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Challenges within the South African education system are key structural issues underlying youth unemployment. The trajectory of labor demand in the South African economy favors skilled workers and, in light of the limited job opportunities available for low skilled workers, the government has implemented publicly funded programs that offer (i) employment in the provision of essential basic services to vulnerable South Africans; and (ii) deployment in programs that can provide income while additional skills are developed, thereby improving future employability. The Community Works Program (CWP) was rolled out in 2008 and is designed as an employment safety net whereby a person’s existing livelihood is supplemented by offering a basic level of income through work. Public deployment programs have only been implemented in South Africa to a limited extent through the National Youth Development Agency (NYDA), which targets unemployed youth and the unskilled.
South Africa’s Jobs Fund represents a significant intervention aimed at reducing unemployment generally. The South African government has implemented a number of initiatives aimed at creating jobs and reducing unemployment, as well as ameliorating the impact of high unemployment on individuals and their households.
In summary, there are certainly concerns around South Africa’s youth unemployment policy interventions in terms of design, targeting and ability to adequately address the needs of young labor market entrants as well as employers. The year 2015 will be an eventful one for the more than one billion people living in Africa.
Read the Foresight Africa publication, and join the conversation on Twitter using #ForesightAfrica to tell us what you think are the critical issues Africa must pay attention to in 2015. This blog features regular contributions from the Africa Growth Initiative's think tank partners based in the African region. The GCR is one of the world’s most important rankings of international competitiveness, because it reflects the views of local and international business leaders and is a reliable long-term predictor of inward foreign direct investment, as well as containing useful information about the constraints to economic growth and employment. Sharp said that South Africa’s labour laws favour older, less skilled, unionised workers at the expense of young and inexperienced job-seekers.

The program is a direct replica model of India’s Mahatma Gandhi National Rural Employment Guarantee Act (NREGA) program. One such example is the system of sector education and training authorities (SETA), which play a pivotal role in skills development in South Africa.
Launched in mid-2011 by the South African minister of finance in response to the loss of more than one million jobs in the wake of the global recession, this is the world’s largest challenge fund, with projects selected for funding through competitive processes with particular criteria relating to eligibility and impact. It is within this context of weak labor demand that the option of a youth employment subsidy has been proposed. Commissioned by National Treasury, the African Microeconomic Research Umbrella at the University of the Witwatersrand ran a pilot study with 4,000 participants from three provinces (Gauteng, Kwazulu-Natal and Limpopo). DPRU is one of the Brookings Africa Growth Initiative’s six local think tank partners based in Africa. It is important to note, however, that South Africa utilizes a broader definition, covering individuals between the ages of 15 and 34 years, and its youth-targeting policies focus on this broader age group.
From elections to the post-2015 development agenda, the Brookings Africa Growth Initiative experts and colleagues identify what they consider to be the key issues for the continent in the coming year. Youth unemployment is high, even in comparison with South Africa’s very high average unemployment rate of 34 percent. These include targeting the formal education system, post-school training, public employment and deployment programs, entrepreneurship interventions and an attempt at job placement programs. For this reason, a number of funding and policy interventions are aimed at improving the education system such that it would raise youth employment prospects. The purpose of this legislation is essentially to promote employment, to improve the prospects of those looking for work by training and to facilitate job matching.

Employment subsidies are appealing because they target job creation instead of indirectly incentivizing the absorption of youth into the labor market. This blog reflects the views of the author only and does not reflect the views of the Africa Growth Initiative. These young people lack strong networks or social capital that allow them to source job opportunities, and tend not to have sufficient financial resources to enable mobility to areas where there is demand for labor.
From the demand side, an employment subsidy has been recently proposed by the National Treasury to incentivize employers to hire young people. TVET institutions are also not always easily accessible in terms of location or financing, as there seems to be less financial support than is available for tertiary education. Another example of a general program that benefits youth employment is the Department of Trade and Industry’s small business support programs. Treasury is in favor of an employment subsidy as it operates through the tax system and can rapidly reach a scale that cannot necessarily be achieved through employment or deployment programs such as those discussed above.
This policy will obviously have to work in conjunction with sector employment projects, training institutions and financial support for further education programs to have a wider scope in terms of the youth that will be targeted.
Future iterations of this program should work toward scaling up the training that facilitated employment in the previous round.

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