Latest news with #Packirisami
IOL News
a day ago
- Business
- IOL News
62. 4% of under 24s Jobless: Experts call for urgent reform
The tragedy of youth unemployment brings severe economic and societal consequences. Image: RON AI South Africa's younger citizens had little to celebrate this Youth Month. Unemployment among those aged between 15 and 34, who make up almost half of the country's working age population, surged to 46.1% in the first quarter of 2025, Statistics South Africa recently reported. This was up from 44.6% in the previous quarter. The facts become even more sobering at the lower end of this age group, with a staggering unemployment rate of 62.4% listed for those aged under 24. The very idea that youths born after the dawn of democracy in 1994 are referred to as 'born frees' must surely feel like a cruel joke to those facing one closed door after another while trying to make something of their lives. Youth unemployment is also incredibly costly to the economy. According to Sanish Packirisami, an economist at Momentum Investments, the most significant cost to the economy associated with unemployment is the strain that it puts on the fiscus, which must support an expanded social welfare programme. 'This diverts much-needed funding for enhancing the potential growth of the economy through infrastructure spending or for delivering on social services to maintain the overall standard of living for millions,' Packirisami told IOL. 'When fewer individuals are contributing to tax revenue, there is further strain on the fiscus,' she added. Social grants, necessitated by widespread unemployment, are a drain on the fiscus. Image: Oupa Mokoena / Independent Media South Africa's social welfare programme is believed to cost the Treasury around R285 billion per year. This funding includes the R370-per-month Social Relief of Distress grant that many unemployed youths apply for. Youth unemployment isn't simply a loss of productivity, it's also a loss of potential, says Dr Thabo Mashongoane, CEO of the Mining Qualifications Authority. 'Every unemployed young person represents a stalled contribution to GDP, a missed innovation, and in many cases, a future cost to the public through welfare or social assistance,' Mashongoane told IOL. Role of the informal sector While youth unemployment remains one of the most pressing challenges in South Africa, it is mitigated, to a degree, by the informal sector, says Maarten Ackerman, Chief Economist at Citadel. However, this situation also brings a set of unique challenges. 'While the informal economy is thriving and provides many youth with opportunities to earn a living, the downside is that these individuals lack access to formal financial services,' Ackerman said. 'For instance, without a payslip, it's much harder to qualify for a loan to buy a home or a car. This exclusion creates a significant gap in the economy.' Youth unemployment brings an economic as well as a human toll. Given that joblessness in South Africa is more prevalent across lower-income earning groups, it can fuel social unrest and crime, which damages the very fabric of society, Packirisami adds. An often unspoken aspect of the youth unemployment crisis is mental health. 'Poor mental health, substance abuse, limited digital access and gender-based barriers also create a divide for the unemployed,' Packirisami explained. 'More government support for those affected by poor mental health and substance abuse is necessary to provide a healthier workforce in SA.' Better support for women facing caregiving burdens was also needed to encourage female labour force participation in the economy, Packirisami added. What are the potential solutions to youth unemployment in South Africa? Addressing the youth unemployment crisis in South Africa will require a multi-pronged approach. At the very least, government needs to address the poor quality of basic education, which leaves gaps in literacy and numeracy, Packirisami said, leaving the workforce ill-equipped when it comes to foundational job-specific skills. 'Government needs to encourage more students to enter Technical and Vocational Education and Training (TVET) to provide practical skills, but these TVET colleges often suffer from underfunding, outdated curricula, and social stigma, as they are viewed as second-best options,' Packirisami added. A telling statistic is that 72% of the 'multidimensionally' poor youth in the former homeland areas of South Africa lack adequate education, according to the most recent Youth Multidimensional Poverty Index. People in these areas, deprived of essential infrastructure and services during the apartheid era, continue to suffer from widespread poverty. Addressing the skills mismatch Educational opportunities that are created also need to align with demand patterns in the economy, says Nkosinathi Mahlangu, Youth Employment Portfolio Head at Momentum Group. 'Alignment between institutions of higher learning and the economic drivers is key to getting young people to acquire skills that are in demand, instead of graduating or pursuing courses that will not result in employment.' Critical and scarce skills should also be listed and tracked, in order to steer the youth into careers that will help turn the tide, Mahlangu added. 'Skills that are imported need to be part of a knowledge transfer and upskilling plan that will subsequently give South Africans a chance to fill those roles in the medium to long term.' Degrees don't always translate to jobs. Image: Supplied Mashongoane said the widening skills mismatch was one of the most overlooked problems facing the economy. Industries such as mining, for instance, face a shortage of artisans, technicians and safety professionals, but the training and the 'pipeline' for delivering these skills are under pressure. Furthermore, the renewable energy sector is expected to create more than 250,000 new jobs by 2030, Nepoworx Energy's CEO Nonjabulo Sokhela told IOL. Yet many of these roles remain unfilled due to a mismatch in skills. 'When young people are excluded from these opportunities, we lose critical human capital and risk delaying our just energy transition,' Sokhela said. According to BluLever Education, South Africa currently produces only 13,000 artisans a year, against a national target of 30,000. Its research shows the sector holds 2.1 million potential jobs, and trades like plumbing alone have a 280,000-role gap. Mashongoane strongly believes that South Africa needs to make a fundamental shift from 'education for education's sake' to education that leads to employment. 