The time bomb nobody wants to defuse – Politicsweb, 25 April 2016

John Kane-Berman says the govt does not seem to particularly care about the problem of youth unemployment

By John Kane-Berman 

Yet another official report has described South Africa's "large masses of frustrated youth" as a "demographic time bomb" because they cannot find employment or earn a living.

According to the latest social profile of youth, published by Statistics South Africa (Stats SA) last week, the proportion of youths (people between the ages of 15 and 34) not in employment, education or training, has remained at around 30% since 2012.

While the proportion of adults participating in the labour force has risen since 2009 to 68%, that of youths has dropped to 48%. Altogether 3.38 million young people are now unemployed, while another 1.6 million are classified as "discouraged" workers who would take a job if offered one but who are not actually trying to find work. Part of the remedy, says Stats SA, is "sufficient flexibility in the labour market".

Stats SA also reports that levels of entrepreneurship among young people, especially young women, are dropping. The number of young entrepreneurs of both sexes has declined from 609 000 in 2009 to 543 000 in 2014. The remedy for this problem, says Stats SA, is to "create enabling environments that attract young people into starting businesses".

We've heard all this before. The National Development Plan (NDP), adopted by the government in 2012, said that disenchanted youth were both a lost resource and a "hazard" posing "the single greatest risk to social stability". Urgent measures were needed to address high youth unemployment. Also, said the NDP, 90% of new jobs would be in small and expanding firms. Comprehensive regulatory reform would give the necessary "boost" to "mass entrepreneurship".

Since then we've seen neither regulatory reform to boost entrepreneurship, nor more flexibility in the labour market. The wage subsidy (officially known as an "employment tax incentive") for workers between the ages of 18 and 29 has not stopped youth unemployment rising from 3.14 million in 2009 to its current level of 3.38 million. The subsidy - which runs for three years until the end of 2016 - doesn't even rate a mention from Stats SA as one of its recommendations for combating youth unemployment.

Yet despite warnings in its own reports about "time bombs" and "hazards", the government continues with policies detrimental to the generation of employment, whether among young people or anyone else. Since the adoption of the NDP - three and a half years ago - labour legislation has been tightened up. In particular, controls on labour broking have been strengthened despite the fact that this industry was playing an important part in connecting young people with employers. In the pipeline are minimum wage requirements that are sure to damage employment prospects for young people even further.

There is only one conclusion to be drawn. The government does not care about youth unemployment. It is more concerned about redistribution than about the economic growth necessary to generate jobs. It is more interested in "creating" a handful of black industrialists than in "boosting mass entrepreneurship".

These priorities are not surprising. They are backed by important lobbies, whereas jobless youths are in practice voiceless. Even though "frustrated" and "disenchanted" youths may be prominent among participants in social instability, this instability is routinely characterised as "service delivery protests" rather than as the result of joblessness. The remedy is invariably a promise to expedite housing provision and other services. It is much easier to make - and even to implement - such promises than to liberalise the laws restricting business and the labour market. Even the term "liberalise" is a no-no. Most commentators prefer to use the vague term "structural reform".

All of this makes the "ticking time bomb" an apt description of high youth unemployment.

Few people are brave enough to defuse such bombs. They prefer to walk away as fast as possible while hoping the bomb will never explode - or at least not until they are at a safe distance. This sums up South Africa's policy on youth unemployment. 

* John Kane-Berman is a policy fellow at the South African Institute of Race Relations, a think-tank promoting political and economic freedom.

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