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SA skills inefficiency is the answer to SA’s economic reality

Unemployment crisis unpacked at University of Stellenbosch Business School (USB) Leader’s Angle.

SA Skills inefficiency is the answer to SA's Economic reality
  • Dec 05

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Unemployment in this country probably lies at the heart of our social, economic and political problems. Many people think that if we grow the economy it will solve the problem but it’s not that simple.

The how much of economic growth is not as important as the how of economic growth. One can have a growing economy, as South Africa has seen in the past few decades, yet unemployment has remained chronically high for many years. Due to the infinite gap between those who have and those who have not, the inequality in our country will be ongoing.

In discussing these very complex and complicated issues, the USB Leaders Angle, which was facilitated by head of Futures programmes, Prof Andre Roux on 22 November, did not aim to find a quick fix, but rather unpacked possible ways of alleviating the issues.

The speakers were Dr Doris Viljoen, senior futurist at the Institute for Future Studies (IFR) at USB, Tony Ehrenreich, South African trade-unionist and regional secretary of the Western Cape region of COSATU, and Miles Kubheka, a.k.a Vuyo, game-changing entrepreneur who empowers others to find success.

The most worrying aspect of the stability of South Africa’s economy is the number of youths that forms part of the unemployment statistic. It is the most unstable sector – we will have protests and demonstrations growing that are uncontrollable.

Tony Ehrenreich opened his presentation by saying that “we have to design the society that we want based on our admission and acknowledgment of our real realities and how we respond to it.”

He said that in 1994 the unemployment was at about 20% with 9 million workers whilst currently we have 16 million workers. “The economy has grown and so too the job creation which reflects on policy decisions made and the democratic promise made to South Africa. However, we have to constantly measure ourselves against what was promised and what the reality is.”

“The most worrying aspect of the stability of South Africa’s economy is the number of youths that forms part of the unemployment statistic. It is the most unstable sector – we will have protests and demonstrations growing that are uncontrollable. We must deal with the problems that exist in South Africa not as an act of charity but because our interest is all tied together. We have to find solutions that respond to all the sides of the divide. And unless we can do that, we will see a massive social problem and crisis unfolding.”

He said that one of our key indicators in the levels of equality, is a direct result on the policy decision that has been made, which has not directly answered to the problems the country is facing.

“The ANC has probably squandered their political power. Whilst you need a strong party to drive a society from where it was prior to 1994 to the democratic values aspired to, the party is fracturing and losing its credibility. Without President Cyril Ramaphosa’s leadership they would most probably not be the governing party and you would find that the unhappiness and the dissatisfaction that a large section of the population has would be expressed even more urgently outside of party-political decisions and occasions such as rising protests.”

He focussed on some of the good news such as the number of houses provided, direct intervention in terms of where people are allowed to stay, access to health, connectivity to water and electricity, and said that “although not perfected yet, it does offer access to better education, economic and standard of living opportunities. But people are still unable to accumulate wealth, and have a disposable income which is a stumbling block on economic growth.”

It’s unmissable: if we take out the negative impact of corruption in both government and private sector South Africa would have been pretty well off because a lot of the resources were taken into corruption spheres.”

So what is the new path? He said the change is built on the creditability of President Cyril Ramaphosa who can keep the ambition and impatience of society at large in place by virtue of his legacy and service to South Africa and less propensity for corruption as we have seen with other leaders, by restoring confidence in the South African economy and society.

“It’s unmissable: if we take out the negative impact of corruption in both government and private sector South Africa would have been pretty well off because a lot of the resources were taken into corruption spheres.”

He said that the labour movement building partnerships and bringing government and people together to work together on solutions is a positive turn. These are:

  • Latest agreement on the Africa Continental Free Trade agreement which opens a market to more than a billion people and South Africa being best placed to take up this opportunity.
  • Government being decisive about public procurement legislation enforcing 60% of government purchases to be from and within South Africa
  • The Proudly South African Campaign where everyone can play a role and drive the purchasing of locally made goods. In the short term it will cost more but long term it will sustain and grow our economy
  • The National Minimum wage raises the aggregate levels of disposable income which generates local demand in economy
  • New focus on the automotive industry which has a significant impact on exports and job creation and the sectors of the clothing and footwear industry, chicken industry, tourism, mining and the digital economy which will pave the way for growth.

