PESA
Youth Empowerment in SADC

The July 2019 issue focuses on providing an overview of youth empowerment in SADC – What is the current state of youth unemployment and youth development in SADC? How do we ensure that SADC countries can exploit the demographic dividend in the future? What are SADC countries doing to support youth development? What do most of the countries’ programmes for youth development involve? What is the Employment Tax Incentive (ETI)? How many jobs has the ETI supported since inception and what has the policy achieved in terms of reducing youth unemployment? The PESA Regional Integration Monitor, Jul 2019 examines some of these questions.

 

 

 

Headline Story by Ken Kalala Ndalamba

An Overview of Youth Empowerment in SADC

The Southern African Development Community (SADC) has a growing, young population. Almost three-quarters of the 274 million people living in the region are below 35 (approx. 200 million)[1]. At a regional level 34.7% of the population are between the ages of 15 and 34 and 19.1% of the population is between 15 and 24[2]. This means that the region is ready and offer best conditions to exploit successfully the demographic dividend.

 

Table 1:  SADC Youth Population Structure

Country Name Age Groups
15-19 20-24 25-29 30-34 15-24 15-34
Angola 10.6 8.7 7.3 6.0 19.3 32.6
Botswana 9.3 9.2 9.2 9.0 18.4 36.6
Comoros 10.3 9.2 8.3 7.3 19.6 35.1
DRC 10.4 8.6 7.2 5.9 19.0 32.1
eSwatini 10.7 10.6 10.2 8.5 21.3 40.0
Lesotho 10.8 10.6 9.6 8.4 21.4 39.5
Madagascar 11.0 9.6 7.9 6.5 20.6 35.0
Malawi 11.7 9.7 8.3 6.8 20.8 35.9
Mauritius 7.5 7.7 7.8 6.7 15.2 29.8
Mozambique 11.0 9.1 7.4 6.1 20.1 33.6
Namibia 10.4 10.1 9.1 7.4 20.5 37.0
Seychelles 5.9 6.2 7.0 7.6 12.1 26.7
South Africa 9.0 9.0 9.0 8.6 18.0 35.6
Tanzania 10.7 8.8 7.5 6.3 19.5 33.2
Zambia 11.4 9.4 7.8 6.5 20.8 35.1
Zimbabwe 10.4 9.6 8.8 7.9 20.0 36.7
Average 10.0 9.1 8.3 7.2 19.1 34.7
Source: UNCTAD 2019. UNCTADStat Database, United Nations Conference on Trade and Development: Geneva. Available At: https://unctadstat.unctad.org/ [Last Accessed: 16 May 2019].

 

The demographic dividend is “the economic growth potential that can result from shifts in a population’s age structure, mainly when the share of the working-age population (15 to 64) is larger than the non-working-age share of the population”[3]. Importantly, demographic dividend is driven by indicators including good health, quality education, decent employment and a lower proportion of young dependents (children and teenagers under 15 and presumable retirees and elders over 65). This will result in economic growth and sustainable development, assuming all or most of the working age population is economically active or employed. This is the central challenge undermining the potential of the demographic dividend in the SADC region.

 

Between 1995 and 2018 the average underemployment rate of people between 15 and 24 years old particularly has been 22.8%[4]. SADC policymakers have recognised the need to economically empower the youth in the objectives of the Article 5 (1) of the SADC Treaty, that places productive employment and effective utilisation of the region’s resources at the centre of the region’s development[5]. However, the high youth unemployment rate shows that SADC leaders have failed to honour these commitments. If this trend continues SADC will not be able to fully achieve its economic potential and could face increased political instability.

 

Table 2: SADC Youth Unemployment Rates

Country Year Average: 2016-2018
1995 2000 2005 2010 2015 2016 2017 2018
Angola 49.6 53.2 47.2 20.5 16.9 17.0 16.7 17.1 16.9
Botswana 37.2 33.1 36.7 35.2 36.8 36.8 36.6 37.1 36.8
Comoros 9.3 10.0 9.6 9.3 9.0 8.8 8.5 8.5 8.6
DRC 5.0 5.1 4.7 7.1 7.8 8.0 7.7 7.8 7.8
eSwatini 41.2 46.5 51.3 49.7 44.7 43.3 43.0 44.2 43.5
Lesotho 51.3 49.9 44.2 37.7 34.2 34.0 33.2 33.2 33.5
Madagascar 9.2 9.3 3.9 6.9 2.9 2.9 2.7 2.7 2.8
Malawi 11.4 11.8 10.7 8.4 7.7 7.6 7.2 7.2 7.3
Mauritus 23.2 26.5 25.6 23.2 25.0 22.4 23.7 23.5 23.2
Mozambique 5.3 5.7 7.3 8.0 7.2 7.1 6.7 6.8 6.9
Namibia 39.7 40.0 43.3 43.8 41.3 44.2 43.9 44.4 44.2
South Africa 52.5 54.4 56.9 50.8 50.2 53.4 53.6 52.9 53.3
Tanzania 6.4 5.6 6.3 5.9 3.7 3.7 3.4 3.5 3.5
Zambia 26.8 21.3 28.3 26.8 16.5 16.4 16.1 16.1 16.2
Zimbabwe 11.9 11.0 7.2 8.2 8.8 8.6 8.2 8.2 8.3
Average 25.3 25.6 25.5 22.8 20.8 20.9 20.7 20.9 20.8
Source: ILO 2019e. ILOSTAT database International Labour Organization: Geneva.  Available at https://data.worldbank.org/  [Last Accessed: 11 April 2019]. Note: (*) There is not data available from the Seychelles with regards to youth unemployment.

