The problem of a shortage of jobs for young people is not new. Apartheid legacies and the structural characteristics of the South African economy mean the labour market has failed to create enough jobs to absorb new entrants since the late 1970s. Technological change has made South Africa’s economy increasingly capital intensive and raised productivity: fewer workers are needed to produce the same output of goods and services.
South Africa’s labour market policies promote collective bargaining and strengthen workers’ power in wage negotiations. Such policies, though well-intended, increase the cost of employment. By increasing the costs of taking on new workers, has South Africa made its unemployment problem worse? Parties need to explain how employment-generation can be encouraged on a much larger scale. Global experience shows that the best way to get more employment is to foster an economic environment in which private sector firms – the most important type of employment generating programme – are able to grow in number and size.
This principle should be extended from the public to the private sector. Less-skilled young people should be able to find jobs by offering their services for less than experienced workers, at least while they are establishing themselves in the world of work.