YouthDay: Grown-ups not doing a good job of creating jobs

JOHANNESBURG - Apparently, George Bernard Shaw, when asked what he considered most beautiful, replied: “Youth is the most beautiful thing in the world what a pity that it has to be wasted on children!”

It gave rise to the saying “Youth is wasted on the young”, which was pretty much taken to accurately describe South Africa’s current generation of youth until recently. Before the #FeesMustFall! campaign, they seemed to pale in comparison to the 1976 generation.

The criticisms of the youth by the older generation always seem strange, because surely the general character of the youths reflects the quality of parenting by the grown-ups.

Every nation is duty-bound to nurture and invest in its youth, but South Africa is not doing a good job of this.

Despite an annual national Budget of R351 billion for education and skills, Statistics SA reports that 3.3 million young South Africans aged between 15 and 24 years are “not in employment, education or training”. It further places the overall youth unemployment (those aged 15 to 34), at 38.2percent in quarter one of 2018.

The youth make up 63.5 percent of the unemployed, primarily because the high overall unemployment rate in the country (26.7 percent) gives employers ample choice of qualified and experienced labor supply – qualities that the youth generally lack.

The Youth Employment Service (YES!) is a welcome intervention. Nevertheless, good intentions notwithstanding, the job placements under YES! will not reduce unemployment sustainably, unless our economy expands in a manner that increases demand for jobs.

Another common solution offered to deal with youth unemployment has been to focus on youth-owned businesses. There are even Black Economic Empowerment (BEE) bonus points offered to companies that support youth-owned businesses.

The rationale is a bit puzzling and seems informed by a dubious “science”, which finds expression in the following equation:

Youth unemployment is unacceptably high and small and medium-sized enterprises (SMEs) are the key to job creation = Let the youth start and manage SMEs to solve unemployment in their ranks.

This effectively shifts the burden of job creation to the youth.

If youth-owned businesses were able to create jobs at a higher rate than those owned by older people, then it would make sense. But this is doubtful, despite the mammoth successes achieved at early ages by the likes of Bill Gates, Steve Jobs, Mark Zuckerberg, Mark Shuttleworth, and Elon Musk, for example.

The exceptions must not be treated as the defining norms for policy purposes.

Outside of sports and entertainment, the majority of people who have successful careers follow a phased and predictable maturity cycle. They spend their youth studying, finding their feet, and developing skills that will only be harvested in their forties and fifties.

It is no coincidence that managerial and executive positions in corporate companies are generally reserved for highly qualified and experienced people.

If the intention is to solve the unemployment problem through SME development, then the policy should focus on where the chances of success and job creation are greatest. Oftentimes, it doesn’t.

To cover this shortcoming, SME development support is often mashed with training and skills development a product of another strange equation:

A shortage of skills + High unemployment + Small businesses are the key to job creation = Bundle intensive training with SME development programmes to skill entrepreneurs and create jobs.

The consequence is that there are endless training courses in business incubators that teach “finance for non-financial managers”, “marketing”, “HR management”, etc.

It is oddly expected that after a few days in a classroom, SME owners will masterfully execute functions that otherwise require professionals more than seven years of study and further work experience to gain competency.

These “tick box” training programmes are often reported as successful SME development interventions.

South Africa needs a few reality checks if we are to solve the unemployment problem and create proper career opportunities for our youth.

Training is personal development, not SME development.

Entrepreneurs are too often kept in classrooms during working hours and away from their real job of driving growth in their organizations.

If entrepreneurs need training and qualifications, they should register in part-time courses with existing tertiary institutions. If needed, they can study and attend classes at night and on weekends.

I must confess that I am as guilty as anyone of having run these SME training programmes. However Alcoholics Anonymous has shown that admitting to folly honestly is the first and crucial step to rehabilitation.

Similarly, we, as a country, must admit forthwith that we have erred and take corrective steps.

SMEs are the key to job creation, but if we continue to allow the SME development “box” to be ticked and pat ourselves on our backs simply for completing training programmes, we should not be surprised when joblessness persists.

Corporate South Africa and the government are co-enablers of this “addiction”. They pay billions annually to SME development programmes and incubators to carry on this training.

They should close the tap.

The Department of Trade and Industry is currently considering public comments on the latest gazetted amendments to the Broad-Based Black Economic Empowerment (B-BBEE) Codes of Good Practice. I would urge them to exclude training from qualifying as an SME development intervention.

If corporates want to fund bursaries for entrepreneurs, they should do this from their Skills Development budgets. SME development must focus on market access and assisting businesses to deliver on opportunities given.

A more effective government policy would be to encourage experienced professionals and corporate executives to leave the comfort of their jobs and start new businesses. They should be provided with “safety nets”, incentives and start-up funding combined with private equity.

These professionals already possess management skills which will increase their probability of success. It would reduce the cost and waste in SME development. Most importantly, it would create job opportunities and help absorb excess youth capacity in the country.

Jobs would result not only from the businesses they create but also from the corporate positions they leave behind.

Karabo Mashugane is the chief executive of 20/20 Insight – Specialists in B-BBEE Advisory, Supplier Development, and SME financing.

The views expressed here are not necessarily those of Independent Media.