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Emerging technology an opportunity and threat for SA youth

13 June 2018Maura Feddersen, PwC
Maura Feddersen – PwC Strategy& Economist

Maura Feddersen – PwC Strategy& Economist

PwC focus on youth unemployment in SA – #YouthMonth18

The key to fighting high unemployment among the youth is to forge an alliance among businesses, educators and the youth to build the skills that lead to entry-level jobs in future growth sectors. This means businesses must play an active role in helping educators tailor their curricula to meetfuture requirements.Preparing the next generation foramindset of lifelong learningis crucial to drive South Africa’s competitiveness in the face of the fourth industrial revolution, which is upending the nature of work across the world. 

This undertaking is urgent, as South Africa’s youth unemployment is both an individual tragedy, as well as a community and socio-economic one. An income and the independence that goes with it are crucial for building a sustainable and thriving society.


“Our most grave and most pressing challenge is youth unemployment. It is therefore a matter of great urgency that we draw young people in far greater numbers into productive economic activity.”

Cyril Ramaphosa, President of South Africa, State of the Nation Address, 2018 


 

Youth unemployment is a state of emergency

Unemployment and poverty are inextricably linked as income from wages account for around three-quarters of South Africans’ income. The youth carries a particularly heavy burden: an estimated 57% of South Africans aged 15 to 24 years were unemployed in 2017.

In no other country assessed by the International Labour Organisation is youth unemployment wedged at such high levels. While improving to 45% during the years of elevated economic growth in the mid-2000s, youth unemployment has since fluctuated around the 50% mark. Female youth are especially vulnerable: their unemployment rate exceeds their male counterparts by 12 percentage points.[1]


Some indicators suggest the youth’s education levels have improved in recent years. Between 1996 and 2016, the number of those who had completed matric grew from 3.7 million to 11.6 million, an increase of 211%.[2] This shows in improved literacy rates, which have risen from 85% in 1980 to 99% in 2015.

However, many learners who start school do not complete their secondary schooling. Out of the 1.1 million pupils starting Grade 1 in 2006, only half progressed to write matric exams in 2017.[3] Overall, the number of young South Africans aged 15-24 not in education, employment or training (NEET) has decreased only slightly from 32% to 31% between 2012 and 2017.

Funding for education is a key concern for many young South Africans. Four in ten South Africans fall under the lower-bound poverty line and do not have the means to purchase both adequate food and essential non-food items.[4] As a result, their children’s continued education often suffers.

For many households, the combined cost of further education and training, travel and residence fees is prohibitive, especially with more than 36% of South Africans living in rural areas.[5] This has a large impact on the number of youth that can enrol at higher education institutions.

In 2017, almost 200 000 students enrolled for their first year at a public university, which is less than 2% of the estimated total number of learners that completed matric in 2016.[6] One in two students on average graduates within regulation time, or two years thereafter, with an undergraduate degree or diploma.[7]

In spite of improvements in the youth’s general education levels, many businesses find it difficult to fill vacancies, especially those requiring specialist skills. The labour market favours highly-skilled candidates: Absorption rates[8] for those with post-secondary education, i.e. skilled labourers, are the highest at 77%, compared to an average of 41% for semi-skilled labourers who have completed their secondary education.[9]

Although the majority of young people are currently employed in semi-skilled jobs, graduates of post-secondary education are more likely to find employment, as they compete with relatively fewer candidates.[10]

Emerging technology is both a challenge and opportunity for the youth

While fighting current levels of youth unemployment as a matter of urgency, South Africa must also build a pipeline of future talent that can partake actively in the age of emerging technology such as automation and artificial intelligence (AI). A worldwide survey of 10 000 individuals showed that one in three respondents are worried they could lose their job to automation.[11] Already, the nature of work is shifting as emerging technology becomes integral to how businesses operate. New jobs are emerging for those who produce and manage these intelligent systems, as well as for those learning to work hand in hand with emerging tech.

South African youth are moving with the changes, as 2015 saw the largest proportion of students at higher education institutions (30%) enrolled in science, engineering and technology studies (STEM).[12]

As young South Africans push for higher levels of education, especially in STEM subjects, they become better able to adapt to the technological changes caused by emerging technology. For example, instead of competing with the new technology, they are ready to take on managerial roles to create or supervise the AI-based systems.

