Investing in the Future, Getting young people working - An employment Strategy of the ANCYL
5 July 1998
The ANC-led democratic government has inherited an economy that has not been absorbing
jobs since 1980’s and that stagnation has continued through o the 1990’s. The
unacceptably high unemployment rate in our country is one prominent features that points
to the structural distortions of the apartheid economy. Getting the economy onto a path of
sustainable growth that creates quality jobs is the single most biggest challenge for our
young democracy. It is for this reason that we agree with President Mandela, who stressed
during his address to Parliament in February, that the Jobs Summit is perhaps the most
important event since our first democratic elections in 1994.
This document is a culmination of work done over many years by the ANCYL in trying to
generate a systematic and scientific response to the problem and challenge of youth
unemployment in South Africa. Having long understood that young people are hardest hit by
the scourge of unemployment, we have chosen to work with and amongst various sectors of
youth, so that, together with them, we can develop a sustainable response to the challenge
of getting young people working in our country. We have chosen this approach because we
believe that no employment strategy can succeed if it does not have the backing of various
sectors of young people as the future workers and the primary beneficiaries of any
employment strategy. Hence we declare for the world to know that "The Youth
are the Future, Build them Now!"
This document constitutes a framework within which specific strategic interventions in
addressing youth unemployment have to be made. The document begins by analysing the current
situation, noting competing definitions of unemployment, laying out some
statistics about unemployment in general and youth unemployment in particular and further
outlines the causes of unemployment. A conceptual framework for youth
employment is laid, after which specific short, medium and long interventions to
address youth unemployment are proposed. The document ends by addressing itself to the processes
leading up to the Presidential Jobs Summit and proposes ways in which youth organisations
can maximise their impact at the Summit.
2. The current situation - What is at stake?
2.1 Definition of Unemployment
As a starting point, we highlight the extent of unemployment in the country and analyse
how it affects young people. Notwithstanding the controversy around unemployment figures,
there is no denying that unemployment is very high. The estimates for unemployment vary
between 25% and 35%, depending on who flags these statistics and for what purpose. This
controversy emanates from competing conceptual models around how unemployment is measured.
There are generally four criteria used to determine whether someone (over 15 years of age)
is unemployed, viz.:
- Someone who is not in paid or self-employment;
- Someone who is available for paid employment or self employment during the seven days
preceding the interview;
- Someone who has taken specific steps during the past four weeks preceding the interview
to find paid employment or self employed, or
- Someone who has the desire to take up employment or self-employment.
There are, broadly two ways to define unemployment. The narrow definition includes 1,2
and 3 above. If an individual did not take specific steps in the last weeks he/she would
not be considered unemployed. Of course, in the context where jobs are hard to find, one
can expect that many job seekers would soon get discouraged and stop looking for jobs.
Therefore, the expanded definition (4) includes discouraged job seekers in its definition.
A further complication is the tendency towards ‘informalisation’ in the
labour market where people do not have jobs with any job security, but are subjected to
short term cash-based agreements. This leads to difficulties both in measuring
unemployment and in defining what being employed means. Many people involved in the
informal or ‘survivalist’ sector of the economy are either counted as those in
employment or not counted at all. The fact that very little is known about what is
happening in the informal sector makes the issue of measuring unemployment even more
complex and controversial.
However, these definitional questions should not become the central pillar of our
framework. They’re important in that they will empower us to engage with the various
statistics and question their underlying assumptions and methodologies. So, depending on
what definition of unemployment you choose, you may under-estimate the extent of the
problem. And such a choice in defining unemployment is definitely not neutral as it may
serve as a tool to exclude certain key sectors of the marginalised and disadvantaged in
addressing the unemployment problem.
2.2 Unemployment facts
Formal sector employment has declined despite some, albeit low, economic growth. The
number of people employed in South Africa at present is equal to the number employed in
1982, despite substantial growth in the number of people who are seeking entry into the
labour market. Unemployment in South Africa remains unacceptably high and recent economic
growth has done little to alleviate it.
