One of the most exciting moments in a young adult’s life is when they have finished writing their final high school exam and walk out of their school, as a student, for the last time. At this stage of their life, the joyful matriculant often feels as if their destiny is only limited by their imagination and the possibilities are endless.
These are the joys of the exuberance of youth which must be enjoyed in the short term as matriculating is not only an exciting time but can also be a scary time for many individuals. It is a time when they make decisions that will impact their lives in the long run. One of the most fundamental decisions is whether to study further or enter the labour market immediately? If they decide to study first – what should they study and where? The choices they make after leaving school will have a real impact on their employment prospects, given South Africa’s persistently high unemployment rate.
In the third quarter of 2017, the national unemployment rate was 27.7% according to Statistics South Africa’s (Stats SA) strict definition of unemployment. The strict definition requires that the unemployed person has to have actively looked for work within the last four weeks to be included as an unemployed person. Extending the analysis of the strict definition of the unemployment rate for individuals between the age of 15 and 24 years old, shows that the unemployment rate is 52.2%. In other words, approximately one out of two individuals between the age of 15 and 24 years old that are seeking employment cannot find a job.
A large contributor to this is the lack of experience and on the job training which is missing from a first time job seeker’s CV. A new entrant to the job market needs experience to get a job but has no experience because he/she is a new entrant to the market.
Another reason that contributes to the high young person’s unemployment is the lack of technical skills to perform the role at a level that at least meets expectations. This often prompts matriculants to further their education and acquire skills to pursue the career of their choice. According to Stats SA there is a strong positive between educational level, employment and being economically active.
Table 1: Economic Activity Status and Unemployment rate by Educational Level
|Level of Education||Percentage Not Economically Active||Unemployment Rate|
|Less than primary completed||52%||25%|
|Secondary not completed||49%||35%|
*Source: Stats SA QLFS Data
Table 1 may appear to contain one or two surprises but these can be explained. The unemployment rate of those that have no schooling at all is surprisingly low. However, nearly two thirds of these individuals have stopped actively seeking employment and are therefore excluded from the economy. This means that 45% of the remaining active job seekers with no schooling are unemployed.
The percentage of individuals that are economically active increases as the highest level of education attained increases – as the skill level of the individuals increase. The unemployment rates of individuals that have only partially completed secondary school or less should be seen in the context of the large percentage of individuals that are not economically active. The unemployment rate of those that have completed matric but not studied further is quite high when compared to those individuals that completed their tertiary education.
Given these statistics of unemployment, it seems logical for most young people to want to further their education to increase their chances of gainful employment. This was evidenced by the strong movement for the “FeesMustFall” campaign. The end result of two years of campaigning culminated in President Jacob Zuma announcing that tertiary education will be made free to all individuals that live in a household that earns less than R350 000 per annum. The specifics of how this will be financed are expected to be announced in the 2018 budget speech. The majority of economists are forecasting an increase in taxes either directly or indirectly to pay for these students.
It has been estimated that only approximately 35% of students that begin a tertiary qualification complete it within the standard allotted time for the completion of that degree. Considering that the relatively thin tax base of South Africa (10% of the population are personal income tax payers) is already under pressure, students that want to make use of these free tertiary education opportunities should endeavour to raise the percentage of students that complete their degrees in ‘normal time’. This will allow graduates to enter the labour force faster and be in the best possible position to find employment – which will reduce the burden on the tax payers.
These employed individuals will help grow the economy and the tax base which will benefit the South African economy in the long run. This means that our primary goals for South Africa should be around increased education and reduced unemployment.
Bryden Morton is executive director and Chris Blair is CEO of leadership & sustainability at 21st Century.
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