Fixing SA, job by job

2013-09-16 10:00

National Development Plan seeks to empower youth to find and retain employment.

If we in South Africa are to overcome poverty and inequality, then solving our economic challenges, especially youth unemployment, has to be at the centre of our objectives as a nation.

In general, we want to establish an economy that serves the interests of all South Africans, one that is competitive and able to absorb jobseekers, with a rising share of income going towards investment, where the incomes of the poor are rising faster, and where young people have access to job opportunities and career mobility.

The evidence is clear.

Despite the significant progress in transforming the economy and in achieving a degree of stability since 1994, our economy does not yet serve the interests of all South Africans.

Too few jobs are created, especially for new entrants into the labour market and young people in particular.

Our analysis of youth unemployment is that it is caused by several factors.

Most young people seeking work do not possess the skills to be employed productively.

They also lack the training, experience and support to supplement their entrepreneurial zeal to enable success in small businesses.

In addition, starting salaries are often higher than the relative productivity of new workers, implying that firms incur a “loss” when hiring inexperienced workers.

Another reason firms are reluctant to hire young and inexperienced workers is that the costs of dismissal for nonperformance are high.

This makes hiring inexperienced workers too risky.

The outcome is that firms are unwilling to take a chance with inexperienced workers.

They search for experienced workers because the risk they face is much lower.

These factors, ranging from poor skills to the costs and risks of hiring new workers, biases the economy against new entrants and effectively locks them out.

This system denies our children and future generations the opportunity to work, to learn, to gain experience and to become full citizens in their own right.

It denies them the opportunity to take on the most basic responsibilities of adulthood.

Unless South Africa tackles this vicious cycle, we are likely to continue to be threatened by social instability, crime and the effects of social exclusion.

We must be clear, the National Development Plan (NDP) does not propose wholesale changes to South Africa’s labour laws.

We recognise the hard-won struggles for better working conditions and for improved rights.

We do, however, propose several ways to lower the cost and risk for firms to take on new entrants.

These measures to encourage firms to employ new entrants have to be balanced with mechanisms to punish firms if they simply replace older, more experienced workers with new workers; or if they seek to undermine workers’ rights.

We are confident that our existing labour laws and the proposals in the plan would prevent displacement of older workers.

But we must go beyond merely punishing those who err.

The strategy outlined in the NDP is threefold: first, we must promote industries that are labour absorbing, such as mining, agriculture, construction, hospitality and small businesses.

Second, we have to grow the more advanced sectors of the economy, such as manufacturing, parts of financial services, telecommunications and business services.

Third, more effective provision of a broader social wage should enable even the poorest of people to have a decent standard of living to build capabilities for better jobs, higher incomes and a broader range of benefits.

We need to engage on an ongoing basis and convince business that working together to solve youth unemployment is in everyone’s best interest.

They must see these proposals to support youth employment as an investment in our youth, without which our future would be far bleaker – for the poor as well as for the rich.

The destinies of all South Africans – rich and poor, employed and unemployed, urban and rural – are intertwined. It is in our common interests to put shoulder to the wheel and support a plan that, at the heart of it, will improve the lives of the poorest South Africans.

»?This is an edited version of?Ramaphosa’s lecture at the Wits Great Hall Talk on September 10

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