The government has gone into overdrive to avert the explosion of an unemployment “time bomb”.
President Jacob Zuma meets government leaders, officials and unionists tomorrow to discuss the state of the economy, including remorselessly increasing youth unemployment.
During the meeting of the Presidential Labour Working Group in Pretoria, Zuma and Deputy President Cyril Ramaphosa will talk to economics cluster ministers and union leaders.
The meeting has been convened as the government appears to have missed the target for youth employment set in the Employment Tax Incentive scheme.
Commonly known as the youth wage subsidy, the scheme, launched in 2014, was aimed at creating 423000 jobs by the end of this year. The Treasury has told The Times that the target might be missed by nearly 170000 jobs.
Treasury spokesman Phumza Macanda would not say whether the scheme – which was heavily criticised by ANC-affiliated unions, which claimed that it would have the effect of displacing older, more expensive workers – will be extended.
“That will be the subject of the review that is currently under way,” she said.
The shortfall is despite the number of companies taking up the tax incentive offer increasing from 5188 in January 2014 to 18 190 in July 2015.
Tax incentives claimed rose from R53.8-million to R3.8-billion in the same period.
Stats SA’s figures show that by 2014 the number of unemployed young people was 3.4million.
Figures from its 2009-2014 Profile of Youth survey – released last month – shows that joblessness in the 15-35 age group rose from 34.2% in 2009 to 35.9% in 2014.
Also last month, Stats SA reported that, in the first three months of this year, unemployment increased to 26.7% from 24.5% in the fourth quarter of last year.
It said 5.7million people were looking for a job.
South Africa faces another set of sovereign debt rating reviews later this year.
Zuma has prioritised economic growth, appointing Finance Minister Pravin Gordhan and Telkom chairman and Business Unity SA president Jabu Mabuza to strengthen short-term confidence in this country’s economy and reinforce long-term growth.
Though the youth wage subsidy has been punted as a “magic bullet” for the unemployment rate, critics – including unionists and economists – say that more must be done.
This would include the expansion of economic hubs.
Bishop Abel Gabuza, chairman of the Justice and Peace Commission of the Southern African Catholic Bishops’ Conference, said youth unemployment posed a danger to national security.
“It’s a time bomb that will soon explode,” he said.
He called on the government to rethink its youth-wage subsidy policy.
Gabuza said his organisation had received many complaints from young people who had been dismissed at the end of the subsidy period without acquiring the skills they needed to find a new job.
Economists warn that the idea of job creation being a “quick fix” to the current economic situation was false.
Economist Dawie Roodt said job creation was an “absolute fallacy”.
“Creating wealth is the right thing to do rather than just keeping people busy.
“It’s easy to create jobs. You get 1000 people to dig holes and you get another 1000 to fill them up and have you got yourself jobs? That’s not job creation. That’s just keeping people busy.”
Instead, Roodt said, the government should get people to take part in the value-creation process.
Economist Azar Jammine said youth unemployment was a huge factor in the dire state of the country’s economy.
“The poor education system is a contributing factor to youth unemployment. Businesses feel those leaving university are not equipped to do the job.
“While those who qualified for university often don’t perform well enough to enrol for courses such as engineering, there is a shortage of young people interested in artisanal work, which there is a need for. Many of our youth are not willing to dirty their hands.”
National Union of Metalworkers of SA spokesman Patrick Craven said that the union was not opposed in principle to the creation of special export zones.
“We want to be closely involved in discussing the conditions under which they work. We’re opposed to lower wages being paid in those zones. But in terms of giving South Africans manufacturers more opportunity, we would support that.”
Roodt said the creation of such zones, in which businesses are given tax incentives to establish companies involved in exporting, would pay off only if zones were declared throughout the country.
“Make the whole of South Africa a special exporting zone. We reduce taxes. We improve the efficiency of the state. We make it easy to employ people.”
Earlier this month Mabuza said business and the government were aware of the need to step up the implementation of other measures to boost the economy.
He told Business Day that these included launching a R1.5-billion entrepreneurship fund and developing investment projects in tourism and agriculture.