Publications
Partners
South Africa has seen a slight reduction in the official unemployment rate in the first half of 2023 after employment increased by 784 000 jobs or 5% year-on-year in the second quarter. However, most of these jobs did not go to young people who were the group's worst affected by the country’s unemployment crisis.
Nearly 61% of young people aged between 15-24 years don’t work and most have not been working for prolonged periods. This number rises to 70% if close to a million young people who’ve given up looking for work are included.
Of the 784 000 jobs created in the second quarter, only 45 000 went to this group, according to a PWC economy report.
With the current levels of economic growth that’ve been forecast for 2023, PWC expects only about 169 000 of this group to realise jobs this year.
This will be more than the 151 000 young people expected to enter the labour force. This, in turn, will result in the youth unemployment rate declining from 46.3% in 2022 to 45.4% by the close of this year.
Marthle du Plessis, PwC Africa Workforce of the Future Platform leader, said increasing youth employment required skills development.
“For millions of young people in South Africa, these skills are hard to come by as countless communities lack access to crucial opportunities, which makes preparing for the world of work an almost impossible task.
“Bridging the skills gap is a complex problem that requires all stakeholders — government, the private sector, education institutions and community organisations — to work together and make the country a more resilient, inclusive and entrepreneurial economic space.”
READ: Youth unemployment crisis threatens South African society as a whole
Four scenarios were created in the report and in all those scenarios, youth unemployment would continue to climb over the next seven years unless something different was done.
The domestic economy needs to grow by at least 2% annually to turn the tide on jobless youth. But the Reserve Bank has forecast South Africa’s economic growth by 0.4% this year and 1% in 2024.
PWC Africa is not far off in its predictions. It anticipates Africa’s most advanced economy will grow by an average of 1.2% between 2024-2030.
“Our model suggests that this will result in youth employment increasing by an average of 1% per annum towards 2030.
“As a society, we need to find the lost demographic dividend and the benefit that increasing jobs among the youth could have on social stability, household income and the economy as a whole.
“In a simulation explored in this report, getting the youth unemployment rate back to the levels seen in 2008 could generate an estimated R137 billion in additional household income per year,” the report stated.
Entrepreneurship may be the answer
The alternative to job creation is encouraging entrepreneurship and creating an environment conducive to entrepreneurship to grow this part of the business.
This is currently a struggle in the country, as around 80% of small-and-medium enterprises die within five years of being created. Government's regulatory requirement has in most instances been a hindrance to this sector.
The scale and speed needed to address this requires a radical approach that is focused on empowering a massive number of new entrepreneurs at a community level.
READ: 'SA not taking small and midsize enterprises sector seriously'
“Entrepreneurialism needs to permeate through all our townships and cities. However, winning this entrepreneurship challenge will require a coordinated effort across society (government, the private sector, education institutions, community organisations) to build momentum, fully develop and hyper-scale this ecosystem towards creating massive amounts of jobs,” said the report.
If South Africa is unsuccessful in addressing the youth unemployment crisis, it is likely to face increasing social unrest.
PwC SA chief economist Lullu Krugel said: “In recent years, South Africa’s social issues have come to the forefront of public consciousness with greater ferocity. With much introspection, larger pockets of society have realised that in order to mitigate and fix the issues being faced by our communities today, a collective effort is needed, as we share a collective responsibility to address issues.
“Fixing them, however, is a far greater challenge than it was a decade or two ago, given the growth of economic disparity, the rise in social and political polarisation and the growing lack of trust that the public has in institutions.”
In July 2021, widespread looting of businesses and shops, as well as destruction of public facilities and private properties, took place over nine days in KwaZulu-Natal and Gauteng, causing damage to the economy and livelihoods.
