DUMA GQUBULE: Jobs programmes are pointless when the economy is running on empty
The government must stop raising the hopes of young people and rather focus on fixing the system
Since he became president in February 2018, Cyril Ramaphosa has announced numerous policies and programmes to tackle the country’s youth unemployment crisis. In his first state of the nation address (Sona), he said: “At the centre of our national agenda in 2018 is the creation of jobs, especially for the youth.” He said the Youth Employment Service (YES), a private sector initiative, would create a million internships in three years.
In the February 2019 Sona, Ramaphosa said the employment tax incentive (ETI) would be extended for another 10 years. In the June 2019 Sona, he set a target to create 2-million jobs for young people within the next decade. In the 2020 Sona, he launched the Presidential Youth Employment Intervention, which had six priority actions. It would be funded by top-slicing 1% of the budget every year. The government abandoned the idea soon after the announcement.
In October 2020, Ramaphosa launched the presidential employment stimulus (PES), which spent R23.5bn until March 2022. By January 2022, the PES had created 673,514 work opportunities and 40,399 retained jobs. The National Treasury has allocated R18.4bn to the PES over the next two years until 2023/2024. It will create just over 500,000 short-term work opportunities each year over the period.
However, 1.2-million young people (aged 15-34) have lost their jobs since Ramaphosa became president. There are 4.9-million employed young people. Between December 2017 and December 2021, the number of unemployed young people increased by 1.5-million to 7.4-million. The expanded unemployment rate for young people increased to 60.4% from 49.1% over the same period. There are now 9.2-million young people who are not in education, employment or training. The YES has created 79,355 work opportunities, only 8% of the promised internships.
The first problem with all the policies and programmes is that too many focus on the supply side when the reality is that there are no vacancies in the economy that are waiting to be filled. The government has dished out subsidies of R42bn to companies since the ETI started in 2014. Yet between December 2013 and December 2021, 1.3-million people aged 15-34 lost their jobs. The number of unemployed young people increased by 2.2-million. Their unemployment rate increased to 60.4% from 45.5%. The subsidy has had no effect on job creation. It is wasteful corporate welfare that should be redirected to expand public employment programmes.
Last week I was a panellist at the launch of a Youth Capital report about the youth unemployment crisis. The report said young job seekers spent up to R500 a month on data and up to R500 a month on transport. It also found that 84% of young people had to choose between looking for work and going to interviews and buying food. The report said: “Research shows that by the time they turn 24, six in 10 young people have never had a job despite years of looking.” The government has now got 2.3-million people to register on the SA Youth portal, which supposedly connects them to learning and employment opportunities.
Another painful reality is that millions of young people are spending so much money and time looking for work and registering on government databases in the hope of winning an employment lottery in an economy where there are no jobs. The government must stop raising the hopes of young people with pointless programmes that do not address the core issue. There is no demand for workers because there is too little money in the economy chasing too many goods and services. Because of the scale of the crisis, youth unemployment is a macroeconomic policy issue that cannot be addressed by projects that aim a water pistol at a blazing fire.
• Gqubule is founding director at the Centre for Economic Development & Transformation.
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