Pathways into the economy for Africa’s youth
Investing in the employability of young people remains a powerful lever for creating pathways into the economy and should be viewed as critical to ESG agendas.
An estimated 1.8 billion youth worldwide will not have the skills or qualifications required to participate in the workforce by 2030. As the workplace changes due to the Fourth Industrial Revolution – especially with the rise of automation and artificial intelligence – there will need to be a shift in how young people are equipped with the necessary skills and know-how.
“An estimated 1.8 billion youth worldwide will not have the skills or qualifications required to participate in the workforce by 2030.”
In the 2018 Global Business Coalition for Education’s report on Preparing tomorrow’s workforce for the Fourth Industrial Revolution, it was estimated that across the globe, 260 million children were out of school and more than 800 million youth were not on track to learn the basic skills needed to enter the workforce by 2030.
The disruption of COVID-19 has accelerated change and further exacerbated the existing inequalities that young people face, making the attainment of Sustainable Development Goal 4, “Ensuring inclusive and equitable quality education and promoting life-long learning opportunities for all” ever more elusive. In addition, the World Bank predicts that the current global cohort of today’s youth generation, as a result of COVID-19 pandemic, are at risk of losing USD17-trillion in future earnings. If young people do not develop vastly different skillsets from previous generations, they will face a growingly uncertain future.
Undoubtedly, one of the major challenges in South Africa’s development, and the African continent – a continent with a population of approximately 65% young people – is youth unemployment. Alarmingly, The African Development Bank has estimated that 50% of the youth in Africa will be unemployed and economically inactive by 2025. According to the Department of Higher Education and Training (DHET), 8.8 million people in South Africa aged 15-34 are youth Not in Education, Employment or Training (NEET). Approximately 5 million are inactive (not looking for work) and 3.8 million are unemployed (actively seeking employment and available to work). 52% of the 8.8 million people who are youth NEET are female. By the end of the first quarter in 2022, 46% of people between 15 and 34 years of age remained outside of employment, education and training.
“One of the major challenges in South Africa’s development, and the African continent – a continent with a population of approximately 65% young people – is youth unemployment.”
The Higher Education system is faced with challenges ranging from high attrition rates at universities; outdated curricula; low throughput rates in Technical and Vocational Education and Training (TVET) institutions; as well as wide variation in quality and control within the Sector Education and Training Authorities. Additionally, the vocational system suffers from insufficient relationships with business and industry, leaving vocational training institutes ill-equipped to meet employers’ skill requirements and young people largely either underexposed or not exposed at all to quality career guidance and work readiness training that would allow them to transition into the world of work.
While concerns about the quality of vocational systems abound globally, in South Africa in particular, the nature of vocational system quality makes addressing critical issues exceedingly challenging. Given this complex context, what are the opportunities for social investors to create meaningful pathways for young people?
Tshikululu recently conducted a large-scale impact evaluation of a youth employment programme that aimed to empower youth with work-readiness skills and places them in various job opportunities in demand-led industries/sectors. The programme ran from 2018 to 2020, with a total investment of R264 700 756. The evaluation specifically sought to measure the effects of the employability programme and ascertain its social return on investment (SROI). The research employed a counterfactual study design that used survey data and qualitative insights from various stakeholders.
A total of 805 respondents (average age 27 years) were surveyed – 499 direct beneficiaries of the programme as well as a control group of 309 young people that did not participate in the programme. The overall effectiveness rate of the employability programme in facilitating young people’s access to the world of work was 78% (comparing favorably with similar youth employability programmes that reported an effectiveness rate of 86%). Most importantly, the evaluation revealed that youth participating in the employability programme are 1.5 times more likely to be placed into jobs. An assessment of the programme’s SROI revealed that for every R1 invested in the programme there was a social return on investment of R8.82.
Notwithstanding, the complex challenges in the higher education system and the overall labour market in South Africa, the research confirms that employability programmes are a meaningful avenue for creating pathways into the economy for young people.
The September 2022 Global Business Coalition for Education report exploring the materiality of education, highlights the imperative for businesses to invest in skills and education for the youth in order to equip them for the new world of work and help drive economic growth. If education challenges are left unaddressed, companies will struggle with developing and retaining the workforce pipeline. This directly threatens the opportunities available for businesses to enter new markets and expand in order to ensure sustainable supply chains are built and maintained. Tangible education, development, and training positively drives diversity, equity, and inclusion (DEI) and human capital management (HCM) metrics. Investing specifically in youth employability could allow companies to meaningfully tackle the ‘S’ in their Environmental, Social, and Governance (ESG) agendas whilst contributing to building a more resilient, inclusive and sustainable society.