Government looks to tech sector to stave off youth joblessness

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba
Johannesburg, 11 Feb 2022

President Cyril Ramaphosa says the state is nurturing new growth and job creation opportunities, with a focus on emerging tech sectors, to help the millions of unemployed South Africans.

Ramaphosa was delivering his State of the Nation Address (SONA) during a hybrid joint sitting of the two houses of Parliament – the National Assembly and National Council of Provinces.

This year’s SONA was, for the first time, held at the Cape Town City Hall, following the fire that engulfed the Parliamentary precinct last month.

During the SONA, Ramaphosa detailed the devastation caused by the COVID-19 pandemic, pointing out it has raised the country’s unemployment and deepened poverty. During this time, two million people have been put out of work, he said.

He expressed that the present situation of deep poverty, unemployment and inequality is “unacceptable and unsustainable”.

The president pointed to global business services (GBS), investments in electric vehicles and green hydrogen, as well as youth skills enhancement, among government’s intervention measures.

Government and the private sector have worked closely to grow the GBS sector from a small group of companies to one of the world’s leading players, he noted. “The global business services sector is on track to create 500 000 new jobs over the next few years.”

As part of the presidential employment stimulus programmes, Ramaphosa said the Department of Home Affairs will recruit 10 000 unemployed young people for the digitisation of paper records, enhancing their skills and contributing to the modernisation of citizen services.

“The Social Employment Fund will create a further 50 000 work opportunities using the capability of organisations beyond government, in areas such as urban agriculture, early childhood development, public art and tackling gender-based violence,” he added.

President Cyril Ramaphosa.
President Cyril Ramaphosa.

Last November, Statistics South Africa (Stats SA) released unemployment data for the third quarter of 2021, showing the country’s official unemployment rate rose to 34.9%, up from 34.4% in the second quarter.

In the third quarter, employment slumped by 660 000 to 14.3 million. In addition, the number of discouraged work-seekers increased by 545 000 (16.4%) and the number of people who were not economically active for reasons other than discouragement increased by 443 000 (3.3%) between the two quarters.

The unemployment rate, according to Stats SA, reached its highest record since the start of the quarterly labour force survey in 2008.

Ramaphosa stated: “Unemployment has been caused by low growth, which has in turn resulted from a long-term decline in investment. In the last year, we have benefited from a clear and stable macro-economic framework, strong commodity prices and a better-than-expected recovery. However, we have been held back by an unreliable electricity supply, inefficient network industries and the high cost of doing business.

“We have been taking extraordinary measures to enable businesses to grow and create jobs alongside expanded public employment and social protection. We all know that government does not create jobs. Business creates jobs. Around 80% of all the people employed in South Africa are employed in the private sector.

“The key task of government is to create the conditions that will enable the private sector – both big and small – to emerge, to grow, to access new markets, to create new products, and to hire more employees.”

Outsourcing master plan

The GBS sector, also known as business process outsourcing (BPO), emerged as the front-runner among sectors that created employment opportunities as the COVID-19 pandemic dulled economic growth and employment opportunities in the country.

Industry body Business Process Enabling South Africa (BPESA) revealed to ITWeb that the GBS sector created more than 50 000 cumulative new jobs from January 2018 up to the second quarter of 2021.

According to BPESA, the majority of these new jobs were for young people, contributing towards addressing the country’s high youth unemployment rate.

International companies like Amazon, Webhelp and TransUnion have made key investments in the local sector over the past year.

As one of the green shoots for the country’s economic reconstruction and recovery, the South African government last year developed an industry master plan set to bolster the sector even further.

The plan provides a framework and overview of the contributions to be made by all relevant parties and the support required to realise the employment opportunity.

The master plan framework, developed and agreed with the Department of Trade, Industry and Competition, BPESA and other strategic public, private and social partners, sets a target of creating between 250 000 and 500 000 cumulative new jobs in the sector by 2030.

The GBS master plan, according to BPESA, is a collaborative clarification of the support that is required to realise the opportunity facing SA, as more global organisations outsource BPO services to locations in the country.

BPESA CEO Andy Searle states: “It caters not just for the demand and supply sides of GBS, but also the components that are essential to the success of any sector in South Africa today – sustainability and transformation.

“Without them, no amount of international investment coming into South Africa will have meaning, and that must remain our driving force.”