 

Policymakers are aware of the issue and the main theme of 38th Ordinary SADC Summit of the Heads of State and Government in August 2018 was “Promoting Infrastructure Development and Youth Empowerment for Sustainable Development”[6]. The impact of the deliberations made during the Summit remains to be seen. SADC has worked with the New Partnerships for Africa’s Development (NEPAD) to create a number of programmes aimed at empowering the youth such as the: Agriculture Technical Vocational Education and Training; NEPAD Climate Change Fund; Southern African Network for Biosciences; Africa Power Vision; PIDA; PICI; Sustainable Energy 4 All and Capacity Development programmes[7]. However, it is difficult to assess the degree of implementation and the outcomes of these initiatives in SADC, because they largely rely on how individual member countries implement them.

 

Similarly, the SADC’s partnership with the United Nations Educational, Scientific, and Cultural Organisation (UNESCO) has created a number of educational programmes which can help address the issues of youth unemployment through Technical and Vocational Education and Training, and Science, Technology and Innovation programmes[8]. In addition, the UNESCO-SADC programmes involve youth in projects addressing social issues such as HIV and health education, water security, renewable energy, and disaster risk management. These initiatives also focus on creating jobs in the culture and tourism and communications and information technology sectors[9]. However, as with the NEPAD programmes, results have varied between countries and, in order to understand the true extent of the problem of youth unemployment in SADC, one needs to look at each country in the region in more detail.

 

The average youth underemployment rates in different SADC countries from 2016 and 2018 suggests that Madagascar has the lowest rate of youth underemployment at 2.8% in spite of it increasing 2.7% in 2016 to 5.0% in 2018. Madagascar is followed by Tanzania at 3.5% which increased to 4.8% in 2018 (2016: 3.4%); Mozambique at 6.9% which increased to 6.8% in 2018 (2016: 6.7%); Malawi at 7.3% despite increasing to 9.0% in 2018 (2016: 7.2%); the Democratic Republic of Congo (DRC) at 7.8% which decreased to 6.9% in 2018 (2016: 8.0%) and Zimbabwe at 8.3% which increased to 9.0% in 2018 (2016: 8.2%). All the above-mentioned countries have maintained or achieved youth underemployment rates below 10.0% despite having a low score on the Human Development Indices[10]. This suggests that these countries have a sufficiently low rate of youth underemployment, which has allowed them to take advantage of the demographic dividend. All the countries, except for the DRC, have seen an increase in youth underemployment. In the case of the DRC, the improvements in youth underemployment may reflect the initial benefit of easing domestic political tensions since the most recent presidential elections or lower population growth rates exceeding GDP growth amongst the youth.

 

Four of the five countries mentioned above performed within the top five in SADC for GDP growth from 2010 to 2015[11]. The DRC, Mozambique and Zimbabwe achieved an average GDP growth rate above 7.0% from 2010 to 2015, and Tanzania achieved an average GDP growth rate of 6.8%.  Similarly, four of the five countries are amongst the top five projected GDP growth for 2017 to 2022[12]. Due to the relatively lower youth underemployment, these countries have been able to achieve the top GDP growth rates in SADC. In addition, these countries have also taken advantage of the demographic dividend to lower youth underemployment.

 

South Africa has had the highest level of youth underemployment in SADC at 52.9% in 2018 (1995: 52.5%)[13]. South Africa is followed by eSwatini at 44.2% in 2018 (1995: 41.2%), Namibia at 44.4% (1995: 39.7%) and Botswana at 37.1% (1995: 37.2%), and who have all struggled to keep their youth underemployment rates below a third of their working age youth. Lesotho is next amongst the worst countries with a youth underemployment rate of 33.2% but its underemployment has declined considerably (1995: 51.3%). These high youth underemployment rates affecting South Africa, Botswana, eSwatini and Namibia reflect the generally poor GDP growth performance in the Southern African Customs Union (SACU) area. Four of the five SACU countries are amongst the lowest performing SADC countries in terms of GDP growth. From 2010 to 2015, all the SACU countries achieved GDP growth rates below 5.0% except for Botswana and Namibia[14].

 

Youth empowerment in South Africa encompasses a process of increasing capacity to influence behaviour, emotions and lifestyle. In this process, youth are equipped with knowledge, skills and competencies to enable them overcome challenges associated with education, unemployment health and poverty in particular[15]. Despite policy imperatives on youth development captured in policy documents including the National Youth Policy (2015-2020); the National Youth Development Agency Act (2008); the Youth Employment Accord; the Employment Tax Incentive Act[16] to mention but a few, current trends suggest that there has been little progress. A scenario leading to mixed feelings. On the one hand, there is recognition of efforts that are being made to change the course of history and the negative trends attached to the process of youth empowerment along the years. On the other hand, the current level of youth underemployment outlines and points to little impact of such efforts on the ground questioning thus the effectiveness of such policies. An adequate and appropriate response should involve a review of the ways in which these policies are formulated and the efficiency in the implementation process.

