Preparation for Youth Unemployment Public hearings

Meeting report

LABOUR PORTFOLIO COMMITTEE
23 May 2006
PREPARATION FOR YOUTH UNEMPLOYMENT PUBLIC HEARINGS

Chairperson:

Youth Unemployment in South Africa

SUMMARY
The Committee met to fine-tune the approach it would adopt during public hearings on youth unemployment in late May and early June. The Parliamentary Research Unit made a detailed presentation to the Committee on youth unemployment in South Africa.

MINUTES

Parliamentary Research Unit presentation on youth unemployment

Ms Joy Watson provided broad background to the public hearings. There had been some very significant gains in regard to youth employment since 1994 and the South African economy had enjoyed more than five years of sustained growth. She explained that the country had sound financial and fiscal monetary policies in place. However the issues of unemployment among young people remained a critical issue.

The Government had two major targets which would impact on youth unemployment in South Africa.
Firstly, the President in this year’s State of the Nation Address had spoken about the need to create sustainable economic growth at a level of about 6% percent per annum. Secondly the Government had committed itself to the United Nations (UN) Millennium Development Goals of halving unemployment by 2014. There would be significant challenges in meeting these objectives and much work had to be done to ensure South Africa could meet the 2014 targets.

To demonstrate the significance of the problem, she highlighted that South Africa had been ranked as having the fifth largest Gini-Coefficient in the world. She explained that the Gini-Coefficient was used to measure inequality and looked at the gaps between the rich and the poor. Inequality in South Africa was so significant that South Africa was ranked fifth in the world in this regard. This highlighted the vastness of the gap between those who have easy access to economic resources and those who did not.

The South African economic landscape was characterised by the fact that many workers earned less than R1000 per month. She broke this down, saying that almost a quarter of formal sector workers, about 73.6% of informal sector workers and 90% of domestic workers fitted into this category. It was significant that women in particular fell into this category. She stressed they really were at the lower end of the income spectrum.

Ms Watson highlighted labour statistics for young people and unemployment rates. South Africa’s population was estimated to be about 46.9 million. Of this 17.41 million fell into the age group of between fifteen to thirty five years old. That was about 47.2 percent of the population. When looking at the official definition of employment, the labour force survey estimates that about 40% of this age group was unemployed.

The terms of reference had looked at the expanded definition of employment. She stressed that unemployment figures amongst young people were concerningly high. Therefore it was very important that the Committee attempt to address the issue.

The Committee’s hearings would aim to point out the nature of the challenges faced by young people accessing employment in South Africa. These hearings would be a forum to discuss the ethics of current labour market interventions and to look at and identify the gaps in legislation. They hoped to identify problems that had been experienced in implementing labour market legislation and to look at the creation of jobs within the context of economic policy with a specific reference to the Accelerated and Shared Growth Initiative of South Africa (ASGISA). The hearings would be a forum to gage the effectiveness of labour market institutions in dealing with the issues of youth unemployment and to look at the extent to which Government programmes had succeeded in creating jobs for young people.

The most critical part was that the Committee needed to make recommendations, both in relation to legislative and service delivery interventions, taking into account both the Committee’s role in legislative interventions and overseeing the work of government.

The researchers had suggested there should be two phases in the hearing process. The first phase would encompass the initial hearings that were being conducted on 30 May, 2 and 7 June. During phase one the submissions would be considered. These were by no means representative of all the stakeholders, although they did constitute key stakeholders. She recommended that the Committee conduct a second phase to look at NGOs and community-based organisations, academic institutions and researchers whom had conducted recent studies into youth unemployment. The Committee could also invite key trade unions and the Department of Trade and Industry to consider the relationship between labour and economic issues.

In this way the Committee would be able to produce a report that would be able to comprehensively identify the scope and nature of the challenges faced by youth unemployment. This report could then be used to highlight where legislation needed to be changed and would form a key tool in the Committee’s oversight role.

Mr Jawoodeen briefly highlighted some of the content challenges around youth unemployment. He wanted to give the Committee a broad sense of the nature of youth unemployment in South Africa.

Prior to 1994 the labour market was characterised in terms of abuse and there had been many distortions of the labour market. Post 1994 there had been a lot of changes in the labour market; a whole range of legislation had been enacted, and a range of institutions had been established.

He emphasised that Government policy placed labour market questions very firmly in terms of economic policy and they should not be seen in isolation from each other. For analysis purposes, youth was defined purely as people between the ages of 14 and 35. It was perhaps counterproductive to see youth as one group, because for example youth from the ages of 14 to 24 could be identified as being particularly at risk. Unemployment rates for this group were somewhere between 50 and 60%. When breaking up the youth groups particularly vulnerable groups could be identified.

He highlighted the South Africa labour market landscape and explained that the economy had changed with globalisation. The manufacturing industries had shrunk in size, but the service sector and the tertiary sectors were becoming more and more important. This was a sign that an economy was maturing and growing on the right path.

In terms of labour market supply and demand there was a problem. There was a structural mismatch between the service sector demands for particular employee skills, and those available. The question was the employability of youth. The service sector had now become the most important sector in terms of contributions to Gross Domestic Product (GDP) and had contributed about 65% in 2005. The issue of youth finding employment in this sector was an issue of skills.

He broke up the different sectors to show that youth employment had been weakest in the Agriculture sector; this sector had been shedding jobs consistently. This had become a very vulnerable sector. The Committee should perhaps look closely at the issues of youth in rural areas. He noted that there had been a submission from one rural youth organization and it would be interesting to see the effects of the shrinking of the agricultural sector on such groups of Youth.

