Of all the records South Africa holds, the most unwanted must be the fact that our unemployment rate is now the highest in the world.
By Avesh Singh, head of TransUnion’s South Africa Global Capability Centre (GCC)
The official statistics say the unemployment rate, which includes people who have stopped looking for work, rose to 44,4% in the second quarter of 2021. The reality for our youth is even worse than that, with some estimates suggesting as many as three in every four young people are jobless.
The problem for most of these young people is that they are effectively shut out of the economy. They’re caught in a vicious cycle: they can’t get jobs without skills and experience, but they also have no way of getting those skills and experience without a job.
There’s no doubt that business has a critical role to play in tackling the country’s unemployment and skills gap. We simply have to take the lead in addressing inequality by providing vocational education, reskilling and upskilling, and paying fair wages to as many young people as we can.
That’s where South Africa’s burgeoning global capability centre (GCC) and business process outsourcing (BPO) sector can make a real difference in creating decent work for young people. The South African government wants the sector to create 100,000 additional jobs by 2023, and 500,000 by 2030. The vast majority of these jobs will be held by youth.
The opportunity is there. South Africa – and the entire continent, for that matter – are massive hotspots for BPO. The South Africa BPO market is projected to reach US$3.6 billion by 2027, growing at 13.2% during this period. The country has also been voted the most attractive offshore customer experience delivery location in the world in 2021, according to the Ryan Strategic Advisory BPO Survey, ahead of India and the Philippines. Now that’s a record we can get behind.
We also have the raw material, in the form of our youth. We have a sizeable regional market opportunity, significant cost savings, sophisticated infrastructure and enabling environment, strong ICT and digital capabilities and a strong foundation in contact centres and niche domain areas. Now what’s needed is to give our youth the necessary skills and experience to go out and seize the opportunity.
At TransUnion’s virtual GCC in South Africa, we’re piloting a recruitment model that’s building what we call our ‘bench’ – additional staff who fill in when people are absent or on leave – through learnerships. We’re recruiting unskilled learners on year-long contracts, in which time they get certified qualifications and a vital year’s experience on their CV. After that year, if they are good at what they do we hope to hire them as full-time employees.
Government’s support is also important. South Africa’s GCC sector is competing with countries like India and the Philippines, where labour costs are often lower. For South Africa to be competitive in the sector, government grants and subsidies have a major role to play. Driving youth employment and education is good for business, too: companies that take on learners after their year-long learnership benefit through absorption points for their BBBEE scorecard.
It’s a model that’s fast-gaining momentum: within TransUnion several teams within the company have taken on learners, including global facilities, HR, finance and IT support.
The importance of creating programmes like this cannot be understated. Research by the World Bank and the International Labour Organisation show that youth employment programmes have long-term positive effects on skills development, entrepreneurship, and economic development. In other words, facilitating the entry of young skilled people into the productive sectors of an economy make the entire economy more productive and competitive.
In 2005, the International Labour Conference had this to say about youth employment: “Decent work for young people unleashes multiplier effects throughout the economy and society, boosting investment and consumer demand and ensuring more stable and cohesive societal ties across generations.”