 

The South Africa case is an example of how many countries in SADC are struggling to make local initiatives to address its high rate of youth unemployment count and even countries who report low youth unemployment rates may still need to focus their energies on providing more opportunities to youth who are not full-time students.

 

In terms of reducing youth underemployment, Angola achieved the largest improvement at 16.9% in 2015 (2000: 53.2%)[17]. Angola’s success is largely due to the end of the Angolan Civil War in 2002 and the booming oil industry. In fact, youth contribution during the period particularly between 2009 and 2014, helped invigorate various subsectors of the country’s economy which ultimately registered significant growth. These include electricity (with an annual average growth of 44.0%), banking and insurance (22.0%), telecommunications (18.7%), transport (11.6%) as opposed to agriculture and public administration which registered an annual average growth of only 1.9% and 0.6% respectively[18]. This is most likely because of less involvement of youth in these sectors. Such is an example of how to harness demographic dividend. However, youth underemployment has increased slightly in Angola since the oil price crashed in 2014 registering an annual average growth rate of 16.9% over the last three years[19].

 

The Angolan government put in place youth empowerment strategies such as human resource development (HRD) as a response to the growing underemployment rate registered in the country over the last four years. HRD is to ensure access to inclusive education, quality and equitable, and to promote lifelong learning for all.  The aim is to substantially increase the number of youths with relevant qualifications, technical and professional skills, for employment and most importantly entrepreneurship[20].  Considering its multi and cross dimensional nature, HRD is being implemented through an inter-ministerial commission which include the Ministry of Basic Education and Training; Ministry of Higher Education, Science, Technology and Innovation; Ministry of Public Administration Ministry of Labour and Social Security; Ministry of Territorial Administration and State Reform; Ministry of Economy and Planning[21]. The strategy is under execution and time will tell how effective the strategy was with regard to youth empowerment.

 

Madagascar also registered a significant improvement with respect to youth underemployment sitting at 2.7% in 2018 (1995: 9.2%). In fact, youth empowerment in Madagascar entails enabling the youth to cope with the demands and constraints of a modern society, develop a sense of responsibility and mutual assistance amongst the youth, prevent the youth from any form of exploitation and social exclusion, the promotion of nationalism and love for Madagascar cultural and moral values amongst other things[22]. In this respect a multi sectorial task force integrating various ministries namely Health; Food; Education (education, culture, leisure); Employment; Migration (habitat and environment) and Integration (institutional framework and advocacy) has been working and produced youth-oriented programmes that are being implemented at the national, provincial and local levels[23]. These include the Ministry of Youth and Sports[24]. Such is an example of how to make local initiatives to address the high rate of youth unemployment count.

 

In summary, youth underemployment is the main obstacle to achieving the benefits of the demographic dividend in SADC. The average rate of youth underemployment has been persistently above 20.0% for the last 24 years in SADC. In order for governments to eliminate youth underemployment and take advantage of the demographic dividend they need to invest in improving human capital and encourage youth involvement in the economy.  Unless SADC leaders are committed to improving youth economic involvement, and the region will not be able to effectively exploit the demographic dividend to promote broader economic and social development. If not addressed meaningfully, the current status of youth underemployment in SADC will go from bad to worse. However, the success of Angola and Madagascar within the region illustrates the possibilities for policymakers in the region to exploit the demographic dividend which depends on making significant gains in improving the lot of young people in SADC.

[1] SADC 2016. SADC Youth Employment Promotion Policy Framework (2016). Southern African Development Community: Gaborone Available At: https://extranet.sadc.int/  [Last Accessed: 22 April 2019]. It should be noted that in SADC and other African regions a youth is defined as a person between the ages of 15 and 34, whereas the United Nations and other international organisations define youths as being between the ages of 15 and 24. This can lead to confusion when it comes to understanding the degree of youth unemployment in the continent but both definitions point to a similar trend. From here on out we will use the UN definition of youths, unless explicitly stated.

 

By Ken Kalala Ndalamba

 


[2] See Table 1.

[3] UNFP 2016. Demographic dividend, United Nations Population Fund: New York. Available At: https://www.unfpa.org/ [Last Accessed 18 June 2019].

[4] See Table 2. It should be noted that the unemployment rate consists of the number of unemployed persons as a share of the labour according to the United Nations and other international organisations definition whereas underemployment rate includes even discourage or structurally unemployed people. On this basis, data presented speak to the trend of underemployment rate which is higher than unemployment.  

[5] SADC 2016. SADC Youth Employment Promotion Policy Framework (2016). ibid.

[6] SADC 2018. Announcement of the 38th SADC Summit in Windhoek, Namibia. Southern African Development Community: Gaborone. Available at https://www.sadc.int/ [Last Accessed: 15 April 2019].

