Youth labour market challenges in South Africa

This paper identifies some labour market challenges facing South African youth. It aims to promote debate as part of the HSRC's Youth Initiative. In South Africa, youth are twice as likely to be unemployed, with 58% of young people aged 15-19 and 50% aged 20-24 unemployed in 2005. However, the South African concept of 'youth' (15-34 years old) might not be very helpful to a discussion about labour markets, as about 30% of those aged 25-34 are unemployed, a rate that is far closer to the national average. This is also a much larger group, accounting for 35% of the labour force and 40% of the unemployed. In a context of very high unemployment, the main argument for focusing on 'youth' relates to wanting to contain the creation of a new generation of long-term unemployed. Generally, the longer one is unemployed or underemployed, the harder it is to reverse the effects on self-esteem, etc. There is a high chance of long-term unemployment amongst youth who have weaker searching skills and resources. The paper also looks at the sort of labour market dynamics youth in South Africa face, particularly interrogating 'rules of thumb'. It poses questions in respect of whether the South African economy is creating low-skill jobs, whether education helps labour market chances, and whether graduate unemployment is a problem because youth are studying inappropriate subject areas. What sort of skills or capabilities is required if employment is more likely to be sourced in the services economy? Should education focus on job-specific skills or on general capabilities such as logic, 'searching' and communication? Two areas are sometimes under-played in our thinking about youth labour market participation - the fact that young African work-seekers are particularly disadvantaged - with extremely weak networks that would help them in the labour market and rarely having any previous work experience. Secondly, health status will affect youth labour market participation severely, particularly with extremely high HIV prevalence rates amongst young women under aged 30. The paper considers the likely future of work for most young South Africans. This is likely to be in low paid, low skill and precarious service sectors such as retail, restaurants, office cleaning, and the like. However, employers are likely to want higher educational attainment in future, even if this does not mean higher earnings. Although the paper acknowledges that the informal sector will offer some employment opportunities, it also shows that it is unlikely to act as a major source of employment growth. Self-employment is an unlikely route for most young people starting out, as experience is generally needed to succeed in business. Moreover, the apartheid past dramatically reduced the culture of entrepreneurship, meaning that young Africans are unlikely to have grown up in a household with business people who would have shaped their understanding of market opportunities, and their access to networks and know how. The paper further shows that government can play an important role in facilitating youth into the labour market. In the current policy frame, public sector employment will be beneficial mainly to graduates as there is a skills bias in hiring. However, this is a policy choice. Public works will become an important source of job opportunities for a large group of marginalised youth, with the vast majority of opportunities to be found in community-based social service delivery such as early childhood development or home- / community-based care, which have a strong gender and rural bias. The paper concludes with a set of policy challenges.