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28th August 2015

By: Terence Creamer
Creamer Media Editor

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Few would argue that South Africa has failed to take advantage, since 1994, of what should have been a demographic tailwind, as its working-age population grew at a far faster rate than those who should, theoretically, have been dependent on them. Over the period, 11-million people entered the working-age category, and, at present, 35-million of South Africa’s 54.9-million people are aged between 15 and 64.

But the country’s inability to create jobs, together with a mismatch between educational outcomes and the needs of employers for higher- skilled workers, has left many young South Africans out in the cold, with two-thirds of the 5.2-million people currently unemployed aged between 15 and 34.

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In fact, 40% of all those who are unemployed are new entrants to the job market, while 60% do not have a matric qualification in an environment where the lower-skilled employment sectors of mining, agriculture and manufacturing are shedding jobs. During the period, 2.8-million jobs were created, while 8.3-million people entered the labour market. Just about all of the jobs were in the services sector, which has also changed the unskilled-to-skilled worker ratio from four-to-one previously, to three-to-one currently.

Unemployment is now higher than it was at the end of apartheid, with almost one-third of the labour force out of work or discouraged. This at a time when almost half the population is under 25 and unemployment among the young (15–24) is almost 50%, double the national rate.

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But in its latest South Africa Economic Update, the World Bank argues strongly that the window of opportunity remains open for South Africa to take advantage of its “demographic dividend”, with the country’s working-age population set to rise by a further nine-million people over the coming five decades. By 2069, two-thirds of the country’s 66-million- strong population, or 44-million people, will still be of working age.

In other regions, particularly East Asia, this population dynamic has been a significant factor in raising growth and improving living standards, with China’s demographic opportunity estimated to have contributed one-quarter of the country’s cumulative real per capita gross domestic product (GDP) growth between 1982 and 2000.

If fully tapped in the case of South Africa, the World Bank believes growth could average 5.4% between 2015 and 2030, which would be sufficient to double per capita income and all but eliminate extreme poverty over the period. Unemployment, meanwhile, would fall to just 5.8%, from over 25% currently.

But World Bank programme leader Catriona Purfield stresses that benefits will not flow automatically, as evidenced already by the fact that South Africa’s unemployment rate has remained stubbornly high, despite its demographic potential over the past 21 years. For South Africa to take greater advantage of its demographic position, the World Bank urges it to combine a more labour-intensive economic growth trajectory with improved educational outcomes and faster labour productivity growth.

Because jobs have become more skilled, Purfield believes improving the quality of basic education should be a top priority so as to ensure that school leavers and graduates have the foundational skills necessary to function in the modern workplace. Steps are also needed to scale up technical and vocational education and training opportunities.

With 280 000 citizens set to enter the working-age popula- tion every year, South Africa needs to take urgent steps to more fully capture its demographic dividend. Failure to do so will mean a demographic time bomb.

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