[7] NEPAD 2016. Southern African Development Community (SADC). The New Partnership for Africa’s Development: Johannesburg. Available at https://www.nepad.org/ [Last Accessed: 15 April 2019].

[8] UNESCO 2017. UNESCO-SADC Cooperation – 2017. The United Nations Educational, Scientific and Cultural Organization: Paris. Available At: http://www.unesco.org/ [Last Accessed: 15 April 2019].

[9] UNESCO 2017. UNESCO-SADC Cooperation – 2017, ibid.

[10] UNDP 2018a. Human Development Indices and Indicators 2018 Statistical Update. United Nations Development Programme: New York. Available at http://hdr.undp.org/ [Last Accessed: 5 May 2019].

[11] PESA 2017. Impact of Slow Global Growth in SADC, on the Political Economy Southern Africa Website, viewed on 20 June 2019, from https://politicaleconomy.org.za/.

[12] PESA 2017. Impact of Slow Global Growth in SADC, ibid.

[13] ILO 2019e. ILOSTAT database International Labour Organization: Geneva.  Available at https://data.worldbank.org/[Last Accessed: 20 June 2019].

[14] PESA 2017. Impact of Slow Global Growth in SADC, ibid.

[15] Buntu, B. and Lehmann, S. 2015. Youth Policy Field and Institutional Analyses at Municipal Level in South Africa, South African Cities Network: Braamfontein. Available At: http://www.sacities.net/ [Last Accessed: 16 July 2019].

[16] NYP 2015. National Youth Policy 2015 – 2020. The Presidency of the Republic of South Africa: Pretoria. Available At https://www.gov.za/[Last Accessed: 18 June 2019]; GoSA 2009. No. 54 of 2008: National Youth Development Agency Act, 2008. Government of South Africa: Pretoria. Available At: https://www.gov.za/ [Last Accessed:17 July 2019]; GoSA 2013. The Youth Employment Accord. Government of South Africa: Pretoria. Available At: https://www.gov.za/ [Last Accessed:17 July 2019]; GoSA 2013. Act No. 26 of 2013: Employment Tax Incentive Act, 2013. Government of South Africa: Pretoria. Available At: https://www.gov.za/ [Last Accessed:17 July 2019].

[17] See Table 2.

[18] GoA 2018. Plano de Desenvolvimento Nacional 2018-2022, Government of Angola: Luanda. Available At www.mep.gov.ao/ [Last Accessed: 20 June 2019].

[19] IMF 2018a. Angola: 2018 Article IV Consultation. International Monetary Fund: Washington, D.C. Accessed At: https://www.imf.org/ [Last Accessed: 21 May 2019]; See Table 2.

[20] GoA 2018. Plano de Desenvolvimento Nacional 2018-2022, ibid.

[21] GoA 2018. Plano de Desenvolvimento Nacional 2018-2022, ibid.

[22] GoM 2004. Loi n° 2004-028 du 09 Septembre 2004 portant Politique Nationale de la Jeunesse, Government of Madagascar: Antanarivo. Available At https://www.youthpolicy.org/ [Last Accessed: 17 July 2019].

[23] GoM 2011. CIJ: Comité Interministériel pour la Jeunesse, Government of Madagascar: Antanarivo. Available At http://www.mjs.gov.mg/ [Last Accessed: 17 July 2019]; GoM 2016. Politique Nationale de la Jeunesse, Government of Madagascar: Antanarivo. Available At http://www.mjs.gov.mg/ [Last Accessed: 17 July 2019].

[24] GoM 2016. Réseau Service ami des jeunes, Government of Madagascar: Antanarivo. Available At http://www.mjs.gov.mg/ [Last Accessed: 17 July 2019]; GoM 2016. CJSOI, , Government of Madagascar: Antanarivo. Available At http://www.mjs.gov.mg/ [Last Accessed: 17 July 2019].

 

Industry Spotlight by Serge Hadisi

Industry Spotlight: Youth Empowerment Services in SADC

African countries continue facing the challenge of high unemployment rates and fast-growing populations. SADC is not isolated from this challenge even though the average population growth rate remained at 2.6% from 2010 to 2015; compared to the average GDP growth rate which declined from 3.8% from 2010 to 2015, to 1.4% in 2016[1]. This is largely caused by the very young SADC population with a median age of 21.7 years and the sustained slow GDP growth which have resulted in high growth rates and worse employment prospects. The average unemployment rate in SADC was 10.7% in 2018, compared to the average unemployment rate of 5.9% in the rest of Sub-Saharan Africa[2]. These gloomy economic prospects are even worse when it comes the SADC youth. The average youth unemployment rate in SADC was 20.9% in 2018 compared to the Sub-Saharan Africa average of 9.8%[3]. SADC governments have recognised the importance of the youth population in regional development and the direct challenges faced by youth. That is why SADC countries have been striving to establish policies and programmes aimed at addressing youth unemployment.

