Education remains key to better labour market outcomes in South Africa, according to Statistics South Africa’s Labour Force Survey for the second quarter of 2023, released on 15 August.
Considering the destructive effects of Apartheid’s “Bantu Education,” which delivered sub-standard education to most citizens, a post-1994 consensus has prevailed in South Africa that education is a potent tool for bridging the gap between job seekers and available economic opportunities.
However, emerging trends, as the accompanying figure shows, suggest that this longstanding relationship might be undergoing a significant transformation, which, if left unaddressed, could reshape the country’s job market in unprecedented and sub-optimal ways.
Over the last few decades, a consistent pattern has held true in South Africa: South Africans with higher levels of education have been more likely to secure gainful employment. But recent years have seen a significant shift. In 2000, 6% of the total labour force with advanced education in South Africa was unemployed, 33% for basic education, and 31% for intermediate education. However, by 2022, advanced qualification unemployment surged to 15%, while basic and intermediate education unemployment climbed to 34% and 32%, respectively. Put simply, unemployment among South Africans with advanced qualifications is rapidly rising, leading to an eroding unemployment gap between this category and other categories.
The apparent gap in unemployment rates between South Africans with basic and intermediate education levels also became less distinct between 2020 and 2021. An unexpected convergence emerged as both groups saw their unemployment rates rise from around 28% in 2020 to approximately 33% in 2021.
This overall unemployment trend can be attributed to multiple factors: the 2008 financial crisis, pervasive state capture from 2009 onwards, and South Africa’s missed opportunities during global commodity booms due to flawed policies and weak macroeconomic conditions. The impact of COVID-19 also exacerbated unemployment around 2020, largely due to ineffective policy responses.
For advanced qualifications, the issue predominantly arises from the proliferation of degrees that generate skills misaligned with the needs of a changing labour market and a struggling economy.
This shift in the landscape has far-reaching implications and forces us to confront the question: Will advanced qualifications continue to wield the same influence they once did in shaping employment prospects in the foreseeable future?
If the pattern illustrated in the preceding graph persists, a scenario in which there is minimal divergence in unemployment rates between those with tertiary education and other categories, South Africa could see a fundamental shift in the role of education in shaping labour market outcomes.
The disengagement of highly educated South Africans also has the potential to retard the nation’s long-term economic advancement, a critical concern given the demonstrated significance of education in South Africa’s economic growth. This also triggers brain drain as skilled individuals seek opportunities elsewhere, leading to wealth outflows. Additionally, there is minimal foreign talent inflow due to the Home Affairs Department’s capacity and administrative issues, along with insufficient incentivisation for attracting foreign scarce skills.
Closing the gap between investments in education (such as academic loans and bursaries) and economic growth is vital. Cultivating opportunities that leverage these investments empowers individuals to contribute to economic growth, creates a thriving labour force, and increases government revenue through taxation.
Statistics from the first quarter of 2023 further highlight the urgency of the situation. With an unemployment rate of 32.9%, the country stands among the nations with the highest levels of unemployment, according to Stats SA.
The way forward?
A fundamental solution lies in crafting a conducive investment environment. The formulation of investor-friendly policies, streamlined regulations, and efficient bureaucratic processes to attract both foreign direct investments and encourage the expansion of existing ventures is essential. This strategy can infuse the economy with fresh capital, foster innovation, and create diverse job opportunities across sectors, ensuring that education and skills find immediate application in the country’s economic growth.
The first step toward an investment-centric approach involves tackling recurring power cuts, euphemistically known as “load-shedding”, which adversely affects the country’s economy. Beyond hampering business operations, this phenomenon casts a discouraging pall over prospective investors. Swift and effective action to mitigate load-shedding is imperative, as it would represent a key stride toward building investor confidence and ensuring the conducive environment necessary for sustainable economic growth.
Beyond investment-focused initiatives, encouraging collaboration between educational institutions and industries can bridge the gap between theoretical knowledge and practical skills, enhancing the employability of graduates. This alliance between academia and the needs of the job market can ensure that students are equipped with relevant skills and experiences, making their transition into the workforce smoother and more impactful.
Incentivising research and development (R&D) can also shape the country’s economic future. By encouraging innovation and the emergence of new industries, South Africa can generate new employment opportunities that cater to the changing demands of a globalised economy and its labour market. This approach to R&D can position the nation as a hub for cutting-edge technologies and solutions, attracting investments and creating high-quality jobs in thriving fields.
Strengthening the support system for small and medium-sized enterprises (SMEs) can equally have a positive effect on job creation and economic resilience. Empowering entrepreneurs and SMEs can stimulate local economies, diversify the labour market, and contribute to overall economic stability. SMEs are known for their ability to adapt quickly to changing market demands, making them instrumental in providing a diverse range of employment opportunities.
Lastly, implementing training programmes tailored to address specific job market demands can be a game-changer, particularly given the increasing need for digital and technological skills. By equipping individuals with in-demand skills, South Africa can address the needs of industries undergoing rapid transformation. These programmes can bridge the gap between education and employment, offering individuals access to meaningful careers while simultaneously fulfilling the demands of the labour market.
The need for labour-absorbing investment and growth in South Africa cannot be over-emphasised. By embracing this diverse approach, South Africa can meet the demands of an evolving job market while harnessing education and skills to drive its economic growth.
This article also appears in the Mail & Guardian.