There are many dimensions to the unemployment problem. The most prominent feature of
unemployment is that it affects people differently in respect of age, gender and
geography. The youth, women and rural people are hardest hit as they disproportionately
share the burden of unemployment and poverty. In fact, the majority of the people who
never had jobs before (estimated at 69,2% of the unemployed) are young people.
Youth, as defined in the National Youth Commission Act, refers to someone from 14 to 35
years of age. Within the category of young people, African youth, rural youth, youth with
disabilities and young women have a further disproportionate share of the youth
unemployment burden (see Table 1, 2 & 3 below).
Table 1 breaks down youth unemployment figures to show unemployment rates of young
workers as a fraction of total unemployment within different categories:
Table 1: Youth unemployment as a proportion of the unemployed in each category
The statistics in Table 1 indicate that youth constitute almost half of the unemployed
in each of the categories of the unemployed and more than half of the total number of the
Table 2:Unemployment rates by race and gender, % per age in the labour force
Source: October 1995 Household Survey, CASE (1997), NYC
The other fact about youth unemployment is that it varies from province to province.
The more rural a province is, the higher the rate of youth unemployment, with Northern
Province, Eastern Cape and Mpumalanga leading in terms of youth unemployment(see the Table
Table 3: Provincial distribution - employed and unemployed youth
Source: October 1995 Household Survey, CASE (1997), NYC
The disaggregation of both the unemployed in general and unemployed youth in particular
is important so that we can identify the most disadvantaged and vulnerable sections
of the unemployed and youth. Tables 1, 2 & 3 give empirical credence to the
correctness of the ANCYL’s strategy of identifying young women, rural youth, disabled
youth and African youth in particular and black youth in general as the priority target
groups of our employment strategy.
2.3 Causes of unemployment
The next important question that should be highlighted is what are the causes of
unemployment in South Africa. Since the 1980’s, formal employment has stagnated. It
peaked in 1988, at 8 million or about half the labour force. Since then, the number of
employed has declined slightly in numbers and rapidly as a percentage of the workforce. In
1989 to 1993, employment fell by 400 000 – some 5 per cent. Unemployment reflects the
economic and social structure as well as labour market imperfections. Factors behind
unemployment lie in both the supply of and demand for labour, as well as in the nature of
the labour market. Factors depressing the demand for labour include:
The long run decline in employment in mining and agriculture. Formal agricultural
employment dropped by almost a fifth in the past two decades and by a tenth in 1987-95.
Mining employment has declined by a quarter since 1987. The fall in employment in these
two sectors in the past eight years equaled 6 per cent of total employment.
Rising capital intensity in the formal sector. Since the early 1980s, labour absorption
has fallen to virtually zero. As a result, even when the economy has grown, employment has
remained unchanged or even declined.
Domestic demand is constrained by the severe inequalities in income distribution,
fiscal and monetary restraint, including very high interest rates.
On the other hand the supply of labour is affected by the relatively high cost of
living for most workers and by poor human resource development. The supply of labour also
reflects under-investment in human resources and social capital As a result, skilled
labour proves relatively expensive, while insecure communities and households undermine
productivity and education.
Recent indications are that most public sector institutions have also been shedding
jobs and this is adding more unemployment figures. If the indications that 300 000 public
servants may have to be retrenched in the course of restructuring the public service are
true, this will add salt to the unemployment ‘wound’ unless there is a social
plan to deal with the consequent crisis.
Finally the labour market has not adequately fostered employment creation. The
apartheid labour law emphasised bureaucratic control of labour, especially Black workers,
to ensure a constant flow of cheap labour. It was deficient in many respects and did not
provide a constructive framework for negotiations or to foster mediated settlements, while
dispute settlement procedures took a long time. This highly segmented labour market
(segmented along race, gender and class lines) is marked by substantial discrimination and
has thus given rise to huge income disparities, referred to as the apartheid wage gap.