 

At continental and regional level, SADC cooperation can be extended with the African Union, Heads of States and Government in the adoption of frameworks to address youth employment which includes the African Youth Charter (AYC), with the Decade Plan of Action as a roadmap toward achieving the AYC, the 2016 SADC Youth Employment Promotion Policy Framework and labour Protocol. Besides that, there are also other many international development partners such as German Government, United Nation entities who are working together on youth issues in Africa and SADC countries  providing technical assistance – cooperation projects (e.g., skills development, technical and vocational education, entrepreneurship development support, capacity building to foster regional integration agenda and ultimately reduce youth unemployment, etc.)[4].

 

Across from SADC countries, youth unemployment rates are recorded such as in Malawi under 5.0%, Zambia and Zimbabwe above 20.0%, Botswana, Namibia, eSwatini (formerly known as Swaziland), Lesotho, and South Africa above 30.0%[5]. Looking at the broad unemployment figures capture at SADC level, it raises the concern whether these youth policies and programmes have been significant in reduce youth unemployment and translated into securing decent employment opportunities in the respective countries. This can be attributed to the insufficient data and accuracy of information on the number of jobs created, and lack of system of monitoring and evaluation which makes difficult to assess the success and failure of the different youth policies and programmes[6].

 

Some of the key issues that SADC countries attempt to address in relation to youth employment are: poor skills development, sector-specific vocational and technical education, and lack of youth entrepreneurship skills[7]. These are usually aimed at resolving skills mismatch, low literacy and training. However, examples will be drawn from some selected SADC countries such as Botswana, eSwatini, South Africa and Namibia to illustrate where some initiatives were taken in terms youth development programmes which can be considered successful than other. Member States of SADC such as, eSwatini, and Botswana have managed to establish similar youth funds and National Internship programme. For instance, the Youth Entrepreneur Fund and Graduates Enterprise Programme in eSwatini, and the Youth Development Fund (YED) and National Internship Programme (NIP) in Botswana. Both of these programmes, the youth development fund aimed at addressing unemployment among youth providing money to young unemployed people to start business, while the National Internship Programme aimed at addressing the issue of skills development of the youth which involves placement of unemployed graduates in government and private sector organisations[8].

 

For example, In Botswana, the NIP managed to place around 3750 youth graduates in jobs in either government, parastatals, NGOs, or in the private sector for up to 24 months since its inception in 2009[9]. In eSwatini, since the inception of the YED in 2008, in year 2011 – 2012 reported, a total of 590 people received USD 718,000.0 and later, 152 people benefited from a total of USD 250,000.0 due to government budget constraints[10]. The Targeted Intervention Programme for Employment and Economic Growth (TIPEEG) in Namibia had created a total of 21,000 permanent jobs, 80,000 temporary jobs, and other indirect employment opportunities since its inception in 2011[11]. Although, the TIPEEG was not traditional solely focused on youth, it provided business opportunities for youth beyond employment, self-employment opportunities, and young-owned business[12].

 

In South Africa, the National Youth Development Agency (NYDA) has been established to design, coordinate, evaluate, monitor and integrate all youth development programme to address the youth socioeconomic issues at the national, provincial and local level[13]. The NYDA also provides grant funding to youth business (e.g., a total of 874 youth owned enterprises received grant funding and 4,071 jobs were created through grants programme)[14]. South Africa, in response to youth unemployment, introduced the Employment Tax Incentive (ETI) in 2014 to address the issues of reducing the cost of employing inexperience young workers, who are often viewed being more costly to hire due to training requirements, and whose productivity in relation to their wages, encourage young work seekers to look for employment[15]. The ETI was set to create 463,000 new jobs, however, there has been a mixed results in terms of overall job creation for youth[16].  In 2018, the Youth Employment Services was launched as an incentive to private sector (business) to employ young people and provide youth with first work experience[17]. Since its inception, a total of 248 companies joined and 4600 youth had already found job placements. The aim of this initiative is to create 1 million jobs opportunities.

 

Despite the number of programmes aimed at reducing youth unemployment, and the achievements mentioned above, youth empowerment in SADC is still overly focused on work readiness, capacity-building and training. The SADC youth empowerment programmes are not discerning in terms of the gendered aspects of youth unemployment, which makes polices insensitive to the unequal impacts and causes of youth underemployment. In addition, there have been little financial support in the form of seed or venture-capital funding for youth entrepreneurship. There is not SADC equivalent of Silicone Valley or other ecosystems aimed at supporting youth-owned start-up. Lastly, there are no programmes aimed at political inclusion of youth in SADC. SADC youth are under-represented in SADC political systems at both regional and national level as evidenced by the low representation in all levels of governance[18].  Zimbabwe had the highest number of young people in a single or lower house of parliament at 3.0% of the house aged under 30, followed by South Africa with 2.8% of the members of its single and lower houses of parliament under 30 years, and Zambia with 0.6%[19]. The SADC Parliamentary Forum Youth Development Programme aims to encourage youth to increase their participation in politics, government, and other legislative structures[20].

