Lessons learnt from international public-private partnerships to facilitate Africa’s unemployment

14th July 2017

Lessons learnt from international public-private partnerships to facilitate Africa’s unemployment

Youth unemployment is an international issue. Unemployed youth struggle to access the global job market due to limited experience or requisite vocational skills. Different nations address the youth unemployment crisis using different methods. By adapting and implementing public-private partnership models that have proven successful overseas, resolution of the youth unemployment conundrum on the African continent can be reached.

Key points:

Youth unemployment is a well-documented and growing concern in South Africa and compounds increasing frustrations with the quality of education in the country. In On Africa (IOA) is currently working with several companies, organisations and individuals on plans to stimulate and facilitate positive changes in South Africa’s youth sector, including a focus on youth unemployment.

IOA’s upcoming Voices Unite initiative aims to provide a platform for South Africa’s youth to voice their concerns, ideas and experiences and for those insights to inform the way forward. In preparation for this initiative, IOA, in collaboration with research partners Columinate, implemented a pilot study with more than 1,400 respondents across South Africa. One of the questions posed in this pilot study asked respondents to indicate what issues/topics are constantly on their mind – unemployment ranked third (selected by 65% of youth respondents), behind crime and corruption.

Prioritising youth employment

In South Africa alone, the youth unemployment rate was estimated at 50.9% in the last quarter of 2016, according to Trading Economics. Creating employment for the youth can resolve unemployment and break the poverty cycle. Youth employment allows for financial stability and survival, as well as providing a sense of purpose and reward. The World Bank indicates that the global economy must create five million jobs on a monthly basis over the next fifteen years to generate enough employment opportunities for the youth entering the job market. Following the World Bank’s statement, the global economy is collectively responsible for creating jobs for the youth and at the required rate. In South Africa, a target to reduce the unemployment rate to 6% in the next thirteen years has been set as part of the South African National Development Plan to alleviate inequality and poverty. Solutions to youth unemployment, particularly of young graduates, can be drawn from initiatives and models adopted in various countries abroad.

There is a catch-22 that the youth and university graduates are caught in where they need education and experience in order to be given an opportunity when entering the job market without having had any such opportunities before to gain the experience they need to enter the job market. A further disadvantage is that the educational background many of the youth have is not what employers require. To address this, public-private partnerships are creating opportunities for the youth to gain work experience.

Public-private partnerships and the youth

Public-private partnerships provide opportunities for collective investment in the youth. Public-private partnerships refer to the arrangement in place between government or a government agency and an entity in the private sector. The Public-Private Partnership Knowledge Lab defines a public-private partnership as “a long-term contract between a private party and a government entity, for providing a public asset or service, in which the private party bears significant risk and management responsibility, and remuneration is linked to performance.” Private sector entities can be small businesses or multinational corporations. Governments provide benefits for the private sector in exchange for business skills that governments may need assistance with.

The Canadian government is offering funding programmes to employers who are hiring youth. For example, the Canada Summer Jobs programme will offer financial assistance, amounting to 50% of the territorial or provincial minimum wage hourly rate, to businesses with 50 or less employees who hire youth between the ages of 15 and 30 for summer jobs.

Youth unemployment in Germany is the lowest of all European Union countries. With the co-operation of the Berlin government, the German Federal Employment Agency combats youth unemployment through the Youth at Work programme. The programme aims to provide youth with work experience from a young age and starts at school level, where students are introduced to the workplace. Teachers are trained to assist students with the school-workplace transition. At the age of 12, children are taken to see how businesses and factories work. Throughout high school, especially in seventh and eighth grade when students are 13 and 14, they undertake week long internships. The ninth and tenth grade internships, when students are 15 and 16 respectively, last approximately four weeks. In this way, students obtain first-hand workplace experience throughout their schooling career. This is due to the fact that students have the option to leave school after tenth grade. Prior to leaving school, specifically trained teachers assist students to apply for jobs and to understand the labour market. Upon graduation, young people either go to university or start vocational training. Apprenticeships have proven to be the best ‘on the job’ training opportunities and provide training and experience for the youth.

The Nordic Council of Ministers – including leaders from Norway, Sweden, Denmark, Iceland and Finland – have been paying more attention to youth unemployment, following the financial crisis in 2008. Thereafter, youth unemployment has increased dramatically. These countries keep track of the unemployed youth through registered unemployment and labour force surveys. These labour force surveys are conducted on a country-by-country basis. The registered unemployment measure is twofold and includes those who are already claiming from the employment insurance fund and those who are ready to join the labour market. The Nordic governments have created more jobs through monetary and fiscal measures, such as releasing funds designated specifically for youth training. This refers to funds set aside to be used to assist the unemployed youth. Finland specifically looks at those under the age of 25 who have not completed relevant training to get closer to finding employment. There are 220 youth workshops that offer assistance for such individuals to complete vocational training or learn specific skills for the targeted employment industry.

Tax benefits

Employment or internship opportunities assist in providing work experience. However, they can also act as incentives for employers. Interns are hired on paid or unpaid contracts, providing inexpensive assistance to companies. Government co-operation is important in this regard, as companies that hire interns can have government-approved lower corporate tax rates. In Kenya, businesses that employ more than ten interns for a minimum period of 12 months will consequently have lower corporate taxes.

The US adopted a similar strategy in 2012. The Workforce-Ready Educate America Act of 2012 serves as an opportunity for employers to receive a credit against income tax, provided that there is a partnership with educational institutions to make skills training for students accessible and available.

Ending the poverty cycle

Public-private partnerships are succeeding in curbing youth unemployment in certain instances around the globe. As a result, various governments release funds to businesses as an incentive to hire youth. The Germans have shown how exposure to the job market benefits high school students in later life. The Nordic states are succeeding in providing a range of programme assistance to the youth in order for them to gain the requisite skills needed for potential employers. Holistically, the global economy remains responsible for creating jobs for the youth that will seek employment in years to come.

Governments are partnering with firms to simultaneously provide internships for the youth, which provide work experience and incentives for firms to hire youth. This strategy allows the youth to gain experience at an early stage of their career and benefits the employer.

IOA’s Voices United pilot study supports a drive for more public-private partnerships in South Africa and a stronger focus on improving vocational skills development among the country’s youth. Increasingly exposing undergraduates and recent graduates to the job market at earlier stages of their professional development has the potential to end the poverty cycle. Many of those surveyed in the Voices Unite pilot study stated that they would have liked more opportunities to apply and earn their experience, strengthening the case for a public-private partnership model to address, at least in part, the youth employment challenges faced in South Africa.

Submitted by In On Africa (www.inonafrica.com). IOA was formed in 2007 with the goal of becoming the global authority on African affairs. Over the past decade, IOA has positioned itself as one of the top research firms in and focused on Africa, with an increasing presence across the continent and an ever-expanding list of international clients. IOA and its team of more than 300 expert consultants combine to provide its clients with decades of experience and expertise in a wide range of research and advisory-related areas. IOA also regularly publishes various Africa-focused reports and position papers.