In analysing the reasons for the particularly high levels of youth unemployment, a
number of distorted explanations need to be debunked. A typical problematic explanation
for youth unemployment is that young people are less productive than older workers, hence
the marginal costs of employing them are higher. While it is often true that young people
are less experienced then their older counterparts, it also needs to be noted that these
are the people who are physically in their prime and are also having faster learning rates
than older workers. This calls into question the productivity-explanation of youth
Related to the above, lack of education and training is also often blamed for youth
unemployment. While it is true that, at an individual level, education and training will
probably enhance someone’s chances of getting a job, this does not always hold
completely at the aggregate level. The fact that people with all levels of education are
unemployed – even up to the graduate and post-graduate level – suggests that
improving education and skills levels cannot be the centrepiece of a job creation
strategy. Whilst it would certainly assist in improving productivity and efficiency in the
economy, education and skill development without structural economic change cannot lead to
massive job creation.
3. Conceptual framework
3.1 Youth unemployment and the bigger unemployment picture
From the above, it is clear that youth unemployment cannot be treated outside of the
overall unemployment in the economy. It is a component of overall unemployment and
measures to address unemployment will have to impact on youth unemployment, as young
people constitute the majority of the unemployed. Whilst we should ask every stakeholder
at the Jobs Summit about their agenda in addressing youth unemployment, we must resist any
temptation to delink youth unemployment from the general unemployment crisis engulfing the
country. We should therefore resist attempts by certain parties to use youth unemployment
as a Trojan Horse to introduce a two-tier labour market - one labour in which workers have
rights and benefits existing side by side with a youth labour market in which wages are
low and there are no bargaining rights. If we accept the latter, we should understand that
young people will be trapped in unending poverty. Such an approach is aggressively
promoted by structures like Business South Africa and the Democratic Party.
3.2 Two-tier labour market - are youth ‘secondary’ workers?
The elements of such an approach would be that young people should accept lower
employment standards including lower wages. This will not be sustainable, as it will lock
young people in low paying jobs which effectively exert downward pressure on wages and
conditions of other workers. A two-tier labour market will be characterised by ‘a
race to the bottom’ and atypical employment trends which do not improve the living
standards of young people. It means we should argue strongly for quality jobs that pay a
decent income and which do not compromise labour standards.
Whilst there should be incentives to companies that invest in labour intensive
projects, we should find a way of giving incentives to companies that increase their
intake of youth into employment. Extreme care should be exercised to avoid creating a
‘welfare state’ for the rich by giving them too many incentives with the hope
that they will create employment, while they continue to do business as usual. Again, it
is therefore essential that measures to address youth unemployment are firmly located
within the overall employment creation strategies.
Any agreement to lower labour standards for young workers would be tantamount to
disinvesting in the future as youth may be subjected to increased exploitation and
uncertainty, with the hope that one day when they grow old, they will get better pay and
improved working conditions. And that day may not come.
3.3 Getting to the bottom of youth unemployment - understanding and unpacking
categories of young people
When conceptualising youth and their employment needs, it also needs to be noted that
youth are not a homogenous group and need to be broken down into various sub-categories.
In particular, they can be broken down by racial, gender, and class. Specific groupings of
youth which can be considered in formulating employment generation proposals include the
- Child labourers
- Retrenched youth
- Young people who have not had a job before
- Youth of school-going age but who are currently out of school
- Professional/Skilled youth
- Rural youth
- Young women.
Firstly, we are opposed to child labour and support the provisions of the Basic
Conditions of Employment Act (BCEA) in prohibiting child labour. It is important that
children under sixteen years of age get the necessary protection from exploitation.
Society needs to invest in their education and development so as to prepare them for a
future meaningful participation in the economy and society generally as active citizens.
Child labour denies children their rights to enjoy a safe and secure life, and any future
opportunities to work and live well.