Regardless of all the youth development policies and programmes in SADC, the youth continue to face unequal social, economic and political barriers. These barriers prevent young people from reaching their full potential and contributing effectively to sustainable development and deeper integration in the SADC region[21]. Consequently, there is a need to ensure that the relevant policies and programmes respond to the aspiration of young people and address the critical constraints they face. This requires a certain level of coordination and collaboration to stimulate both employment and expand the economic participation of youth beyond the labour market. Moreover, the policies and programme need to include effective monitoring and evaluation implementation in order to ensure the achievement of positive results and empowerment of youth.

 

By Serge Hadisi

 


[1] ILO 2019. Statistics and Databases, International Labour Organisation: Geneva. Available At:  https://www.ilo.org/ [Last Accessed: 10 May 2019].

[2] ILO 2018. World Employment and Social Outlook: Trends 2018, International Labour Organisation: Geneva. Available At: https://www.ilo.org/ [Last Accessed: 10 May 2019]; ILO 2019. Statistics and Databases, ibid.

[3] ILO 2019. Statistics and Databases, ibid.

[4] Pharatlhatlhe, K. and Byiers, B. 2019. Youth Unemployment and the Role of Regional Organisations: The Case of the Southern African Development Community (SADC), European Centre for Development Policy Management: Maastricht. Available At: https://ecdpm.org/ [Last Accessed: 7 June 2019]; UN n.d. Regional Overview: Youth in Africa, United Nations: New York. Available At: https://social.un.org/ [Last Accessed: 6 June 2019]; ILO 2019. Youth Employment in Africa, on the International Labour Organisation Website, viewed on 6 June 2019, from https://www.ilo.org/; Mupedziswa, R.n.d. Youth Employment and Skills Development in Africa: Lessons from Botswana’s Experience, Labour and Employment Relations Association of South Africa: Johannesburg. Available At: https://lerasa.org.za/ [Last Accessed: 8 June 2019].

[5] UN n.d. Regional Overview: Youth in Africa, ibid.

[6] Pharatlhatlhe, K. and Byiers, B. 2019. Youth Unemployment and the Role of Regional Organisations. The Case of the Southern African Development Community (SADC), ibid; Nthomang, K. and Diraditsile, K. 2016. ‘Improving Youth Employment in Botswana: The Need for Evidence Based Policy and Programme Development’, Mosenodi Journal, Vol.19, No.1, pp. 45-55. Available At: https://www.researchgate.net/ [Last Accessed: 4 June 2019]; Mupedziswa, R.n.d. Youth Employment and Skills Development in Africa: Lessons from Botswana’s Experience, ibid.

[7] ILO 2012. Youth Employment Interventions in Arica: A Mapping Report of the Employment and Labour Sub-Cluster of the Regional Coordination Mechanism (RCM) for Africa, International Labour Organisation: Geneva. Available At: https://www.ilo.org/ [Last Accessed: 10 April 2019]; SADCPF 2017. Establishment of Youth Development Programme at Southern African Development Community Parliamentary Forum – 5 years Strategic Plan (2017 – 2022), Southern African Development Community Parliamentary Forum: Windhoek. Available At: https://www.sadcpf.org/  [Last Accessed: 16 April 2019].

[8] Nthomang, K. and Diraditsile, K. 2016. ‘Improving Youth Employment in Botswana: The Need for Evidence Based Policy and Programme Development’, ibid; SADC 2019. Inside SADC: SADC Secretary Monthly Newsletter Issue 3, Southern African Development Community: Gaborone. Available At: https://www.sadc.int/ [Last Accessed: 4 June 2019]; UN n.d. Regional Overview: Youth in Africa, ibid; ACBF 2017. Youth Unemployment in Africa: Capacity Building and Innovative Strategies, The African Capacity Building Foundation: Harare. Available At: https://elibrary.acbfpact.org/ [Last Accessed: 16 April 2019]; Mupedziswa, R.n.d. Youth Employment and Skills Development in Africa: Lessons from Botswana’s Experience, ibid.

[9] Nthomang, K. and Diraditsile, K. 2016. ‘Improving Youth Employment in Botswana: The Need for Evidence Based Policy and Programme Development’, ibid.

[10] Phakathi, M. 2011. Swaziland: Small-Loans for Young Entrepreneurs to Help Fight Crisis, on the Inter Press Service New Agency Website, viewed on 5 June 2019, from http://www.ipsnews.net/.

[11] ACBF 2017. Youth Unemployment in Africa: Capacity Building and Innovative Strategies, ibid.

[12] ACBF 2017. Youth Unemployment in Africa: Capacity Building and Innovative Strategies, ibid.

[13] ACBF 2017. Youth Unemployment in Africa: Capacity Building and Innovative Strategies, ibid.

[14] Pharatlhatlhe, K. and Byiers, B. 2019. Youth Unemployment and the Role of Regional Organisations. The Case of the Southern African Development Community (SADC), ibid; NYDA 2018. Annual Report 2017-2018, National Youth Development Agency and Department of Planning, Monitoring and Evaluation: Johannesburg. Available At: http://www.nyda.gov.za/ [Last Accessed: 11 June 2019].

[15] De Lannoy, A., Graham, l., Patel, L., and Leibbrandt, M. 2018. What Drives Youth Unemployment and What Interventions Help? A Systematic Overview of the Evidence and a Theory of Change, University of Johannesburg: Johannesburg. Available At: https://www.uj.ac.za/ [Last Accessed: 26 May 2019].

