South African skills crisis

Despite South Africa’s extremely high youth unemployment rate, companies in the mining and manufacturing sectors struggle to fill vacancies due to a lack of skills and the declining attractiveness of these sectors. 

Economist Dr Thabi Leoka told the SABC that it is shocking that companies are struggling to fill vacancies while youth unemployment, and unemployment more generally, is so high in South Africa. 

The Spectator Index’s 2023 youth unemployment rate list reveals that South Africa has the worst youth unemployment among all included countries.

South Africa has over 10 million young people aged 15 to 24 years. Of these, only 2.5 million were in the labour force, either employed or unemployed.

The largest share of this group – 7.7 million young people – are those out of the labour force.

The main reason for being inactive is discouragement, which means they have lost hope of finding a job that suits their skills or in the area they reside.

37% of this group was disengaged from the labour market in South Africa. These are regarded as youth, not in employment, education or training.

There has been an increase in the ‘not in employment, education, or training rate’ category for both males and females.

Leoka said this is partly due to a lack of skills and a mismatch between the jobs offered to young people and the jobs they want. 

She raised the example of mining companies in the North West looking for workers but being unable to find any, saying that it is a possibility that young people would simply prefer not to be rock drillers in the province. 

These companies offer salaries well above minimum wage but can still not fill job placements. 

Leoka said it is also a function of poor governance, with people not wanting to live in dysfunctional municipalities. 

The unemployment crisis in certain areas is exacerbated by poor management of numerous municipalities, which drives those who can leave to do so. 

It is a vicious cycle, as poorly managed, dysfunctional or corruption-ridden municipalities rob communities of the opportunity to become economically active.

The data shows that people would rather live in squalor in Johannesburg than in relative comfort in rural areas because of the access to amenities and a higher quality of life in an urban area. 

Another aspect of this is the ability to progress within one’s career that cities, such as Johannesburg, offer. 

In this sense, “the system is failing our youth”, Leoka said. It sets them up for failure as the country has not addressed the root causes of high unemployment.

Ticking time bomb

The United Nations Development Programme (UNDP) has warned that South Africa’s high unemployment rate, particularly among its youth, is a “ticking time bomb” that could result in social unrest.

The UNDP recently released its South Africa National Human Development Report for 2022, which focused on analysing South Africa’s youth employability.

“Youth unemployment in South Africa is a multipronged challenge that limits the earning potential of youth, stymies business growth, threatens social cohesion, and puts pressure on public resources,” the report said.

“There is no doubt that the high unemployment rate is a ticking time bomb.”

Financial advisory firm PwC pointed out that unemployment is on an upward trend due to structural constraints that limit growth, particularly load-shedding and deterioration of logistical infrastructure.

These constraints limit potential economic growth in the country, and given the relationship between economic growth and employment, unemployment will rise.

The accounting firm’s baseline growth rate for South Africa is 1.3% per annum over the long term.

This is barely above South Africa’s population growth rate of 1% per year, meaning incomes will remain stagnant in the long term.

With high inflation, South Africans will be getting poorer in real terms.

Due to South Africa’s poor economic growth, PwC anticipates the country’s unemployment rate increasing from 32.7% at the end of 2022 to 35.5% in 2030.