Secondly, young people who are in institutions of learning need a greater sense of
assurance that when they leave school, they will find employment. This is only possible if
there is an improvement in the quality of public education. Further education and training
institutions should be transformed and utilised to their fullest capacity as they hold
more potential in providing the bridge between school and the world of work. More and more
young people should be trained in areas of greater need such as economic and management
sciences and science and technology. There should be more coordination between career
advice services in learning institutions and labour market information and placement
agencies. This will help prevent graduate unemployment, a trend that is now rife in our
country. Graduate unemployment cannot be tackled effectively if it is addressed outside
the need to transform higher education within the context of broadening the knowledge and
skills base of the economy, through opening access for the historically disadvantaged.
Most graduates find themselves with paper qualifications but very little ability to do the
In many sectors of the economy, the ‘experience’ requirement makes the labour
market inaccessible to new entrants. These new entrants are mainly young people coming out
of the education and training institutions. There can be no reasonable expectation that
these young people will have the type of work experience currently demanded by employers.
Neither the current education and training system nor the employers have programmes that
give exposure and pre-employment experience to studying youth. To simply require
experience on their part is tantamount to locking them out of employment doors. Instead of
demanding ‘experience’ as narrowly defined by employers, public and private
sector employers should offer young people opportunities for on-the-job training and
internships in workplaces so that they can acquire it in the course of practice. In
addition, experience should accommodate the person’s potential and ability shown in
other life settings.
Thirdly, we approach youth unemployment as a problem facing largely historically
disadvantaged sectors of youth such as young women, rural youth and African youth in
particular and black youth in general. Working class youth are therefore hardest hit by
the unemployment crisis. They bare a disproportionate burden of society’s problems of
unemployment, particularly in the absence of a comprehensive social security system and in
the context of a legacy of apartheid’s education and training system that did prepare
youth for ‘the world of work’. Any employment strategy should be judged by how
in the short term does it offer immediate income relief to these vulnerable sectors of
youth and while in the long term enhancing their opportunities to get sustainable,
quality, safe and secure jobs. It is with this strategic consideration that we approach
our own proposals on what should constitute the pillars of a sound youth employment
4. Four pillars of our employment strategy
In this section, we outline broad strategies on key areas of economic and labour market
issues. Without being detailed, we focus on four key pillars of a strategy, and
specific proposals within these pillars Broader macro-economic issues are raised insofar
as they impact on these proposals.
Essentially, our job creation strategy should have four central pillars, informed by
the above conceptual framework:
- Firstly, to increase the total number of jobs in the economy.
- Secondly, to increase the proportion of total available jobs which are channeled to
- Thirdly, to introduce special programmes which serve both to provide temporary
employment for youth and to increase their levels of skills and "employability".
- And fourthly, to promote self-employment and collective employment programmes for young
4.1 Increasing aggregate employment
Increasing the level of youth employment in a sustainable and long-term way is
impossible without increasing the total number of jobs available in the economy, i.e.
increasing the aggregate demand for labour. Reducing unemployment levels requires both the
absorption of new entrants into the labour market (which is not currently happening) as
well as generating employment for those who are currently unemployed, who might have been
employed as some point.
This requires both increasing the productive capacity of the economy as well as
increasing the number of jobs which arise from a given productive capacity. While it is
not feasible to describe a complete strategy for this here, the following proposals are
amongst those which could be implemented:
Activist industrial and labour market policies. The state must play a
driving and interventionist role in the structure and operation of the economy. To the
extent that Spatial Development Initiatives (SDI’s) and Industrial Development Zones
(IDZ’s) hold prospects for maximising industrial development, raising levels of
investment and creating quality new jobs, their contribution to youth employment is
crucial. We should ensure that there is an increase in the number of jobs that go to young
Implementing appropriate monetary policy and fiscal policy which give
prominence to employment creation over control of inflation, while of course not
neglecting the importance of keeping inflation down. Essentially, these policies need to
be judged by the extend to which they facilitate job creation, rather than meeting targets
that have no positive social and economic spin-offs.
Limiting and avoiding as far as possible, job losses arising from public
service restructuring. While government is not an employment agency, and it can be
acknowledged that there are areas of the public service which are bloated and inefficient,
it is a reality that the public service is currently responsible for about a third of all
jobs in the economy. Furthermore, a developmental and activist state cannot shy away from
the responsibility of creating jobs as a mechanism to sustain and enhance the delivery of
social services. The state can also play a key role in leveraging private sector
investment for the creation of jobs.