[16] De Lannoy, A. et al. 2018. What Drives Youth Unemployment and What Interventions Help ? A Systematic Overview of the Evidence and a Theory of Change, ibid.

[17] Pharatlhatlhe, K. and Byiers, B. 2019. Youth Unemployment and the Role of Regional Organisations. The Case of the Southern African Development Community (SADC), ibid.

[18] UN 2017. Africa’s Youth and Prospects for Inclusive Development: Regional Situation Analysis Report, Office of The High Commissioner – United Nations Human Rights: Geneva. Available At: https://www.ohchr.org/ [Last Accessed: 16 April 2019]; IPU 2016. Youth Participation in National Parliaments, Inter-Parliamentary Union: Geneva. Available At: https://www.ipu.org/ [Last Accessed: 16 April 2019].

[19] UN 2017. Africa’s Youth and Prospects for Inclusive Development: Regional Situation Analysis Report, ibid; IPU 2016. Youth Participation in National Parliaments, ibid.

[20] SADCPF 2017. Establishment of Youth Development Programme at Southern African Development Community Parliamentary Forum – 5 years Strategic Plan (2017 – 2022), ibid; UN 2017. Africa’s Youth and Prospects for Inclusive Development: Regional Situation Analysis Report, ibid.

[21] SADC 2019. SADC Executive Secretary calls for Youth-Focused Programmes at 17th Africa Scout Conference in Harare, on the Southern African Development Community Website, viewed on 16 April 2019, from https://www.sadc.int/.

 

Policy Spotlight by Tsepiso Ranto

Policy Spotlight: The Employment Tax Incentive

Youth unemployment is a global challenge that needs serious and immediate attention.  Some SADC countries have implemented policies and programmes to resolve youth unemployment.  Some national policies and programmes follow a state-led approach, while others take a public-private partnership approach.  The South African Employment Tax Incentive (ETI) is a state-led approach aimed at encouraging youth employment through a wage-subsidy programme.

 

The ETI was proposed in 2012 initially as a ZAR 5.0 billion subsidy to be spent on 423,000 employees of which 178, 000 would be new recruits[1].   The ETI Act No. 26 of 2013 was enacted in October 2013 to reduce the costs of hiring inexperienced youth aged 18 – 29 years old, for the first two years if they earn between ZAR 2,000.0 and ZAR 6,000.0 per month[2].  In the first year of employment companies claim 50.0% of tax subsidy for employees earning ZAR 2,000.0 and ZAR 1,000.0 for those earning between ZAR 2, 001.0 and ZAR 4,000.0 per month[3].  As a result, the total of ZAR 11 billion was claimed by 50, 977 employers between January 2014 and March 2017[4].   As for 2017/2018 only, total of ZAR 4.0 billion tax claims was made by companies[5].  The number of youths benefitting from ETI was estimated at 3.6 million from inception of the policy to March 2015[6].  As for 2015/2016 only, about 31, 000 employers claimed tax subsidy for 1 million youth[7].  Most of employment opportunities under ETI are offered by companies located in the Special Economic Zones (SEZ)[8].

 

Despite an increase in the number of jobs supported by the ETI, youth unemployment remains high in South Africa. In 1Q2019 youth unemployment is estimated at 63.0% for those found in the 15 – 34 age group.  This is the worst unemployment rate among the youth population which constitutes more than 60.0% of South Africa’s labour force[9]. In fact, unemployment has been steadily increasing for this age group. For example, unemployment increased from an annual average of 26.0% from 2013 to 2017, to 27.0% in 2018[10]. This illustrates that, despite considerable growth in the number of ETI supported jobs, the policy is not a sufficient solution to youth unemployment on its own.  Solution to increasing youth unemployment should focus on supporting them with technical and financial resources to establish own businesses.  For instance, the Zambian government introduced Youth Development Fund in 2012 for young people to start own small scale businesses[11].  Supporting young people with technical and financial resources to establish own businesses can ultimately contribute to long term self-employment, instead of short-term solution to unemployment offered by the ETI. Currently, the policy only aims at equipping young people with work experience over a two-year period which can be vital for job retention in some cases.  It is also not clear whether after acquiring skills through apprenticeship youth are offered certificates (formal/informal) that can be used in future jobs searches.

 

The tax subsidy declines by half in the second year of employment, and this obviously affects the amount claimed by companies.   For instance, ETI declines from 50.0% to 25.0% for employees earning ZAR 2,000.0 and from ZAR 1,000.0 to ZAR 500.0 for those earning between ZAR 2,001.0 – ZAR 4,000.0.   There is also no tax subsidy for employees earning ZAR 6,000.0.  Decline in tax subsidy together with absorbing unskilled and inexperienced youth contribute to reluctance of some companies to implement the policy[12].  There are also some companies that only implement the policy for the sake of getting tax subsidy, but failed to create new jobs for the young people[13].