The manufacturing industry had stabilised in terms of unemployment. Possibly there could be an expansion in terms of employment in this sector.

In terms of the statistics, looking at the official and expanded definition of unemployment, there had been a reduction but it was marginal and very gradual. The expanded definition could now be seen at 38.8% whereas at one point in 2000 it was at 42%. The official definition was now moving to around 36% which was partly linked to the growth seen in the economy.

There had was also the problem of seasonal unemployment for people for example in the agriculture or tourism sectors because there were periods of employment followed by long periods of unemployment.

There was also the issue of cyclical unemployment, which was where unemployment rates travelled parallel with the cycles of the economy. However what had been happening since 1992 was that unemployment had gone in one direction and the economy had been going in the other direction. He explained that normally if South Africa went into an economic boom, employment would increase; if the country went into a recession employment would decrease. However South Africa was experiencing a boom, but unemployment was not decreasing. This he believed was a question of skills availability; it was a question of what the economy was demanding and what was available.

One of the key programmes of Government was the Extended Public Works Programme (EPWP), which could absorb a lot of youth especially now with ASGISA and the expenditure of R270 billion over a ten year period on infrastructure. One of the precautionary aspects of this was that the EPWP had to be carefully monitored in terms of costs and output and number of jobs created.

Mr Jawoodeen dismissed the criticism that the Government was not doing enough on the issue; he believed a lot had been done. He emphasised that the Government were rolling programmes out. However in terms of the unemployment figures this was only making a very marginal dent in youth unemployment as a whole. There was a constant decline in Youth Unemployment, but it was slow.

Youth unemployment and youth labour market issues should be seen within a broader labour market context. Although he stressed that a lot was being done, a more co-ordinated approach could improve the situation. He however believed that this was not a problem that could just be solved overnight.

Discussion

The Chair thanked the researchers and explained that the presentations had given the Committee good background on the state of youth employment in South Africa.

The Chair explained to the Committee that the Department of Labour had been meant to attend the meeting in order to brief the Committee on the International Labour Organisation (ILO); unfortunately they had not turned up.

In arranging these public hearings the Committee did not want to unrealistically raise the expectations of young people, rather they wished to create a platform to allow young people themselves to address the issue. The intention had been to highlight some interventions and to talk about the challenges and successes of the youth employment issue.

She explained that the Committee had limited time. It was important they fine-tuned the approach to be adopted during the hearings. The Committee had received written submissions and nine oral submissions. She stressed that although one submission had arrived after the cut-off date, the Committee had excepted it because it was the only representation from a predominantly Afrikaans group. She had felt it was important to accommodate everyone in this process.

There would be three days of hearings and three submissions would be heard on each day. She particularly wanted Members’ proposals. She suggested that perhaps the National Economic Development and Labour Council (NEDLAC) should also be invited to attend, because this issue really related to ASGISA and NEDLAC would perhaps have a useful input in this regard.

The hearings would each only last half a day from 9:00 to 13:00 so the management of time was crucial. She suggested that each stakeholder should be given 20 minutes to present, and the youth organisations 10 minutes. From there it would be an engagement between the Committee, the youth organisations and stakeholders.

She asked if the Committee had any questions of clarity in regard to the approach that should be adopted during the hearings. She felt it would perhaps also be useful for Members to come up with suggestions specifically in regard to approach.

Mr G Anthony (ANC) sought clarification on the statement that there were job losses in agriculture. He had understood South Africa had a booming agricultural sector, how could the two be reconciled?

The Chair requested that Members not ask questions. They should come up with proposals or ask the researchers for clarity of approach.

The Chair said it was important to approach this in two phases; however she felt that included in the second phase should be a process of allowing graduates, and academic institutions to have their input.

Mr Anthony questioned whether Sector Education and Training Authorities (SETAs) were fulfilling their function, where they really doing a good job? He noted that large companies had in the past done much of their own training. Now, however young people were being trained by SETAs. He found it difficult to comprehend that training young people for such short durations could be beneficial. Did this system need to be revised?

The Chair said that this was an important issue. She explained that this was why the Department had also been invited to sit in on the hearings. It would perhaps be an idea for there to be a representative of each cluster of SETAs to be invited to hearings, so that if such questions arose they would be able to respond.

Mr M Mzondeki (ANC) questioned the approach. He was concerned that the hearings would be dominated by large, national organizations and that the voices of smaller players would be neglected. He questioned whether the Committee should not rather go to labour centres and hear from individuals on ground level.

The Chair felt this was an important issue. She felt that perhaps the best way to tackle this inherent challenge would be for the Committee to reflect after the first phase of hearings on whether they had achieved their aims. The Committee could then select an appropriate course of action. She felt it was also important for the Committee to ask the national organisations what they were doing at ground level.

Mr Mzondeki suggested that perhaps the proposed phases should be shuffled. This could cater for a middle phase for the purpose of visiting provinces.

There was consensus on this matter.

The Chair believed that these hearings would lead the Committee to engage the Labour Minister. The Minister had accepted her invitation to attend the public hearing. He had however expressed concern that the Committee be careful not to build unrealistic expectations. The Chair felt the Committee needed to make it very clear that they were not promising to create employment for youth, but were however creating a platform to discuss solving the problem. There had been a round table discussion going on that would engage different stakeholders to discuss reviewing labour laws. It would perhaps be useful for the Minister to meet with the Committee to allow them to make inputs into this process.

Meeting adjourned.