Increasing the labour intensity of production. Reversing the current
capital intensity of production would mean more jobs being created at the same levels of
output. Examples of specific proposals to make production more labour intensive could
include the generalising/socialising of labour-related costs and the reorientation of
Development Finance institutions (such as the Industrial Development Corporation and
Development Bank of Southern Africa) to favour more labour-intensive investments.
While there is no denying that South Africa is part of the global
economy, we should also admit that trade liberalisation has led to considerable job
losses, particularly in industries such as clothing and textiles and automobile
production. We propose that everything should be done in order to minimise job losses
during the era of global economic integration. Furthermore, social plans need to be put in
place for those industries which are being "squeezed" by the liberalisation of
4.2 Increase the share of jobs total going to youth
Another way of encouraging the private sector to employ proportionately more young
people is through the use of procurement policy. When government awards its tenders, it
takes into account various criteria, such as the racial and gender composition of
companies tendering. Another criteria which could be introduced is the proportion of young
people on the company’s payroll.
As was seen in the statistics presented earlier, youth as a category are particularly
hardest hit by unemployment. Specific strategies are thus needed to ensure that a greater
proportion of jobs, particularly new jobs, are channeled to youth. Of course, we do not
want a situation where young people gain jobs at the expense of their mothers, fathers,
elder sisters and brothers. Specific proposals to increase youth employment as a
proportion of aggregate employment could include the following:
4.2.1 Targeted employment subsidies.
This would essentially be incentives put in place by the state to encourage the private
sector to employ youth. For example, this could take the form of the state bearing a small
proportion of cost of each new youth job created in a company. Whilst such an approach can
be effective in bringing rapid and measurable results, there are a number of dangers
associated with such policies that needs to be taken into account. One scenario is that
companies take such subsidies for jobs which they would have created anyway, thus
effectively providing windfall gains for capital. Companies could also substitute existing
adult employment for youth employment in order to gain the subsidy. Neither of these would
be desirable situations, and attention is thus drawn to the fact that, were employment
subsidies are to be introduced, they would have to be carefully monitored and constantly
In addition, it could be useful to specifically target employment subsidies at those
sections of youth which are particularly suffering from unemployment, notably young women
and rural youth. For example, instead of offering youth employment subsidies throughout
the economy, they could be focused in rural areas with high levels of unemployment, or the
subsidies could be higher for young women than for young men. It may also be wise to focus
subsidies on those specific age groups within youth who find it most difficult to obtain
4.2.2 Active state procurement policy
It is important that policies intended to channel a greater proportion of jobs to youth
do not only rely on "carrots" (incentives and subsidies), but also on
"sticks" (penalties and regulations). Implementing them, particularly the
proposal around the use of procurement policy, would obviously require the political will
to see them through. The proposal for youth employment subsidies would also have obvious
expenditure implications, and will require flexibility in approaching deficit targets and
reprioritisation of the budget.
In broad terms, this suggests an approach that sees employment creation as a
multi-pronged strategy rather than seeing it as the responsibility of the labour market.
High unemployment in South Africa is deeply rooted, and no single measure can bring about
instant or easy improvement. Rather, only the combination of various policies to increase
employment opportunities while stimulating growth seems likely to ensure sustained gains.
Such policies should include an appropriate fiscal and monetary policy (e.g.
infrastructure and housing) with an emphasis on labour intensive job creation, lower
interest rates, active industrial policy, etc.
4.3 Special programmes to enhance youth employability
While we obviously need long-term structural solutions to the unemployment crisis,
there is also a need for more short-term approaches as well. These would serve three main
objectives: Firstly, to provide jobs for those people (especially youth) who cannot find
work elsewhere, particularly those who have not worked before and are considered
"unemployable" in the formal sector. Secondly, to equip such people with
sufficient skills and experience that, on moving on from such programmes, they are able to
find regular employment in the formal sector. Thirdly, to deliver on basic needs by
contributing to the provision of housing, infrastructure, etc.. There are three related
programmes which are mentioned hereunder. Umsobomvu Fund and other budgeted expenditure
could be used.