 

The policy also creates inequality between regions and companies.  Only companies located in the SEZ are preferred, while the ones outside together with public companies are not considered[14].  The policy also targets youth in the 15 – 29 age group, and side-lining those found in 30 – 35 age group.  In order to solve the current state of youth unemployment in South Africa, ETI should be implemented in different parts of the country and should also target all youth population.  As a result, review and extension of ETI to February 2029 should have considered other companies outside SEZ and youth found in the 30 – 35 age group[15].

 

Youth unemployment is a challenge that needs a holistic approach.  And this called for public-private involvement in South Africa to combat it. Although this approach is commended for absorbing some unemployed youth in South Africa, it is not a sustainable solution to the plight of young people.  A sustainable solution to youth unemployment should involve equipping them with technical skills (vocational and business management trainings) and financial resources to establish own businesses.  Government and other stakeholders should monitor the progress of youth businesses to avoid collapse and other related challenges.  At present, ETI only trains youth for formal employment (with no guarantee of employment after two years of attachment) rather than self-employment.

 

By Tsepiso Rantso

 


[1] NT 2016. Media Statement: Release of a Descriptive Report Detailing the Progress of the Employment Tax Increase, National Treasury: Pretoria. Available At: http://www.treasury.gov.za/  [Last Accessed: 9 April 2017].

[2] SARS and NT n.d. How the Employment Tax Incentive Works for You, South African Revenue Services and National Treasury: Pretoria.  Available At: https://www.sars.gov.za/ [Last Accessed: 6 April 2019].

[3] AGRI-SA 2014. Employment Tax Incentive Act, AGRI South Africa: Centurion. Available At: http://www.forestry.co.za/ [Last Accessed: 6 April 2019].

[4] National Treasury. 2017. Data report – Employment Tax Incentive Claims. Available At: http://www.treasury.gov.za/ [Last Accessed: 13 June 2019].

[6] NT 2016. Employment Tax Incentive Descriptive Report, National Treasury: Pretoria. Available At: http://www.treasury.gov.za/ [Last accessed: 6 April 2019].

[7] NT 2019. Budget Review 2019, ibid.

[8] SARS 2014. Draft Guide to the Employment Tax Incentive (ETI), South African Revenue Services: Pretoria. Available At: https://c.ymcdn.com/  [Last Accessed: 6 April 2019].

[9] StatsSA 2019. Youth Graduate Unemployment Rate Increases in Q1:2019, on the Statistics South Africa Website, viewed on 11 June 2019 from  http://www.statssa.gov.za/.

[10] StatsSA 2019. Quarterly Labour Force Survey: Quarter 1: 2019, Statistics South Africa: Pretoria. Available At: http://www.statssa.gov.za/ [Last Accessed: 13 June 2019].

[11] Bhorat, H., Cassim, A. Masumbu, G., Naidoo, K. and Steenkamp, F. 2015. Youth Employment Challenges in Zambia: A Statistical Profile, Current Policy Frameworks and Existing Interventions, International Development Research Centre: Ottawa. Available At: https://www.idrc.ca/ [Last Accessed: 11 June 2019].

[12] De Jongh, J., Meyer, N. and Meyer, D. 2016. ‘Perceptions of local businesses on the employment tax incentive act: The case of the Vaal Triangle region’, African Journal of Public Affairs, Vol. 9, Issue 2, pp. 47 – 61. Available At: https://repository.up.ac.za/ [Last Accessed: 6 April 2019].

[13] Ebrahim, A, Leibbrandt, M. and Ranchhod, V. 2017. The Effects of the Employment Tax Incentive on South African Employment, United Nations World Institute for Development Economic Research (UN-WIDER): Helsinki. Available At: https://www.wider.unu.edu/ [Last Accessed: 6 April 2019].

[14] SARS 2014. Draft Guide to the Employment Tax Incentive (ETI), ibid.

[15] SARS 2019. How Does the Employment Tax Incentive (ETI) Work?, on the South African Revenue Services Website, viewed on 9 April 2019,  from http://www.sars.gov.za/.

 

Ken Kalala Ndalamba

Role: Research Associate
Contact: ken@politicaleconomy.org.za
Ken is a Researcher specialising in strategic management, organisational development and leadership...

Serge Hadisi

Role: Research Associate
Contact: serge@politicaleconomy.org.za
Serge is an Economist with extensive research and publications on sustainable economic development focusing on social development in sub-Saharan Africa...

Tsepiso Augustinus Rantso

Role: Research Associate
Contact: tsepiso@politicaleconomy.org.za
Tsepiso is a Development Practitioner specialising in cross-sectional research, agricultural and rural development...

Ross Oliver Douglas

Role: Editing and Research Specialist
Contact: ross@politicaleconomy.org.za
Ross is a Writer, Editor and Historian specialising in rural development in South African history...

Charl Swart

Role: Editing and Research Specialist
Contact: charl@politicaleconomy.org.za
Charl is a Political Scientist specialising in constitutional democracy...

Thabo Thandokuhle Sacolo

Role: Editing and Research Specialist
Contact: thabo@politicaleconomy.org.za
Thabo is an Economist specialising in applied economics, environmental economics and agricultural economist...

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