'Government, SETAs, and employers must jointly fund and scale programmes that combine classroom theory with real workplace exposure. This includes expanding artisan development, apprenticeships, internships, and learnerships that are matched to sector needs.' Role of the private sector The private sector should play a key role in helping the youth transition into the formal economy, and this goes hand in hand with addressing the broader structural challenges that have long hindered sectors such as manufacturing, mining and construction. Companies can help bridge the gap through various skills development, enterprise development and corporate social investment interventions, Mahlangu said. However, government needs to play its part in creating optimal conditions for these opportunities to be realised. 'Unlocking growth in these industries through better policy, infrastructure, and investment conditions would enable businesses to expand and create sustainable employment opportunities,' Ackerman said. 'Ultimately, enabling the private sector to thrive will help absorb more workers into the formal economy and reduce the unemployment burden, particularly among young South Africans,' he added. Unemployment remains one of the single biggest threats to South Africa's future, both socially and economically. In 2025, we have less people employed, in nominal terms, than just before the COVID pandemic, says Frederick Mitchell, chief economist at Aluma Capital. 'If you don't incentivise businesses to grow or employ people, businesses won't do that,' Mitchell said. Clearly, there is a great deal more that government could be doing to alleviate this crisis. IOL Business
IOL News
a day ago
- Business
- IOL News
62. 4% of under 24s Jobless: Experts call for urgent reform
The very idea that youths born after the dawn of democracy in 1994 are referred to as 'born frees' must surely feel like a cruel joke to those facing one closed door after another while trying to make something of their lives. The facts become even more sobering at the lower end of this age group, with a staggering unemployment rate of 62.4% listed for those aged under 24. Unemployment among those aged between 15 and 34, who make up almost half of the country's working age population, surged to 46.1% in the first quarter of 2025 , Statistics South Africa recently reported. This was up from 44.6% in the previous quarter. South Africa's younger citizens had little to celebrate this Youth Month. 'When fewer individuals are contributing to tax revenue, there is further strain on the fiscus,' she added. 'This diverts much-needed funding for enhancing the potential growth of the economy through infrastructure spending or for delivering on social services to maintain the overall standard of living for millions,' Packirisami told IOL. According to Sanish Packirisami, an economist at Momentum Investments, the most significant cost to the economy associated with unemployment is the strain that it puts on the fiscus, which must support an expanded social welfare programme . Youth unemployment is also incredibly costly to the economy. Reset restore all settings to the default values Done Beginning of dialog window. Escape will cancel and close the window. Social grants, necessitated by widespread unemployment, are a drain on the fiscus. South Africa's social welfare programme is believed to cost the Treasury around R285 billion per year. This funding includes the R370-per-month Social Relief of Distress grant that many unemployed youths apply for. Youth unemployment isn't simply a loss of productivity, it's also a loss of potential, says Dr Thabo Mashongoane, CEO of the Mining Qualifications Authority. 'Every unemployed young person represents a stalled contribution to GDP, a missed innovation, and in many cases, a future cost to the public through welfare or social assistance,' Mashongoane told IOL. Role of the informal sector While youth unemployment remains one of the most pressing challenges in South Africa, it is mitigated, to a degree, by the informal sector, says Maarten Ackerman, Chief Economist at Citadel. However, this situation also brings a set of unique challenges. 'While the informal economy is thriving and provides many youth with opportunities to earn a living, the downside is that these individuals lack access to formal financial services,' Ackerman said. 'For instance, without a payslip, it's much harder to qualify for a loan to buy a home or a car. This exclusion creates a significant gap in the economy.' Youth unemployment brings an economic as well as a human toll. Given that joblessness in South Africa is more prevalent across lower-income earning groups, it can fuel social unrest and crime, which damages the very fabric of society, Packirisami adds. An often unspoken aspect of the youth unemployment crisis is mental health. 'Poor mental health, substance abuse, limited digital access and gender-based barriers also create a divide for the unemployed,' Packirisami explained. 'More government support for those affected by poor mental health and substance abuse is necessary to provide a healthier workforce in SA.' Better support for women facing caregiving burdens was also needed to encourage female labour force participation in the economy, Packirisami added. What are the potential solutions to youth unemployment in South Africa? Addressing the youth unemployment crisis in South Africa will require a multi-pronged approach. At the very least, government needs to address the poor quality of basic education, which leaves gaps in literacy and numeracy, Packirisami said, leaving the workforce ill-equipped when it comes to foundational job-specific skills. 'Government needs to encourage more students to enter Technical and Vocational Education and Training (TVET) to provide practical skills, but these TVET colleges often suffer from underfunding, outdated curricula, and social stigma, as they are viewed as second-best options,' Packirisami added. A telling statistic is that 72% of the 'multidimensionally' poor youth in the former homeland areas of South Africa lack adequate education, according to the most recent Youth Multidimensional Poverty Index. People in these areas, deprived of essential infrastructure and services during the apartheid era, continue to suffer from widespread poverty. Addressing the skills mismatch Educational opportunities that are created also need to align with demand patterns in the economy, says Nkosinathi Mahlangu, Youth Employment Portfolio Head at Momentum Group. 'Alignment between institutions of higher learning and the economic drivers is key to getting young people to acquire skills that are in demand, instead of graduating or pursuing courses that will not result in employment.' Critical and scarce skills should also be listed and tracked, in order to steer the youth into careers that will help turn the tide, Mahlangu added. 'Skills that are imported need to be part of a knowledge transfer and upskilling plan that will subsequently give South Africans a chance to fill those roles in the medium to long term.'
