Over 3.1 million South Africans between the ages of 20 and 29 are unemployed. Half a million of them have joined this group since 2008 alone. This staggering figure equates to more than 50% of our ‘willing and able’ youth — people who can work and want to work but cannot find jobs.
Beyond the obvious economically-crippling effects being unemployed has on a young, active person, the loss of motivation, the loss of skills and the long-term effect this can have throughout their entire working lives can be devastating. But getting a job is just the first hurdle young people face. Keeping it is another story.
Challenges
The African Microeconomics Research Umbrella (Ameru) in the School of Economic and Business Sciences at the University of the Witwatersrand undertook a study to understand just why youth unemployment in South Africa is so high and what the challenges young people face in finding work are. The study followed 4 000 young people between the ages of 20 and 24 over three years and interviewed the companies that might hire them.
Neil Rankin, Director of Ameru, explained that there are really three key challenges young people face in their search for work — and in actually getting the job. Firstly, they don’t have the means, or ‘signals’, to prove they have what it takes to do the job. Secondly, the way they look for jobs and the way firms recruit are different. And thirdly, companies are currently just not hiring right now. “Companies don’t trust the productivity or suitability signals people bring to them,” reveals Rankin. “Schooling certificates, for example, don’t necessarily indicate to a company whether a person is a good fit and companies are very wary of a bad match which may be difficult to break.” This is also a large part of the reason companies recruit in the way they do, but sadly, it’s not the same way young people search.
The main way young people approach companies is through direct applications. The main way firms recruit is through referrals. And therein lies the rub. With companies being faced with a mountain of direct applications every month for limited vacancies, recruiting through referrals is a way for them to deal with these large, often overwhelming, numbers of applicants. It also gives them a better signal of the applicant’s ability and means that an existing member of staff can vouch for their productivity and monitor – and mentor – them in the new job.
Networking
“Results from the study indicate that close to half those people who did find a job, found it through various networks. So if you don’t have these links to companies through family members or social networks, it’s very difficult to get a job,” Rankin explains. “Especially when there are so few available and with so many people vying for them.”
As the second round of the financial crisis rears its head, small and medium companies in particular are not handing out jobs with wild abandon — in fact, they’re cutting them. And the first people to get cut are the ones with the least skills and experience; usually the youngest. The enduring legacy of apartheid which has resulted in people living far away from where jobs are has further constrained people in their ability to search for work, with distance and the cost of transport creating barriers to the labour market.
Reducing transport costs or moving jobs closer to people or people closer to jobs are two alternatives for dealing with this issue, but what about the other factors that stand in the way of people and jobs? Providing people with more relevant and ‘trustworthy’ signals could help overcome company’s unwillingness to rely on them, for instance, as Rankin points out, “school-leaving exams or other types of tests could measure things that are important in the work world, for example, working in groups, reliability and initiative.”
Hiring voucher
Another intervention that the study has been trying to interrogate is Treasury’s proposal for a hiring voucher, otherwise known as a wage subsidy. According to Rankin, “the intention is that young workers are hired at existing wage rates but the cost of these workers to the company is reduced through the tax credit a firm earns, thereby encouraging them to hire — and retain — younger employees.
“It seems unlikely that this would lead to widespread replacement of older, more experienced, workers since older experienced workers and younger workers are not close substitutes. However, this substitution is one thing our research also specifically investigates.” But, as Rankin is careful to remind us, “no policy will work well without the creation of large numbers of jobs that fit the characteristics of the currently unemployed.
“Government, and ultimately the tax-payer, cannot afford to employ even a relatively small portion of the unemployed. The bulk will need to be employed by businesses of all sizes. This can only be done through focusing on current constraints to business growth and formation.”
This article originally appeared in the Mail & Guardian newspaper as a sponsored feature