Job creation requires bold thinking, transformation and partnerships

The Jobs Summit saw several government interventions and job creation stimulus plans come to the fore to address the immediate employment crisis in South Africa, but now the real work needs to start, and it cannot be placed on government’s shoulders alone.

South Africa, while having been immersed within a volatile economic environment in recent years, has now entered a new era of growth and transformation. At the recent Jobs Summit, President Cyril Ramaphosa announced the vision to reduce unemployment to 6% by 2030. This mountain cannot be reached unless we work as a combined collective of public and private partnerships, together with the tertiary education sector. The unemployment crisis therefore requires bold action, fresh perspectives, and I am confident that the measures put in place will position the South African economy on the road to growth and recovery.

The brightest minds from more than 200 companies across 20 industry sectors in South Africa, joined forces at the Jobs Summit to devise strategies designed to turn the tide against rising unemployment rates. This also came at an opportune time when the president announced a stimulus package and called on the public and private sector to play their role in facilitating youth employment, with the goal to create 275 000 jobs a year for the next five years.

Now the real work needs to start, it cannot be placed on government's shoulders alone
Phumla Williams

The government has created 20 industry task teams, each committed to producing 100 000 new jobs by the end of this year alone.

The Presidential Committee on the Jobs Summit established five working committees comprising members from government and private sector, and convened by the National Economic Development and Labour Council. It was clear that not only do we need to accelerate the formation of job creation, but to also support small businesses and job retention.

The rate of unemployment currently resides at 27.2%, which significantly hinders the country’s economic growth rate. Of this percentage, youth constitute at least 52.4% of the unemployed. Young people blame poor access to funding opportunities for new business, low skills development and little to no job opportunities as some of the primary reasons for youth unemployment.

Financial business and government sectors have committed a R100-billion injection over the next five years to invest in black-owned industrial enterprises, as well as spearheading facilities for financing at preferential rates. Public funds will be reprioritised to the value of R50 billion to stimulate job creation in agriculture, township economies and rural areas. Absa chief executive Maria Ramos stated at the Jobs Summit: “The focus is making sure we can get black enterprises going; the funds are going towards small and medium enterprises.”

Investment into skills development, education and funding for small, medium and micro enterprises is the ambit for job creation. Research has shown that anyone with six to 12 months’ work experience has an 80% chance of finding long-term employment. The government is looking to subsidise certain industries to stimulate job creation. Other interventions driven at the summit included the expansion of the Employment Tax Incentive, which is intended to encourage employment of first-time workers under 29 years old.

Investment into skills development, education and funding for small, medium and micro enterprises is the ambit for job creation
Phumla Williams

There are two primary challenges in this country that are contributing towards unemployment, namely youth struggling to find jobs and small businesses remaining sustainable. It is well known that the majority of start-ups fail because they cannot access the required capital needed to sustain their businesses.

It is clear that small, medium and micro enterprises are the foundation of the South African economy, contributing 36% to South Africa’s gross domestic product and generating 60% of employment.

Youth form a critical pillar as part of the South African government’s economic agenda and social cohesion.

Data from Statistics South Africa’s Quarterly Employment Statistics Survey indicates that in the second quarter, 69 000 jobs were lost. This is concerning especially in light of the fact that 98.5% of the economy is small businesses, according to the Small Business Institute.

It is well known that the majority of start-ups fail because they cannot access the required capital needed to sustain their businesses.
Phumla Williams

The trade and industry department has found that 2.8 million small, medium and micro enterprises contribute 60% of South Africa’s employment. In this way, expansion of small, medium and micro enterprises development and incubation has become a pivotal strategy moving forward. Small businesses and start-ups are set to benefit from the R5-billion Smallholder Support Fund and R1.5-billion Township Enterprise Fund, which aim to equip entrepreneurs with much-needed funding.

It is also the time for us to use innovative solutions to address the challenges of the present and the future. It is vital to create a workforce of the future that is able to collaborate with business and government bodies.

Education and training are critical to ensuring that skills development remains relevant in terms of the current and imminent labour skills required for the economy. The University of Stellenbosch Business School presented research that found that 35% of jobs in South Africa would be at risk of redundancy due to digital automation in seven years because of the emergence of advanced technology, automated machines and artificial intelligence.

However, now is the time to turn risk into opportunity and empower our workforce to acquire the requisite skills to work with machines, in order to create and retain skilled jobs.

Plans are under way to improve employment opportunities of school leavers through training at Technical and Vocational Education and Training colleges, with a focus on much-needed technical skills.

Higher Education and Training Minister Naledi Pandor plans to start a pilot project in 2019 that will partner 26 colleges and more than 840 students with businesses, stating that: “South Africa is going to succeed at addressing its problems only in so far as we manage to establish partnerships across different stakeholder groups.”

Business Unity’s Sipho Pityana spoke about the “disruption of labour by digitisation and the Fourth Industrial Revolution”.

New technical innovations are starting to be developed to address the jobs crisis.

Plans are under way to improve employment opportunities of school leavers through training at Technical and Vocational Education and Training colleges, with a focus on much-needed technical skills.
Phumla Williams

Finfind is an example of an innovative online platform linking finance seekers with potential funders. It is the only aggregator of available public and private sector small, medium and micro enterprises funding offerings in a single solution in the country.

Commitments have also been implemented to encourage local procurement of goods, developing South African exports and growing the local manufacturing sectors. Notably, we cannot only look towards the future, but also need to acknowledge that strategies for current challenges need to be addressed. The land-reform process needs to be accelerated and finance models have been developed where local farmers are partnering with commercial banks to obtain necessary funding for land.

The government has also agreed to release 7400 hectares of state-owned land for mixed-use developments, to provide additional 635 000 houses for the country by next year.

Job creation cannot be viewed in isolation to environmental sustainability, and President Ramaphosa has committed to establishing a Presidential Climate Change Coordinating Commission, and increasing recycling tonnage to 2.7 million tonnes over five years, which will also generate jobs.

Our president states that we will not be able to reduce unemployment “unless we do something extraordinary”. It is certainly the time for large-scale extraordinary measures.

South Africa’s path to economic prosperity is dependent on the country becoming more globally competitive, and open for investment and employment acceleration. We as a country need to seize fundamental reform sooner rather than later to achieve our economic objectives.

Phumla Williams is acting director-general at the Government Communications and Information System (GCIS)

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