4.3.1 National Youth Service Programme (NYSP)
The National Youth Commission’s Youth Policy 2000, the ANC’ 50th
Mafikeng National Conference and our 20th National Congress provide a comprehensive
framework on the NYSP. We need to use the hype created by the Jobs Summit to popularise
the NYSP and to lobby for it to be a Presidential Lead Project. We need mobilise
for mass participation of youth in the NYSP and capture their imagination. This spring the
NYC will unveil the Green Paper on the National Youth Service Programme. We should use the
public participation process of the NYSP Green Paper to mobilise youth behind the NYSP and
unleash their creative energies for reconstruction and development.
The overall goal of the NYSP is to engage young people in a systematic programme that
provides them with vocational skills and educational training, while contributing to
reconstruction and development and enhancing their employability. This programme will not
only impart life skills to the participants but it will also encourage and inculcate the
spirit of community service among young men and women in South Africa. While the NYSP will
include all youth and will be accredited through the NQF, it will be targeted specifically
at previously disadvantaged youth such women, out-of school youth, the unemployed youth,
demobilised youth and young returnees.
If the NYSP is to succeed, there will have to be a great deal of co-ordination within
government, between the NYC and youth in civil society organisations. There is a need to
involve organisations such as trade unions, business, professional bodies, tertiary
institutions and local government in the NYSP as they can bring more resources and
infrastructure that is crucial for the success of the programme. Already existing youth
development initiatives need to be harnessed at local and national level. The NYSP
constitute the most daunting challenge to South Africa young men and women. The need for
its success cannot be over-emphasised. In the coming months we should ensure that it
captures the imagination of the public in general and young people in particular.
4.3.2 National Public Works Programme (NPWP)
The government does already have an extensive public works programme in place, which
has contributed substantially to job creation. Programmes such as Working for Water, Land
Reform Campaign and Clean Cities Campaign have already made youth employment part of their
focus. However, given the current unemployment crisis, this needs to be drastically
expanded. It is also important that public works are not just there to create temporary
jobs, but they do also contribute to reconstruction and the meeting of basic needs, as
well as the skilling and empowering of those passing through the programmes.
Were such programmes to be implemented on a massive scale, they would obviously require
considerable state funding. We could argue that this would be justified in the context of
the levels of unemployment and the apparent unemployability of some sections of the
4.3.3 Employment internships for youth in the public and private sector
Internship programmes should be located within the framework of the NYSP so that they
don’t undermine the spirit of compulsory community service. As a long term way of
addressing the "lack of experience" problem, employment internship programmes
should be made accessible to young people so as to expose them the challenges of work.
This internship programmes should target, but not be limited to, youth in institutions of
further and higher education. This will give exposure to students so that they get a sense
of the "world of work" while still learning. Internship programmes can also be
used to recruit youth into full employment at the completion of a particular programme.
Within the framework of the NYSP, the government can also use such internships to
recruit young people to a needy area of developing a public service cadre committed to
transformation and a high standard of service delivery. This is particularly the case in
levels such as local government, where the delivery of services is hampered by staff
shortages and lack of resources. The concept of a learnership allowance can also be
applied in internship programmes as it is already the case.
4.3.4 Learnership programmes targeted at young people
There should be a combination of measures that facilitate skills development and entry
into the labour market. learnership programmes should be put in place in both the private
and public sector to facilitate skills acquisition. Destitute people who are in
learnership programmes should be provided with learnership allowances as some form of
income relief. The learnership allowance is already practised in various forms in
different companies and professions as law, medicine, engineering for students serving
articles, internship or those doing practicals
This learnership allowance is different from the concept of a youth wage in that it is
first and foremost a training allowance provided over a speficied period of time rather
than a wage offered to a particular worker because of age. While the allowance may be
targeted primarily at youth, it should also include other sectors marginalised by the
labour market such as women, the disabled and rural people in general. The learnership
allowance is a pre-employment income relief, whereas the youth wage is an income bracket
set for people of a particular age. What we need at the stage is a large scale learnership
programme that offers youth short term income relief (allowance), while opening entry into
the labour market through skills acquisition. This does not require an age-bound two-tier
wage structure that may serve to perpetuate the apartheid wage gap.
