The landmark Framework Agreement signed at the Presidential Jobs Summit during October last year has the potential to turn the tide of youth unemployment.
By Najwah Allie-Edries, head of the Jobs Fund at National Treasury
However, it calls for actively pursuing beneficial partnerships between private and public sectors as well as non-governmental organisations, going well beyond the passive box-ticking.
Eradicating unemployment is a top policy priority as elucidated by President Ramaphosa in his State of The Nation Address. While results of the Quarterly Labour Force Survey (QLFS) for the fourth quarter of 2018 released by Statistics South Africa reveal minor gains (unemployment rate decreased by 0.4%), the urgency is well placed. Unemployment rates still hover around 27% with sectors like construction, utilities and transport shedding jobs.
The percentage of youth aged 15-34 years who were not in employment, education or training (NEET) increased by 0.5% from 38.4% to 38.9% in Q4: 2018. Shockingly, four in every ten young females were not in employment, education, or training. A broader and concerted effort by all social partners – government, labour, communities and business – is sorely needed to pull back youth from this precipice.
Long-term and youth unemployment, and low female participation, pose particular challenges to kick starting one of Africa’s biggest economies. The good news is that government has undertaken to draw a clear line in the sand beyond which high-impact actions must be implemented to drive job creation, job retention and economic growth. If it works – and it must, if our economy is to be pulled out of its dire recessionary predicament – year-on-year an estimated 275,000 real jobs can be enabled.
Key employment creation initiatives such as The Jobs Fund have a key role to play in introducing measures needed to bring unemployment down, but the extent of the challenge shows that a more participative and innovative approach is required. We believe that governments current efforts at creating jobs will serve to ramp up the fund’s activities even further while, in turn, spurring much-needed broader initiatives to generate jobs and growth.
Since 2011, The Jobs Fund has been driving innovation in job creation through structured partnerships with private, public and not for profit entities. It has operated and implemented projects that represent a microcosm of the broader initiatives now agreed.
The practical actions that include investment of R100bn (over five years) in black firms in the industrial sector, R1.5bn for a new Smallholder Support Fund as well as R1.5bn for the Township Enterprise Fund will provide a stimulus for renewed job creation efforts.
We were pleased to see that youth employment accelerator Harambee – a Jobs Fund supported initiative – featured prominently, with several of its scalable solutions endorsed and adopted in the Jobs Summit agreement. These include partnerships that enable growth sectors like business services and unlocking job opportunities across the formal, informal and township economy through installation, maintenance and repair jobs (submitted through the National Business Initiative).
Enterprise Development through business incubators is an effective way of creating new jobs. Small businesses have the potential to contribute to South Africa’s job creation efforts. A2Pay, an innovative FinTech business supported by the Jobs Fund, is a good example of enterprise development taken to scale. A2Pay developed the technology that enables entrepreneurs to sell prepaid products to informal settlement, peri-urban and rural consumers. This not only provides a much-needed service, but also creates jobs in areas where unemployment levels are high.
Support for Work Seekers (SWS) projects use creative ways of bridging and matching candidates to opportunities, including exposing potential candidates to actual or simulated work environments. The candidate thus has a greater appreciation for what is required in the workplace, improving their performance. Using the two taxi-rule, young work seekers are placed within reasonable proximity of their places of residence to ensure success.
The Fund’s SWS projects (25% of the portfolio) predominantly target unemployed youth and generally follow this route to placement:
* Access to work readiness and other soft skills to prepare them for the world of work.
* Access to technical skills training in preparation for a specific job.
* On the job training and they are matched with employers and placed in employment.
* The result is that the young person’s employability and prospects for securing long-term employment is greatly increased.
Through the Jobs Fund, South African government continues to actively search for innovative job creation models in key sectors of the economy, including agriculture and tourism, both of which are able to create a significant number of jobs. Agricultural projects supported by this initiative bear testimony to this, also where this has happened the local economy in rural areas has also benefited.
Since the Fund’s inception in 2011, the Jobs Fund Investment Committee has approved 127 projects in seven Funding Rounds (as at 30 September 2018). An amount of R6,7-billion in grant funding has been allocated to these projects, which will be disbursed in tranches throughout their project implementation period. The Jobs Fund Partners have in turn committed R9,5-billion in matched funding.
Any discussion about jobs is, of course, incomplete without real solutions for our youth. Through our strategic focus and partnerships, we continue to work to find further opportunity for scaled solutions. Our success over the past few years clearly shows what can be done if all role players share a common vision and purpose.
At the end of the day, this is about creating a human capital pool that will serve as a competitive advantage for South Africa and not simply ticking a box.