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JEREMY MAGGS: South Africa has the highest unemployment rate in the world after its rate increased to 32.9% in the first three months of 2023, after another 179 000 people lost their jobs. Considering this, what tangible new policy interventions could government now take to make any kind of dent on unemployment. Dr Kate Philip is programme lead at the Presidential Employment Stimulus. Dr Philip, if this high unemployment level trajectory is set to continue, what is, in your opinion, the impact?
KATE PHILIP: Well, the impact of our levels of unemployment are extremely corrosive on those affected in communities, on the society, and actually also on our net levels of productivity. So it’s a vicious cycle that we need to turn around.
JEREMY MAGGS: What are the principal drivers right now?
KATE PHILIP: That’s a really complex question, but I think we have a whole lot of historic factors. We have a structure of the economy that makes it hard right now to create new jobs. We have very high levels of concentration in the economy, and that’s one of the key factors that makes it difficult for small enterprise to thrive because, for example, if you look at the basket of goods that poor people buy, most of the items in that basket are already mass produced in our core economy.
If you think of bread, dairy products, tea, coffee, tinned goods, all of those things are already mass produced in our core economy, and yet in other parts of the world, that’s where the small … business sector starts.
They start by producing things that are needed at the local level and in their neighbourhoods and selling to people in their neighbourhoods and expanding from there. That particular trajectory into small enterprise development and employment creation is largely closed in our context because of the structure of the economy. So I think that we need to understand that we confront particular problems. There are, of course, all the other contextual factors right now, energy, logistics, there are many factors that are combining to make growth and employment growth extremely difficult.
JEREMY MAGGS: Your assessment about small business though is worrying because we’re always led to believe that the future of employment in South Africa is predicated on, and it’s going to be built on, small enterprise.
KATE PHILIP: Yes, and I think in that context, it is important to understand that that’s not necessarily a silver bullet, and we need all components of the economy coming together to address the challenge. So I do think it’s important to understand the constraints and that in this South African context, actually entrepreneurs have to be even more entrepreneurial than in other contexts because of the market challenges that are faced.
So it is for these reasons that we argue, and certainly from the perspective of the Presidential Employment Stimulus, that we have to have complimentary interventions that use social provision of employment to compliment what we expect from the market.
JEREMY MAGGS: Let’s talk then about those complimentary interventions, if we can. What specific short-term measures then could government implement to stimulate economic growth and create those job opportunities, particularly in the sector that you’ve referred to?
KATE PHILIP: So, I think there are a range of different interventions and we know that attempts to address the structural issues are happening through something like Operation Vulindlela. We know that there are all kinds of efforts to rectify the deficits in our skills framework. There are many, many interventions, but I think at the same time, what we need to recognise is that given the contextual factors, it’s going to take time for all those interventions to deliver the scale of employment that society needs.
That’s why we need complimentary interventions through forms of social provision of employment.
That’s what the Presidential Employment Stimulus is doing – we have delivered 1.2 million jobs in livelihood opportunities since inception in October 2020. What that’s doing is, in a sense, contributing to net employment and providing young people, in particular, with work experience because one of the vicious cycles that we have in our context is that often the private sector says they’re not that keen to employ young people because they don’t have work skills, they don’t have work experience. But young people can’t get work experience unless they’re given the opportunity and that’s where these kinds of programmes come in.
So, for example, right now we have 235 000 young people placed as school assistants in 23 000 schools in the country. That is the biggest youth employment programme the country has seen. What it’s doing is providing young people with that missing link in their CVs (curriculum vitae), a crucial work experience, a very high quality one, often a one-to-one mentorship relationship with teachers. It’s giving them all the skills the private sector says they need, but it’s not just the private sector that needs work experience.
The evidence also shows that entrepreneurs without work experience are less likely to succeed.
So if we want entrepreneurs to succeed, if we want to boost the small enterprise sector to its maximum potential, we need to provide a mechanism that provides work experience, even when the private sector’s not able to do that. Right now, the private sector is simply unable to absorb young people at the scale of need and that’s why these programmes are a critical part of a big jigsaw puzzle of interventions, but an important part within that jigsaw puzzle.
JEREMY MAGGS: That argument, of course, is predicated, isn’t it, on the right type of jobs and the sustainability of those jobs.
KATE PHILIP: Okay, but let’s be clear, these kinds of jobs are not sustainable jobs. These are short-term work experiences that try to deal specifically with giving people an opportunity to enter the world of work and to get some work experience. We absolutely need the wider economy to create sustainable jobs, but we need to see these interventions as complimentary so that it’s about layering, it’s also about what comes first.
So the interventions that are needed to create sustainable jobs are not going to happen, switching a switch on, they’re going to take time and the society can’t wait that long for people to get opportunities. So we need interventions, complimentary interventions, that hold that space in a sense, give people a sense of hope, a sense of opportunity, a sense of work experience.
What we are certainly hoping is that the market-based interventions start to take effect, that sustainable jobs start to kick in and the people are able to continue into pathways, into sustainable jobs. But to be clear, these jobs are short term, publicly funded jobs to break the cycle, to act as a circuit breaker, if you like.
JEREMY MAGGS: I do understand that now. It’s also important though that you harness more private sector enthusiasm and involvement to complete the cycle.
KATE PHILIP: Absolutely, there’s no question about it, but I think we do know from extensive engagement with the private sector, just how hard it is out there. So I think as a society, we have to work with the private sector, create the enabling environment, engage in the structural reforms that have to happen. All of that has to happen but we can’t wait for all of that to happen before we intervene in ways that actually provide solutions on the ground and at community level.
JEREMY MAGGS: Dr Kate Philip, thank you very much.
