NEWS ANALYSIS: Shining a light on jobs
Throwing more money at formal training is not the solution to youth unemployment — it’s far trickier than that, but fortunately some institutions are showing the way
SA’s youth training system is too focused on formal skills development and is failing to address the core problem, that of bridging young people’s transition to the world of work and actually landing them their first job.
This was a consensus finding of a "Solutions Exchange" summit co-hosted by the presidency, the Human Resource Development Council of SA and the Harambee Youth Employment Accelerator, outside Cape Town last month.
The delegates agreed that some of the focus (and funding) needs to be diverted from skills development to a work-seeker support package. This would reduce the costs associated with looking for work, prepare young people for the workplace, and actively channel them into jobs.
As a result of SA’s unique spatial geography, in which millions of young people reside in townships far from economic nodes, skills deficiencies are not the only barrier, and maybe not even the biggest barrier, to finding work.
According to the Siyakha study from the Centre for Social Development in Africa, the job-search costs of the median unemployed young person are R550/month. This includes R350 on transport and R200 on print, data, and other costs.
"SA suffers from a massive geographical dislocation problem so even if you could create extensive job opportunities in Sandton or Midrand, it wouldn’t solve the problem of youth unemployment because most young people couldn’t get there," explains Jak Koseff, a chief director in the Gauteng premier’s office.
There is no shortage of investment going into formal skills training in SA.
In addition to the R7.5bn transferred annually from the national budget to technical and vocational education and training (TVET) colleges, a further R16.6bn flows through the Setas into accredited training. This mostly comes from the Skills Development Levy, which is equivalent to 1% of a firm’s payroll.
In addition, more than 1,500 firms are putting approximately 1m children through private-sponsored tuition of some sort, according to former treasury deputy director-general Andrew Donaldson. On top of all this, the new BEE codes target raising the percentage of payroll going towards training black people from 3% to 6%.
"This is implausibly high," says Donaldson. "Very few firms would be able to spend that. It hasn’t been properly thought through."
Many existing skills incentives are geared to developing the formal skills of people already working or about to start. To benefit fully from the national skills levy it makes sense for firms to keep sending their existing staff on training courses every year.
"We are overinvesting in the same group of people who are already in jobs and underinvesting in people locked out of the economy," says Nicola Galombik, executive director of Yellowwoods and the founder of Harambee. "We should rather be developing a pipeline of new people into the system."
The message from the conference is that SA shouldn’t be funding endless training but rather the process of transitioning young people, whose skills can be quite easily upgraded without formal study, into jobs — then let the job be their first university.
This means the type of training also needs to shift to one that emphasises "employability over certification", says Galombik.
From January 2018, the Gauteng province will do just that when it partners with Microsoft to provide short-term training to a targeted 400,000 young people in how to use Word, Office and Excel.
Through a R200m, two-year partnership with Harambee, the province has channelled about 50,000 young people over the past year through its clearing house facility and placed about 6,000 of these in permanent jobs.
The clearing house starts by providing up to eight weeks of work-seeker support, including work-readiness and interview-preparation programmes.
This is followed by a range of interventions tailored around factors such as where each young person lives, how far they can afford to travel and what type of work they can do realistically.
There are opportunities opening up in various growth sectors of the economy, explains Galombik, but they tend to be high-value jobs like those in data analytics, call centres, and certain sophisticated manufacturing and agri-processing jobs.
These jobs don’t necessarily require tertiary qualifications but many young people do need short, effective, focused input in,
say, how to multitask on a computer keyboard. Many also need to develop confidence in spoken English and other softer behavioural skills.
"We are missing opportunities to accelerate poor, young, excluded people into these types of jobs because a lot of financing is geared to funding formal accredited qualifications," Galombik says.
"The current system is not designed to solve the key problem — the transition of youth into the economy."
Part of the problem is the mismatch between the number of young, unemployed people and the number of formal sector jobs, especially in the townships. The solution has to involve creating more work opportunities where young people live.
Gauteng is trying to do this by empowering township firms to hire more young people by linking small, informal business to formal value chains and through stimulating the use of micro-franchises, among other things. The province hired 750 young data auditors earlier this year to unearth the existence of small, informal township firms. They found 80,000 firms across Gauteng, from panel beaters to retailers.
Each has an average turnover of R30,000/month which translates into an informal economy worth R29bn/year.
The problem is that almost all are one-man businesses.
To enable these firms to scale up and become more profitable so they can hire more staff, the province is partnering with Hollard Insurance (to cite just one example) to identify clusters of panel beaters to which the insurer can channel vehicle repairs.
On the basis of this guaranteed work stream, the province and the banking partners will release finance that will allow the panel beaters to upgrade their facilities to the insurer’s required standards. In exchange, the firms must hire young people from the province’s programmes.
"If we can activate the township economy around various nodes — like a township library where we’re offering online learning — then things can really start happening," says Koseff.
There are a lot of moving parts to get right, but the province feels it is now at the stage where it is generating a lot of interesting models, some of which can be increased to scale.
"Youth unemployment is a key issue," says Galombik. "We all agree on solving the problem but we need some prodigious joint programmes that can make a real difference over the next three years, regardless of the rest of the economy. If we can crack them, we will have something to show the rest of the world."