LAEL BETHLEHEM: Democratic dividend requires investment in young people

When SA won the Rugby World Cup in 1995 captain Francois Pienaar famously said the entire population of 40-million people had inspired the Springboks to victory. If Siya Kolisi employed the same metaphor now, he would need to say the team has the support of more than 63-million South Africans.

This week Stats SA announced a population increase of nearly 50% over the 1995 figure, despite two pandemics in the interim period.

Population growth is good news in many ways, reflecting improved living conditions and better healthcare. In 1995 the infant mortality rate was 41 deaths out of 1,000 live births. This has dropped to 22. Similarly, in 1995 the average life expectancy in SA was 62, plummeting to 53 in 2005 at the height of the HIV pandemic. It is now 66. All of this is good news for individuals and families.    

Population growth can also be good news for the economy. China and India have reaped a “demographic dividend” at different times, with many young people coming into the workforce to take the place of ageing workers. Young people can inject dynamism into an economy, especially in sectors that value innovation. The experience of Europe and others shows that a declining population can lead to great difficulties as shrinking working age populations struggle to support social security for older people.

But the demographic dividend enjoyed by India and others has not come about simply due to the presence of younger people. Those younger people have to be equipped to contribute to the economy. A growing youth population can be a great asset, but it is not automatically so. It depends on whether the society invests in their skills and capacities.

Stats SA estimates that 27% of our population is under 15 years old. Our population is growing at about 1% a year, about half the rate in Africa as a whole and about double the rate in Europe. This is a manageable growth rate. The problem is the stagnation of the economy. If GDP is growing slower than the population, GDP per capita will drop into negative territory — as it did in 2023.

A total 45% of South Africans between the ages of 18 and 34 are unemployed. Think about this reality in human terms. Think about the social and political consequences. As more young people enter the workforce we need to find ways to absorb them.

What sorts of economies can benefit from a youth bulge? The following are key factors:

• The education system. The flow of skills into the economy is crucial. Young people with strong educational backgrounds can inject dynamism into economic activity and help power innovation. A strong foundation of literacy, numeracy, and problem-solving skills provides the basis for development, for the individual and for the society.
• The structure of the economy. Economies that mostly rely on primary agriculture and extractive industries are less likely to create opportunities for employment growth. This is especially true due to the climate transition, and the accelerating pace of digital services that require skilled, flexible workers.   

SA scores poorly on both counts. Most high school graduates are poorly prepared for life in a modern economy. This is not due to shortcomings in the curriculum, but rather in the abysmal management of most state schools. Turning this around requires a gargantuan effort.

Then there is the structure of our economy, which still heavily relies on carbon-heavy industries. These sectors will slowly decline due to the climate transition. The more dynamic, digitally powered parts of the economy will have to grow substantially to take up the slack. 

• Bethlehem is an economic development specialist and partner at Genesis Analytics. She has worked in the forestry, renewable energy, housing and property sectors as well as in local and national government.