BUSISIWE MAVUSO: Business has most to lose if youth unemployment is not addressed

Business may be facing a plethora of economic challenges in an uncertain economic environment, but youth employment arguably poses the biggest risk to social stability and will only be mitigated by business partnering with the government in a concerted effort to reverse the statistics.

With two out of three youths unemployed, the lack of opportunities to become productive members of society is an enormous challenge, and we can’t make it government’s problem alone. First, it is not in a financial position to address it. Second, business is the only social partner with a disproportionate share of resources and commands the lion’s share of trust in the country.

The extent of the trust gap between the government and business is reflected in the 2023 Edelman Trust Barometer. SA’s 40 percentage point gap is the widest of the 28 countries in the index, which shows that 62% of respondents trust business over government, and a mere 22% trust government over business.

Government has policy-making power; business the trust factor

The government has control over the levers of economic power through its ability to implement policies that facilitate growth and job creation. But business has the trust and resources to unlock the country’s economic potential. Also, business has the most to lose if this systemic risk isn’t addressed.

The good news is that partnerships with government in crucial areas that require structural change are bearing fruit and thus confirm that public-private sector partnerships offer a way out of the economic stagnation plaguing the country and all stakeholders.

We have a precedent of how all stakeholders successfully put aside their differences and worked together during the Covid-19 pandemic in supporting the vaccination drive. More recently we have the example of business and government coming together yet again to address the most pressing priorities we face as a country — energy, logistics and crime.

With respect to youth unemployment, much work has already been done on building a platform that offers young people earning opportunities and current initiatives, many between government and business, are gaining traction and achieving significant success. But these must now be scaled up and accelerated.

As national pathway manager in the Presidential Youth Employment Intervention, the Harambee Youth Employment Accelerator is co-ordinating SA’s efforts to transition youths from learning to earning. To gain the momentum that is needed this not-for-profit social enterprise has outlined a five-point plan to generate 1-million livelihood opportunities for economically excluded youth by the end of 2026. It will require an enhanced effort between business and government to generate these earning opportunities through public employment programmes, business-led activity and inclusive hiring.

When addressing youth unemployment the most critical change needed is that businesses stop seeing inclusive hiring as merely a corporate social initiative. The government, business and labour also need to work together to facilitate youth earning opportunities in sunrise industries and in the formal and informal sectors. To do so, business needs to be open-minded and explore the youth employment infrastructure that is already in place.

Addressing youth employment relies on an enabling policy environment

At a macroeconomic level economic growth is the key to addressing youth employment, and that relies on the government creating an enabling environment for investments that build the capacity to generate the earning opportunities that will alleviate youth unemployment.

However, the broad policy environment is still less than ideal, lacking the clarity and certainty business needs to operate and invest effectively and sustainably. For instance, the visa process for expatriates is difficult to understand and tends to change depending on the circumstances. The government could resolve this by introducing a point-based system that prioritises the critical skills business needs to access to meet the shortages in specific job categories.

Why is getting the policy environment right an imperative in addressing youth unemployment? The World Economic Forum Global Risk Report puts SA in the top three countries facing the biggest risks of social erosion because of their lack of social cohesion.

Business has the most to lose if these risks, including youth unemployment, are not overcome, otherwise we could have our own version of an Arab Spring, along the lines of the KwaZulu-Natal riots in July 2021, which were in effect an attack on the country’s supply chains and an experience we never want to go through again.

With the economy not functioning as needed we need to develop sustainable solutions that facilitate the economic participation of young people, who might otherwise render the country unstable.

Building functioning network industries must be the top business priority

For Business Leadership SA the immediate imperative is getting the network industries working, because the economy cannot work effectively without these. Out of the four network industries in the country three are dysfunctional, namely energy, transport and water. This is a looming crisis. The fourth, technology, is the only one contributing positively to the economy.

Operation Vulindlela was established to modernise and transform these network industries and is a great example of how business, labour, and the government have come together to address crucial economic challenges. It has enabled businesses to support vital economic initiatives by providing the resources they have at their disposal and government does not.

But there is still a long way to go before we have the necessary infrastructure and enabling policy environment that allows business to do what it needs to do. Good policies increase business confidence, which drives local private sector and foreign investment. That provides the necessary momentum to achieve growth rates of at least 3% a year, and ideally the 5% we need to create the jobs required to make a dent in the unemployment rate and youth employment.

If we get our house in order we won’t have to have investment conferences to attract investors; they will invest on their own account.

• Mavuso is CEO of Business Leadership SA.