Maryana Iskander

Maryana Iskander

Peace is a young woman completing her learnership at Standard Bank. Though bright and ambitious, she fell pregnant and dropped out of school before matriculating.

This made the likelihood of her finding employment negligible, as her lack of qualifications placed her in a queue behind the 858,610 matriculants, 136,806 diplomates and 30,698 graduates who are unemployed in SA.

In the 18- to 29-year age group, 43% of South Africans are not in employment, education or training. And the longer they remain so, the less likely are their chances of ever finding employment, as the experience gap between them and the employed widens. This makes youth unemployment the most critical component of SA’s overall unemployment challenge.

Not only is higher employment critical for helping individuals such as Peace move out of poverty, but it is also needed for the economy as a whole to translate all that wasted human potential into faster growth.

Peace was unemployed for a lengthy period before joining youth employment accelerator Harambee. There, for the initial investment of R30,000, she was put through a corporate work-readiness or "bridging" programme, and she is now employed in Standard Bank’s call centre.

The lifetime benefit for Peace translates into a 35:1 return on that initial investment, according to the Boston Consulting Group. This is based on its calculation that Peace will earn R1.1m over her working life in present value terms.

The benefit to society and the economy of the 30,000 previously unemployed young people like Peace that Harambee has put into permanent jobs over the past five years is many multiples of that. And yet Harambee CEO Maryana Iskander is painfully aware that "this is not enough".

The urgent need to scale up the multitude of job-creation initiatives being pursued by NGOs, business, cities and the rest of government was the subject of a high-powered conference on youth unemployment held at Spier wine estate, outside Stellenbosch, last week.

Finance minister Pravin Gordhan was there to announce that government planned to extend both its youth wage subsidy — the employment tax incentive (ETI) — and its learnership programme.

He shared the podium with Goldman Sachs MD Colin Coleman, who is the driving force behind the new Youth Employment Service (YES), a R50bn plan to put 1m young people through one-year internships over the next three years.

The YES will require business to increase employment by 3%/year. This means that a firm employing 1,000 people, with a 10% attrition rate, will need to hire not just the 100 new staff it will need to replace lost workers each year, but an additional 30 unskilled interns it does not need.

This is a big ask in an economy that isn’t growing, and yet it is something that all the large and small firms in one panel said they were capable of doing.

Coleman is also hoping to persuade the top 100 earners in big firms to sacrifice some of their salaries to help fund the scheme, and to convince trade & industry minister Rob Davies to grant firms empowerment credits in exchange for employing these interns.

Half the cost of the YES, about R8bn/year, will be borne by government in the form of incentives or tax revenue forgone. One of the main incentives will be the ETI.

According to national treasury, the take-up of the ETI has been strong, with government sacrificing R6.3bn in taxes to fund it between January 2014 and February 2016.

Over this period 645,973 individuals obtained ETI-supported jobs, which significantly exceeds treasury’s initial estimates. It constitutes about 5.7% of all individuals in SA’s tax database, and about 17% of all 18- to 29-year-olds.

But if the good news is that government and business are working hard together to tackle youth unemployment, the bad news is that even the most successful schemes, such as Harambee and the ETI, are barely making a dent in the scourge.

Though the ETI supported more than 600,000 jobs, youth employment didn’t improve significantly because the 1.7% jobs growth in the 18- to 30-year age group over this period was not enough to offset the number of young people entering the job market. As a result, the unemployment rate for this group rose from 39.5% to 42.1%, while the number of young people unemployed for more than a year also climbed, from 1.56m to 1.62m over this time.

The ETI and the multitude of other job-creation schemes in SA are also expensive undertakings. Coleman told a plenary session that "the best-kept secret in the country" is that R14bn from government finds its way into supporting youth employment every year.

What was not said was that this is the price SA has to pay for a dysfunctional economy in which growth has stalled.

To scale up and stitch together all these initiatives so they have a systemic impact requires not just doing more of the same but also focusing on the root cause — SA’s lack of economic growth and its appalling education system. Fixing these requires policy reform and systemic change that only government can perform.

Gold Fields deputy chairman Rick Menell came close to articulating this when he urged delegates to devote as much energy to addressing systemic issues as they did to their individual projects.

SA has to "go back and fix the education system", he said, suggesting a revival ofa system of voluntary service to get people to provide mentorship and training within the schooling system.

Ann Bernstein, executive director of the Centre for Development & Enterprise, hit the nail on the head when she noted that, despite everyone’s efforts, youth unemployment is increasing. "Everyone wants growth and youth employment but nobody wants to talk about fundamental change," she said. "We have to talk about what we want to change and that means we have to talk about policy."

But policy change was not on the agenda. Even Gordhan failed to go there, calling instead for "a conveyor belt" of projects and for "combining initiatives in the right way" to find "cohesion" and create "a powerful platform" to address youth unemployment.

As long as government fails to drive systemic reform, it will fall on innovative NGOs, generous corporates and brave SMMEs to give hope and jobs to people like Peace. If only that were enough.