Over the past month or so, South Africa has featured in a number of influential reports released by such significant organisations as the World Bank, the Organisation for Economic Cooperation and Development (OECD) and the United Nations Conference on Trade and Development.
The inaugural OECD Economic Survey of South Africa, which was released on July 18, focused entirely on this country and its economic prospects and, therefore, received a significantly amount of attention.
Quite naturally, much of the initial reportage was dedicated to the organisation’s view that there could be merit in the central bank taking a more activist role in quelling currency volatility and in dealing with rand overvaluation. This volatility and overvaluation are said to be at the heart of the country’s poor export performance and, in turn, the low level of job creation in the export sectors.
However, the report contained a number of other highlights, as well as some lowlights, the overwhelming one being South Africa’s alarmingly high rate of youth unemployment.
The OECD survey indicates that South Africa is not alone in experiencing the problem, with youth typically accounting for nearly one-half of the unemployed globally, despite representing about one-quarter of the labour force.
But the combination of a chronically high overall unemployment rate and the country’s youthful citizenry is serving to exacerbate an already toxic problem.
The latest Labour Force Survey, which was released by Statistics South Africa last week, showed that the official unemployment rate increased again to 25,3% in the second quarter of 2010, from 25,2% in the first quarter. This means that 4,31-million people are officially out of work.
However, taking into account broader measures of unemployment, which includes those who have simply given up trying to find work, the figure is well over 30%, which the Congress of South African Trade Unions (Cosatu) correctly describes as a “national catastrophe”.
The figures for youth unemployment are more disturbing by far.
The OECD showed that, while other middle-income emerging market economies employed about 80% of their working-age youth in 2007, the figure in South Africa is closer to 50%.
Bottom of the Log
In fact, South Africa had the worst rate of unemployment for youth between the ages of 15 and 24 among 36 countries surveyed by the OECD in 2008. It was followed by Spain, whose rate was close to 25% and Italy, at around 20%.
Racial disparities were further compounding matters, with 53,4% of all young black Africans between the ages of 15 and 24 being unemployed by the end of 2009 – three times worse than the unemployment rate of 14,5% among young white South Africans.
Interestingly, the survey was published in the same week that the founding Cosatu president, Jay Naidoo, described South Africa’s youth unemploy- ment as the country’s “greatest ticking time bomb”.
In an interview with the Sunday Times, Naidoo even encouraged Cosatu to accept the proposal of a wage subsidy to encourage first-time employment. “We need young people to have a ladder into the formal economy,” he argued, warning that young people who feel “alienated” by the system can bring the entire system down.
In line with this appeal to show greater openness to new ideas for tackling youth unemployment, it would probably be worthwhile to consider some of the remedies proposed by the OECD.
The OECD suggestions, which were outlined by the organisation’s secretary-general, Angel Gurría, during a recent visit to South Africa, include:
• the creation of a broadened wage- subsidy programme, possibly building on the existing learnerships programme;
• an expanded job search assistance scheme;
• the differentiation of sectoral minimum wages by age; and
• special extended probation periods for employees below a given age.
Now, I am not saying these suggestions should be adopted. Instead, what I am calling for is an urgent national con- versation about how to practically tackle this frightening scourge. And, like Naidoo, I believe that the National Planning Commission could be a good place for this dialogue to begin.