centres), drones, cybersecurity, creative, agribusiness and processing, and 3D modelling and design.

Ultimately, though, no single programme, player, industry or intervention can fix our unemployment problem alone. We must grow our economy as a country. Until that happens, we need to do a range of things to give our youth the chance to become the catalysts for that growth. Putting multipliers in place to grow jobs exponentially is just one of them — but it is one we cannot afford to ignore.