There is an unspoken assumption that a rising GDP will lift youth boats – ‘let’s grow the economy, jobs will follow, and youth will find work.’ Growth is, of course, an important enabler of job creation, but an analysis of the Quarterly Labour Force Survey (QLFS) data reflects that since 2008, even when South Africa’s economy has grown, youth employment is decoupled from GDP growth. Even in the good times, young people are being left behind.

We can speculate about why this is the case – lack of skills, hiring biases, and structural barriers – but this data suggests that we have a generation of young people whose potential and productivity is being squandered. This is despite the scaling of many interventions in South Africa, including 1.4 million work opportunities that were enabled by SA Youth, of which 8% are net new jobs that have gone to youth, or programmes like Youth Employment Services (YES) which have placed nearly 160,000 youth in quality 12-month work experience programmes. These programmes are stemming the tide, not reversing it.

Growth is a necessity but is an insufficient condition for youth employment. And even if we were to achieve the ambitious targets laid out each year by individual organisations, an even more ambitious collective vision is still needed.

How can we reverse this crisis, and by when?

From Harambee’s 13 years of experience, we have assembled data and evidence for what ‘levers’, if applied at scale, could reverse this crisis: inclusive hiring of youth, unlocking youth jobs in new sectors, growing youth self-employment, and prioritising youth in work experience programmes.

We can can take concrete steps to shift this crisis. For example – employers can drop unnecessary barriers to entry level roles and engaging with alternative assessments such as those available on SA Youth, combined with strong mentorship and work readiness programmes. SMMEs operating in the township economy can work to derisk entry for youth, and corporates can create more supportive value chains for youth-led enterprises, to help South African create a culture of job creators rather than job seekers.  Finally, we need to sustain work experience programmes to drive inclusion and pathways to longer term work—but optimise them by creating a strong evidence base for their effectiveness.

The effect of all levers being pulled together could see the relationship between GDP and youth employment strengthening, with a total increase of three million additional young people in employment, and the youth unemployment rate declining from a projected 56% to 34% by 2030.

Critically we need pathway management across all these levers – to break barriers and support youth to access work and stay in work. This requires a bold vision for us to fire on all cylinders and add jet fuel to the great work being done by individual organisations. At the heart of this vision is the assumption that inclusion does not need to be at odds with growth but, if we act intentionally, it can unlock prosperity for all.

KEY INSIGHTS FOR
THIS QUARTER

Source: Harambee Youth Employment Accelerator 2024

Lever 2: Grow the informal economy for it to absorb youth and generate earnings

Insight: Informal work needs to be derisked for youth – otherwise incomes are precarious. Intentionally opening supply chains to micro enterprises benefits both existing and new business

Source: Harambee Youth Employment Accelerator 2024

Sunrise sector jobs are “the holy grail” and everyone wants jobs of the future, but they are incredibly hard to unlock. Expanding the informal sector’s share of youth employment from 20% to 30% – a systemic and structural shift in the shape of our economy, could result in 900,000 additional youth jobs by 2030 reducing the youth unemployment rate by 6%. It would also unlock an engine of growth in value chains like last-mile sales and delivery, mobility, and agriculture.

But we need to de-risk the entry of youth into the informal economy, otherwise, they are doomed to precarious incomes. Most business ideas pursued by youth are temporary and uncertain, leading to inconsistent incomes and financial instability. Operating outside legal frameworks can also leave youth vulnerable to exploitation and many self-employed individuals find the costs of formalisation prohibitive. Poor access to funding and skills training further restricts the type of work young people can take on, trapping them in low-paying and unstable activities. On top of all of this, a lack of formal financial services hinders their ability to save or invest, perpetuating poverty. As a result, self-employment opportunities tend to be the last resort for young people and the least ‘sticky.’ SA Youth data reflects that only 23% of people starting in a self-employment role within our network transition to another self-employment opportunity, the rest opting out into more secure work experience programmes (36%) or formal economy (41%) roles. We cannot expect youth to ‘entrepreneur’ their way out of poverty with side hustles, but if we support them, this could lead to economic resilience and community upliftment.

We have done this before, with partners such as Qwili and Green Riders, which enable less precarious incomes. Opportunities unlocked through SMME partners offer access to markets, financing, skilling, and assets; generate higher incomes ranging between R3,000 and R5,000 and keep excluded youth engaged for significantly longer, estimated at an average of 12 months. This translates into an additional R33,200 – R56,400 in earnings per opportunity over a year.

The last-mile delivery sector is emerging as an exciting zone of opportunity for excluded youth to make their own money, and organisations like YourBikeClub and Green Riders help young people to cut down the operating costs of running their own delivery business. South Africa’s e-commerce market is expected to reach more than R400 billion by 2025 with more than 1 billion transactions per annum, and this growth is also labour absorptive with an increase in the new jobs for delivery drivers. Through support such as access to markets, monthly gross earnings for drivers are estimated to reach between R3,300 per week to R14,000 per month. And while drivers typically face high running costs of up to R1,500 per month, SMME partnership support can help mitigate this, enabling potential net incomes of R1,800 per week or R7,200 per month.

Agriculture is another sector that offers significant self-employment potential, provided there is extra support to de-risk youth entry. Harambee’s recently completed ROOTS Agripreneur pilot project sought to address this by providing 130 young people with comprehensive agri-growing and business management skills, start-up capital, and access to markets. Through this, participants became sustainable ‘agripreneurs’, earning almost R12,000 per participant, with some reaching R162,000 in their first production cycle from June 2024 since pitching and setting up their businesses. For their next production cycle, it is expected that their average income will increase by 20-40%. The results not only show the impact of agripreneurs on local economies and food security when equipped with proper support but also showcases the chance to create more jobs. Early indicators highlight that agripreneurs can employ an average of 1-3 additional people, all in underserved rural and peri-urban communities. Another example is Unilever’s Jozini Agricultural Project that has reached almost a thousand people, 76% youth and 66% women. This project brings small-scale farmers into Unilever’s supply chain and gives participants exposure to its end-to-end business process.

We need to expand our informal economy, derisk entry for youth, and accelerate absorption of youth into SMMEs. Self-employment and entrepreneurship are key levers for reducing youth unemployment and by fostering a more supportive ecosystem for youth-led enterprises, South Africa can create a culture of job creators rather than job seekers.