A relentless focus on ushering young South Africans into STEM subjects in schools and further education and training will be crucial to allow South Africa to take advantage of the wave of emerging technology that is shifting the nature of work globally.

In this context, educators and businesses must form an alliance to ensure that education programmes produce young workers with market-relevant skills. As a result, training strategies need to be constantly updated to reflect evolving business needs in an ever more digital and automated workplace.

For the youth currently seeking employment in low- or semi-skilled jobs, an immediate solution is required. The Youth Employment Service (YES) is one of the first social compacts between government, business and labour to create one million job opportunities for young South Africans. Armed with a year of work experience, a CV and employment letter, a young person’s chance of future work increases threefold and can see him or her leaping out of unemployment and into a lifelong career.

Young South Africans may also be able to access new forms of independent work through the emergence of digital platforms. As digital platforms can share intelligence and knowledge, independent workers can leverage their own value proposition, as the cases of ride sharing, delivery driving, home services, or market and field research show.  

Through a two-pronged approach of incentivising the employment of young South Africans to allow them an entry into the workforce, as well as a longer-term focus on STEM to allow us to embrace and shape rapid technological changes, government, business and labour can turn around arguably the most significant socio-economic challenge facing us today.


[1] The World Bank. 2018. World Development Indicators (WDI). Unemployment, youth total (% of total labor force ages 15-24) (modeled ILO estimate), South Africa

[2] Statistics South Africa. 2016. Education Series Volume III: Educational Enrolment and Achievement, 2016. [Online]. Available at: http://www.statssa.gov.za/publications/Report%2092-01-03/Report%2092-01-032016.pdf  (Many learners do not complete their secondary schooling by the age of 17 or 18 and complete their schooling over a longer duration, often repeating grades in the process.)

[3] Times LIVE. 2018. SA's matric distinction eye-opener, 11 January 2018. [Online]. Available at: https://www.timeslive.co.za/news/south-africa/2018-01-11-sas-matric-distinction-eye-opener/

[4] Statistics South Africa. 2015. Poverty Trends in South Africa: An examination of absolute poverty between 2006 and 2015. [Online]. Available at: http://www.statssa.gov.za/publications/Report-03-10-06/Report-03-10-062015.pdf 

[5] International Bank for Reconstruction and Development/The World Bank, 2018. Overcoming poverty and inequality in South Africa: An assessment of drivers, constraints and opportunities, March 2018. [Online]. Available at: http://www.statssa.gov.za/wp-content/themes/umkhanyakude/documents/South_Africa_Poverty_and_Inequality_Assessment_Report_2018.pdf

[6] Africa Check. 2016. Factsheet: Funding & the changing face of SA’s public universities. [Online]. Available at: https://africacheck.org/factsheets/factsheet-funding-changing-face-sas-public-universities/; Statistics South Africa. 2016. Education Series Volume III: Educational Enrolment and Achievement, 2016. [Online]. Available at: http://www.statssa.gov.za/publications/Report%2092-01-03/Report%2092-01-032016.pdf

[7] The Council on Higher Education (CHE). 2018. Vital Stats. [Online]. Available at: http://www.che.ac.za/sites/default/files/publications/CHE_VitalStats_2016%20webversion_0.pdf

[8] The labour absorption rate is the proportion of the working-age population that is employed.

[9] Statistics South Africa. 2016. Education Series Volume III: Educational Enrolment and Achievement, 2016. [Online]. Available at: http://www.statssa.gov.za/publications/Report%2092-01-03/Report%2092-01-032016.pdf  (2015 estimates)

[10] Statistics South Africa. 2015. National and provincial labour market: Youth. [Online]. Available at: http://www.statssa.gov.za/publications/P02114.2/P02114.22015.pdf

[11] PwC. 2017. Workforce of the future: The competing forces shaping 2030. [Online]. Available at: https://www.pwc.com/gx/en/services/people-organisation/workforce-of-the-future/workforce-of-the-future-the-competing-forces-shaping-2030-pwc.pdf

[12] Department of Higher Education and Training. 2015. Statistics on Post-School Education and Training in South Africa, 2015. [Online]. Available at: http://www.dhet.gov.za/DHET%20Statistics%20Publication/Statistics%20on%20Post-School%20Education%20and%20Training%20in%20South%20Africa%202015.pdf

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