In line with global trends, youth unemployment in South Africa has reached crisis levels. Our unemployment rate is high for both youth and adults; however, unemployment among young people aged 15–34 is particularly dire. In Q1 of this year the rate was 38.2%. This means that more than one in three young people in the labour force did not have a job. Translating that into numbers, nearly six million young people in this country are out of work. Furthermore, many of them are “NEET” – not in employment, education or training – in other words, well and truly unemployed. We have the third highest youth unemployment rate in the world.
As a nation South Africa faces the paradox of jobs going unfilled for lack of skilled applicants, while thousands of learners leave school with a matriculation certificate but are unable to enter the workforce, either due to a lack of work readiness or an inadequate education. Shockingly, 56% of the million young people entering the job market each year don’t have a matric. Fixing our education system is not an overnight task; so in the short term we need other solutions that will enable young people to access the training and work opportunities they require.
A social and economic crisis
Employers often want experience, but without a chance to step into that first job, youth find it difficult to get the required experience that makes a CV attractive. The crisis is not only economic, it is social, as young people become disaffected and disenfranchised and ultimately lose hope in their future prospects. Challenges such as HIV, gender-based violence, drug abuse, crime and gang activity are not caused by unemployment, but it is often a contributing factor to many social ills. Economically, everyone loses out: tax receipts are lower and there is less public funding available to contribute to infrastructure, healthcare and education. GDP is negatively affected, because when consumer spending is dampened due to low personal and household incomes, our national output suffers.
And it is not just a crisis of the present – our youth represent the workforce of the future. If they are not being trained, educated or employed, who will be the backbone of our economy 10, 20, 30 years from now?
On 27 March this year, President Cyril Ramaphosa launched the Youth Employment Service, or YES. The initiative is a joint effort involving government, labour, business and civil society, designed to provide more than one million young South Africans with paid work experience over the next three years. At the launch, Ramaphosa stressed that the initiative is just one pillar of a broader national effort to create opportunities for young people. “Another central pillar of this effort must be the development of the skills and capabilities of young people,” he said.
How does YES work?
For the youth:
Any young person can register for the programme, provided they:
- are between 18 and 34 years old
- have been unemployed for more than six months
- are black people (African, Coloured or Indian)
Once registered, young people will be required to sign a contract with YES indicating their commitment. The salary is expected to be the national minimum wage of R3 500 per month. Registering for the programme is not a job offer and individuals will still have to apply for placements on a competitive basis. The YES website contains a range of work readiness resources to help young people prepare for interviews and placements. Currently, placements will only be released once the YES legislation is finalised.
The aim of YES is to create new one-year positions for unemployed youth over and above current employment numbers. YES is designed to be “additive”. Businesses can be part of YES by employing a number of young people – or a single young person to mentor and develop. As an incentive, businesses will qualify for a new youth employment B-BBEE recognition, to be gazetted shortly. This will allow a business that meets YES targets and complies with registration criteria to move up a level on their current B-BBEE scorecard.
Not all organisations have capacity to host young people, but there are other ways for companies to participate in YES. There is provision for large companies to sponsor the salary of a one-year starter position in an SMME near a young person’s home (e.g. in a rural area). The benefits of this option are twofold: – the larger company will qualify for B-BBEE recognition, while the SMME will gain capacity and competitiveness. It is also possible to develop youth-owned micro-enterprises that feed into the supply chain and place youth in external service providers for training and work experience.
Employment Tax Incentive
The Employment Tax Incentive is not new, and is not a component of YES, but if youth employed under the YES scheme are between the ages of 18 and 29, the employer will be eligible to claim the ETI, which reduces the cost of hiring young people through a cost-sharing mechanism with government. The employee must earn not less than R2000 per month and not more than R6000. The employee’s wage is unaffected by the ETI; the tax incentive is worth c. R1000 per month to the employer (it’s a bit more complex than that, for full details see www.sars.gov.za). Employers must be registered for Employees’ Tax (PAYE) with SARS and must be tax-compliant to be eligible for the scheme.
Say yes to YES!
Young people need high-value careers, not just jobs. They need employment that harnesses their skills and talents and contributes to the intellectual as well as economic growth of the country. They need training that develops their potential and moves them from entry-level jobs to rewarding careers. But to do that, they need your support. President Ramaphosa has challenged business to create half a million jobs a year to tackle youth unemployment, saying that young people don’t want favours, they want opportunities. For young people in rural areas particularly, it can be very costly to find employment, with places of work being located far from homes. “This is where we all work together to respond to a social challenge that affects our people,” said Ramaphosa.
This Youth Day, let’s all consider how we can make YES a success, and build the workforce of the future.
For more information, visit www.yes4youth.co.za.