Youth unemployment a growing concern

More than 50% of South African youth are unemployed, highlighted the World Economic Forum (WEF) Global Risk 2014 report. South Africa has the third highest youth unemployment rate in the world, according to the report.
 
“South Africa's high youth unemployment rate is extremely concerning and has serious social and economic repercussions,” said David Feinberg, founder of online internship portalInternfit.
Youth unemployment is one of the greatest problems facing the country having increased from three million in 2009 to the highest level of 3.4 million in 2013 and 2014, said the Department of Labour in a statement.
 
While 25% of the country is unemployed, Gill Marcus, former governor of the Reserve Bank, stated that 53% of youth are unemployed, but this excludes discouraged work-seekers. Estimates have put that figure closer to 70%, said Feinberg.
 
Unemployed graduates
 
Even though only 12% of South African’s have a tertiary education, about 600 000 of them are unemployed, explained Feinberg.
 
“Only around 12% of South Africans have a tertiary education. One would imagine that in a skills-starved economy they are in high demand, but unfortunately finding an internship can be an extremely frustrating experience for both employers who get many requests and for the students who often have to contact each company individually,” said Feinberg
 
However, the Department of Labour believes that there is a gap between what graduates are taught at tertiary institutes compared to what job seekers actually need.
 
“Although there are a lot of jobs that emerge from time to time, the challenges we face are the persistent structural skills deficit informed by the mismatch between the skills acquired by the job seekers in the education system against the skills demanded by the labour market,” said Sam Morotoba, the acting director general for Labour.
 
Employment tax incentive
 
However, there are programmes out there to tackle the rate of unemployment among the youth. businesses can take advantage of the Employment Tax Incentive (ETI) to employ young people aged between 18 and 29. Through this initiative the government offers a subsidy of up to 50% on salaries of R6000 or less. An employer will be eligible to receive the ETI if the employer is registered with SARS for the purposes of employees’ tax, explained South African Institute of Chartered Accountants (SAICA).
 
SAICA added that the incentive will be available for the first two years of employment of qualifying employees as defined in the ETI Act. This will cover three different categories of employees: employees between the ages of 18 and 29 years, employees who are employed by an employer located within a special economic zone and employees who are employed by an employer in a designated industry such as textile and manufacturing. If the employer is operating in a special economic zone or a designated industry, there will be no age limitation for qualifying employees, said SAICA.
 
“Businesses will get credit for employing young people and at the same time we are creating an environment that is conducive for the business to employ young people. Our plan is simple: reduce the cost of doing business while reducing the cost of living of the poor,” said Minister of Finance, Nhlanhla Nene earlier this month at Monetary Fund-World Bank discussion.
 
Internship opportunities
 
One way for a recent graduate to find experience is through an internship. However, internship positions do not offer much remuneration, and sometimes can be unpaid, explained Feinberg. Sometimes an employer offers only an allowance for food and travel, which is around R2 000 to R3 000 a month.
 
Those that are paid are offered in the region of R8 000 to R10 000. The amount paid and whether to pay depends on the sector and what the intern has studied, explained Feinberg.
 
Another way in which youth can gain experience is to work during their holidays. Furthermore, they can also take part-time jobs as waiters, working in a call-centre or on a shop floor, for example, to help supplement their income.
 
Feinberg explained that it is no longer only corporates who are hiring interns, but also small to medium sized businesses.
 
“Traditionally corporates have been the main employer of interns with structured programmes which help to maximise the experience for the intern, and to meet the long term HR requirements for the company. According to the revised BEE codes of good practice which are to be implemented in 2015, the hiring of interns will now contribute skills development points. Increasingly, small and medium sized businesses are also making more use of interns. These businesses are able to get more done at a lower cost, while giving graduates the opportunity to get practical experience,” said Feinberg.