Bring on the wage subsidy

BEING an advocate for the youth wage subsidy, I came across an interesting article last week about youth unemployment in south-east Europe, specifically the six countries constituting the area: Albania, Bosnia and Herzegovina, Kosovo, the Former Yugoslav Republic Macedonia, Montenegro and Serbia.

In the interests of brevity, the article made me realise that the youth unemployment situation in South Africa is not necessarily as bad as it is made out to be. The World Bank article includes a graph comparing the youth unemployment rates of seven economic regions, for the ages 15 to 24.

For example, in middle east and north Africa, the rate is approximately 37%; in south-east Europe, the rate is about 34%; in Europe and central Asia, the rate is 30% and even in Africa, the rate is 21%. Ironically, Africa has the lowest youth unemployment rate of all the regions.

These rates are, however, for regions and not for countries. In South Africa’s case, the Quarterly Labour Force Survey for Quarter 2 of 2013, states that the number of “not in employment, education or training” youth between the ages of 15 to 24 is 32.9% - in line with the regional rates of south-east Europe and of Europe and central Asia.

Serbia’s youth unemployment, on the other hand, is near 50%.

Aside from the common problem of youth unemployment with Serbia, we too have problems of limited growth and a labour market characterised by involuntary unemployment, underemployment, inactivity and discouragement.

If we are to remedy our situation, perhaps we can draw on the lessons from Serbia and south-east Europe – before things get out of hand.

The six south-east European countries have studied the situation in detail and important national programmes have been designed and implemented. The impact of these efforts has, however, been limited and challenges remain.

Therefore, along with experts from multilateral organisations, academic institutions and other spheres, the group is researching further measures that can have a greater impact on the situation.

The collaboration has considered some specific focus areas, which include:
• reforms capable of fostering entrepreneurship;
• reductions in labour costs associated with young workers;
• regulations that protect workers rather than jobs;
• improvements in primary and secondary education with an increased focus on stronger links between vocational education and private sector needs;
• the removal of barriers faced by specific sub-populations of youth, such as improved availability of childcare for young women and subsidised apprenticeships for youth from disadvantaged backgrounds.

Do these focus areas not remind you of the youth wage subsidy, and the complaints around our labour regulations and the failing education system?

If they do not, you have clearly not read through the national development plan which mentions such things as: “Improve the school system”, “offer young people life-skills training, entrepreneurship training”, “tax incentive to employers”, “subsidy to the placement sector” and “Expand learnerships and make training vouchers directly available to job seekers”.

In comparing South Africa to certain parts of the world, perhaps our youth unemployment problem is not so much of a “problem”; as they say, everything is relative. That being said, 32.9% is too high and while economic growth is necessary, it is not sufficient to create jobs.

Government needs to start implementing targeted programmes if anything is to improve and so such things as the youth wage subsidy is a must.

 - Fin24

*Geoffrey Chapman is a guest columnist and trade policy expert at the SABS. Views expressed are his own.

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