We can’t know how many of our unemployed young adults will be permanently marginalised – yet six out of ten of our 15 to 24-year-old jobseekers are routinely rejected.
As it could dismantle a nation’s social cohesion, most governments would treat a youth unemployment crisis half as severe as ours as an existential emergency. Compare that to how we fret about the risks of entering into a recession, notwithstanding our unemployment metrics being substantially worse than they were during the Great Recession or even the Great Depression.
In a normal economy, a never-employed 25 year old who had left school a decade earlier could still expect to find a formal job and become reasonably productive. Our situation is far worse, as such jobseekers would be surrounded by people roughly the same age, along with those several years older and younger, in the same predicament. Employers will favour recent school leavers or older workers with experience.
South Africa’s per capita income peaked well over a decade ago, while forecasts suggest this key metric will continue to stagnate. Consequently, each year roughly three hundred thousand young South Africans will join the millions going nowhere.
Permanently marginalised
Might ANC elites want to permanently marginalise young adults?
If the ANC is dispatched from the Union Buildings in 2029, prosecuting and jailing the party’s leaders could be discouraged by sparking large-scale social unrest. This would be much easier if most young people were radicalised by economic marginalisation. The July 2021 rioting, associated with the jailing of Jacob Zuma, was a cautionary tale costing hundreds of lives along with causing tremendous property damage.
Large-scale social unrest can trigger martial law. Constitutional requirements to reestablish democratic protections can be ignored.
Swelling youth unemployment can also be used as an excuse for aggressive waves of redistribution amid efforts to advance the socialist agenda misnamed as the National Democratic Revolution.
Three largest provinces
Polling suggests the ANC will retain its political hegemony at the national level by becoming the dominant partner in a ruling coalition. If, as seems quite possible, the ANC is sidelined from governance of the three most urban provinces, that could be the more significant outcome.
Our economy won’t be sustaining high growth any time soon. Nor within the next decade will it begin to employ the vast majority of each year’s school leavers. It is equally implausible that our domestic economy will sustain high growth long enough to eventually absorb today’s many millions of long-term unemployed before they become pensioners.
We would need a vastly larger middle class for our domestic economy to support something resembling normal workforce participation. Instead, the economic marginalisation of most young adults has created a poverty trap which will long be hostile toward middle class growth.
Fresh thinking
Given such a backdrop, how might non-ANC provincial leaders fight poverty through growing jobs?
As new provincial leadership won’t be able to fix SOEs or reverse national-level economic policies, such an electoral outcome should trigger fresh thinking. Misguided beliefs, such as that our unemployment crisis can be remedied by improved education outcomes and growing the economy, must be jettisoned.
Our youth unemployment bulge is so extreme that it precludes sustaining growth in consumer spending sufficient to overcome it. Improving education outcomes ensures nothing. Graduates need jobs and employers need revenue growth to expand employment.
It is a dangerous fallacy to think that jobs-with-prospects should only be available to those who have achieved scholastic success. Most workplace skills are learned while working. South Africa’s bias against the low-skilled reflects their extreme overrepresentation among our unemployed – even though our economy also fails to employ some academic over-achievers.
Our employment challenges look very different within a global context. While many wealthy countries have an overabundance of older workers with advanced yet antiquated skills, our oversupply of labour is highly skewed toward being young and poorly educated.
That is, we have the world’s highest youth unemployment rate at a time when many of the world’s wealthiest economies have labour shortages, reflecting ageing and shrinking populations. Meanwhile, services are driving global growth, as digitalisation and AI are radically disrupting many sectors.
Three versions dominate SA’s approach to global integration: companies like Investec or Nando’s replicate their business models overseas; car manufacturing is highly distorted by government efforts to create high-paying union jobs; and highly skilled workers emigrate. Conversely, the rapid rise of Asia, arguably humanity’s most impressive feat, traces to global integration, beginning with low-skilled workers adding niched value to exports – and it expands from there.
Today’s swift, highly disruptive changes greatly favour young workers. Meanwhile, traditional education paths are losing relevance at a dizzying pace.
Situational awareness
No region is as economically isolated by geography as sub-Saharan Africa – largely for lack of snow-covered mountain ranges feeding navigable rivers leading to ocean harbours. No country is as distant from a top-three economy as South Africa. No region is as geologically endowed, yet entrenched in poverty and patronage, as sub-Saharan Africa.
For most of the industrial era, production, and thus economic development, was concentrated in areas with river access to the North Atlantic. This triggered scrambles for the minerals – and later hydrocarbons – unevenly clustered around the world.
Today’s world is very different. Manufacturing is now concentrated in Asia while global growth is increasingly dominated by services – with many sectors suddenly being re-conceived by digital and AI possibilities.
As demonstrated by the many digital nomads visiting Cape Town, distance has been defeated, thus sharply upgrading Africa’s potential to integrate into the global economy. The importance of natural resources to global growth is in long-term decline whereas Africa’s relevance to the global workforce is on a sharp upward trajectory.
Shortages of young workers threaten many wealthy nations, whereas, within a generation, 40% of the world’s young children will be in Africa. Just as agricultural economies once required abundant labour and industrial economies required hydrocarbons and industrial metals, rapidly evolving digitally driven economies prioritise youth.
Devolving power
South Africans have long been ratcheting down their reliance on government providing basic services such as security, schooling and electricity. Giving up hope on investment-led growth is a more recent transition. Policies weren’t reformed and international investors retreated.
Meanwhile, a small but growing number of South African school leavers earn micro credentials online, leading to online incomes. This refutes the importance of our disparate leaders while corroborating the value of individual initiative and devolving power from a central government.
Technological advances provoke both destruction of old ways and new opportunities. Amazon Web Services and Cisco seek to train many young South Africans for digital jobs; Microsoft recently announced its intention to train two million Indians.
As large international companies need lots of young people, many will increasingly target India and Africa. Just as Western Cape officials sold airlines on the commercial benefits of adding flights to Cape Town, they along with their counterparts in Gauteng and KZN need to persuade online employers to recruit in their provinces.