He concluded by saying that, “the only way that we are going to see a change is if we work towards including everybody’s interest and break down the divide of the past.  Whilst the future is uncertain, the only way we are going to get there is if we work together to share the wealth and prospects of this country which will give us all a lasting future.”

When we think of unemployment, we simply view it in the South African context. It’s happening world-wide and we need to translate what is happening globally and then make decisions based on what is relevant to our circumstances.

Dr Doris Viljoen painted the current picture of the 38% unemployment rate in the country and said that what is more worrying, “is the 2.79 million discouraged workers. To put this number into perspective: it is the entire population of Namibia. They have no motivation left to try and find a job and have simply given up.”

She said that The World Economic Forum’s 2018 Future of Jobs report asked South African organisations in terms of the shifting skills needs what their plans are, and the majority answer was ‘hire new staff with skills relevant to new technologies’. “I think that is an assumption because we don’t know what those skills will be. And in a world of oversupply of applicants, corporates get lulled in the notion that there will always be people willing to do the work.”

With the onset of the Fourth Industrial Revolution there will be a number of drivers of change and a shift in what influences economic activity and employment. She said in the world of work the following seems to be our imminent future:

  • Personalisation and customisation
  • Recognition that people are different (cognitive differences) with an increase in the valuation of what it means to be human in relation to a robot and the unique skills of humans such as wisdom, tolerance, emotional intelligence, and ethical understanding
  • Rise of the gig economy will see non-traditional work sprouting where people do project work across a number of disciplines for different organisations throughout the globe with the help of technology
  • The end of the three stages of life – going to school, then on to University, entering employment, starting a career (and perhaps climbing the ladder) and then work until retirement
  • People will start to take ownership of their own development which will put pressure on current skills development
  • Need for updating skills no matter the qualification. Without upskilling we will not be relevant anymore
  • The start of adapting to a multiple generational work place where different generations find ways of working together
  • Rise in zero waste where physical work space is shared and in some instances deemed unnecessary
  • Potential of automation especially in the retail sector

“When we think of unemployment, we simply view it in the South African context. It’s happening world-wide and we need to translate what is happening globally and then make decisions based on what is relevant to our circumstances.  We have to focus on humans and how we make plans for our people. We have to accept that change is coming – it’s not going to stop.”

Dr Viljoen said that with this in mind organisations especially should:

– Foster curiosity

– Seek to bridge the divides of male vs female, rich vs poor etc by changing the narrative to bridging rather than accentuating

– Create an enabling environment where a person has a fair chance to become economically active

– Add a time dimension. All good business ideas have a plan and we need to start thinking constantly of what we will be doing next

Nowhere in my undergraduate studies was I taught how to start something. I’m the first in my generation to do anything – first to go to university, being on a plane, you name it. I did not have an uncle to ask for advice, someone who had a successful business already in place.

Miles Kubheka who turned the fictional character of Vuyo from the Hansa television advertisement into reality and a business, spotted an opportunity, inheriting a R25 million brand equity.

He said “a sense of purpose from an early age propelled me to change the world for the better. But when I started as an entrepreneur, I couldn’t find any resources or content that spoke to my circumstances. Nowhere in my undergraduate studies was I taught how to start something. I’m the first in my generation to do anything – first to go to university, being on a plane, you name it. I did not have an uncle to ask for advice, someone who had a successful business already in place.”

He said that solving unemployment won’t be done by the corporates doing the same thing and that out of the box thinking is needed.

Some learnings he shared for entrepreneurs and the unemployed:

  1. Start by starting. There are so many ideas out there!
  2. You don’t need capital to start a business. Just start. Create something and go out and test it. If someone pays you for it then you have a business. Don’t make it complicated!
  3. Dream bigger – people don’t dream big enough. You are limiting yourself when you dream small
  4. In life it is often better to ask for forgiveness afterwards than to ask for permission
  5. Doing good is good business. If you can find an opportunity to incorporate the landscape of SA of unemployment, hunger and poverty, you have a business that answers to an existing need.
  6. When it comes to employees, look for attitude. Skills you can teach but not attitude
  7. Failure is an option. Days are gone where failure can’t happen. But failure is real and the willingness to take risk is how business will go forward. You learn through failure.

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