4.3.5 Improving access to labour market information by young people
The National Youth Commission’s Youth Information Service is a very crucial
project in making a wide variety of information to be accessible to young people.
A key component of the Youth Information Service should be to rpovide labour market
information that is up to date. By providing information on the number of unemployed young
people in particular region, and their skills profile, the youth Information Service can
become very useful to unemployed youth in a particular area.
One of the main difficulties we face is that there is no database on labour market. By
improving the matching of supply of and demand for labour, more available jobs can be
channeled to youth. This would require expanding and improving the efficiency of labour
placement and employment information institutions. Linked to this is skills matching,
which implies a closer synthesis between education and training and the labour market.
This should not be reduced to meeting the needs of industry alone, but rather tailoring of
education to empower scholars and students with relevant skills. Such skills matching
would thus clearly require transforming of the content of curriculum, learning methods,
and so on.
4.4 Promotion of self-employment and collective employment
Apart from putting in place policies which increase the number of jobs provided by the
public and private sectors, we can also facilitate job creation through self-employment
and collective employment. Within this broad theme, two key areas can be mentioned:
4.4.1 Promotion of Small, Medium, and Micro Enterprises (SMMEs).
This has been raised in various approaches as a job creation vehicle. SMME’s may
become the most viable option for people finding it difficult to gain work in the formal
sector. They also have huge potential in generating economic growth. The following
limitations should, however, be noted if SMME’s are to achieve their job creation
potential to be recognised:
Institutional capacity problems: SMME’s face a huge
challenge in respect of institutional capacity. Most SMME’s, according to the White
Paper on the Development and the Promotion of Small Business in South Africa (March 1997),
have problems related to access to finance, marketing of their products and services,
access to adequate and appropriate infrastructure, insufficient skills in manufacturing,
management and financial planning, access to title deeds. If SMME’s are to become an
important creator of quality jobs and wealth, these problems need to be seriously
Poor working conditions: Many of the jobs which are apparently
created by SMME’s are often not net new jobs, but rather jobs which have been
transferred from bankruptcies, downsizing, or subcontracting and outsourcing from larger
enterprises. In addition, jobs in SMME’s are susceptible to downwards variation and
often tend to be poorly paid with poorer conditions and difficult conditions for
unionisation. The relatively high failure rate of SMME’s also makes such jobs more
vulnerable and insecure. Some of them are survivalist and thus cannot provide jobs beyond
the owners/managers. The above reservations are not intended to suggest that SMME’s
should not be actively promoted, but rather that they cannot be seen as the sole solution
to unemployment and that they need to be well regulated.
Lack of information about growth of the sector: While the growth
of the SMME sector may hold prospects for job creation, the fact that very little is known
about the type of economic activity that goes on in the "informal" or
"grey" economy, this constitutes a serious limitation for the potential that may
exist. Access to technological support and advice will help to highlight the possibilities
and prospects of employment growth within the sector.
4.4.2 Promotion of youth co-operatives, enterprises and franchises
One of the more empowering ways of encouraging bottom-up employment creation is through
the fostering of co-operatives. South Africa does already have a fairly well developed
co-operative sector, but there is certainly considerable potential for further
development. Co-operatives can range from sewing circles to agricultural enterprises to
cultural initiatives and so on. The state needs to ensure that there is a conducive
legislative framework as well as appropriate training and support. Co-operatives,
especially in the agricultural and tourism industry, can be used to address unemployment
among rural youth.
Agriculture and tourism co-operatives should be used as a model to draw rural youth
into productive economic activity such as farming. Agriculture and tourism have a huge
potential for employment growth in the rural South Africa. This has the potential to
generate food security for the nation, while generating wealth for the economically
depressed rural communities.
4.4.3 Pursuing an active industrial policy and supportive monetary policy
Apart from these responsibilities, various aspects of the macro-economic environment
would need to facilitate the promotion of SMME’s as well as co-operatives. Firstly,
South Africa’s extremely high interest rates increase the costs of borrowing and can
seriously stifle the development of such enterprises. Reconsidering this could entail both
a general lowering of the interest rate and consideration of differential interest rates
and directed credit. Related to this is the more general question of access to and control
of finance through various financing and enterprise development mechanisms such as the
National Empowerment Fund, Ntsika Enterprise Promotion Agency and Khula. It is clear that
market allocation of finance is both inadequate and inappropriate, suggesting a stronger
role for the state in regulating, harnessing, and channeling finance and investment in the
5. The Jobs Summit - Our Strategic Approach
Expectations on the Jobs Summit are high, particularly since President Mandela, in his
State of the Nation speech in Parliament, characterised the summit as the biggest
challenge and perhaps the most important event since the 1994 elections. It is now clear
that this long awaited summit will finally take place quite soon.
At the moment, it appears the summit itself will not see substantive negotiations and
decisions being made, but will rather serve as a presentation of a framework already
agreed at NEDLAC (if ever there will be agreement) and the programme of action around
tackling unemployment in the short term. The real negotiations are taking place in the
run-up to the summit through NEDLAC.
We need to note youth are not regarded as one of the key players in the job summit
process. They are part of a the community constituency, which is itself a junior partner
in a process dominated by government business and labour. Most of the actual decisions are
already being made between government, business and labour at NEDLAC. It is not necessary
or strategic to come with detailed proposals in all areas that are already covered by
those constituencies such as government, labour and the community constituency. Our
proposals will make more impact if they are centred around a couple of key focus areas. We
therefore want to emphasise the need to lobby for our positions and work closely with
these three partners. When it comes to business, we must challenge them to take concrete
steps around investing in youth employment and skills development.
We must continue to clarify ourselves in respect of what outcome we expect from the
Jobs Summit. In this regard, we must avoid two twin dangers: On the one hand, we must
challenge parties which may want to use the Jobs Summit as a public relations exercise in
which there are general pious declarations which will not produce any single job. The
ANCYL will resist any attempt to want to refer everything to a post-summit process. On the
other hand, we must avoid turning the Jobs Summit into an all-or-nothing event. It will be
unrealistic to want to achieve consensus on everything in the Jobs Summit.
What we should push for is minimum agreement on the framework for job creation and a
programme of action to begin to alleviate unemployment. Some issues need to be referred to
a post-summit process for further work and negotiations. The key question is going to be
"Which issues?". While we don’t want everything to be referred to the
post-summit process, we shall be comfortable if there is agreement on some of the major
policy issues identified in this document, as well as the major instruments to achieve
massive job creation. Any further detail can be subjected to further negotiations after
In this document, we have tabled key proposals around job creation for young people in
particular. We have raised macro-economic policy issues insofar as they impact on
employment creation and proposed ways in which fiscal and monetary policy can facilitate
job creation. For us the key question is not whether Gear is right or wrong. To the extent
that the 50th ANC Conference has resolved that Gear is not cast in stone, we
should engage in a healthy but difficult debate about ensuring that fiscal and monetary
policy, industrial policy as well as labour market policy facilitates the creation of
sustainable, secure and quality jobs for young people in particular and society in
general. To the extent that macro-economic variables should be supportive of the urgent
task of creating sustainable and decent jobs, we have raised issues that broaden the
horizons of the current fiscal and monetary policy, as well as putting emphasis on the
centrality of an active industrial policy in creating employment opportunities for
disadvantaged sectors of our society. It is in this context that we think that an
all-or-nothing approach to Gear will neither create jobs nor resolve the structural
problems of the South African economy.