At the end of the third quarter last year, South Africa recorded a high unemployment rate of 27.5%. Townships and informal settlements are at the helm of this problem where the youth lack resources to even apply for jobs.
A young, unemployed man crosses a busy street on 12th Avenue.
Dragging a greasy trolley filled with trash, he looks at us blankly as he continues to lug his garbage to the nearest junkyard.
It is a regular sight and a regular weekday on the streets of Alexandra, eight kilometers from Africa’s richest square mile, Sandton, in South Africa.
Sixteen-seater minibus-taxis dash from corner to corner, packing their vehicles with enough passengers before making their way out of the township.
It is 10.30AM on this sunny Wednesday morning in December.
The street corners are adorned with colorful tuckshops; they stand out against the backdrop of the grey homes around them.
One of the spaza shops is bright blue with light textures of yellow paint; a man sits behind a mesh by the sales counter. It is almost impossible to see his face.
He offers a young man a cigarette via a peep hole through the mesh.
Three men gather to smoke the same cigarette before making their way to the multi-purpose community center on the other side of the road.
Each carrying a sling bag and an A4 envelope, they disappear into a building located at the end of a twirling staircase. Young and old ceaselessly walk in and out.
The yard is filled with a number of service centers: the local clinic, revenue service offices, the post office, multiple internet shops and the Youth Advisory Centre (YAC).
At the end of the hallway, Themba Mafuya sits collecting dozens of résumés from the eager youth who are desperately in search of employment.
He gathers the pile of documents and hands it over to his assistant.
“People are hungry for jobs,” he says as he looks at the unending stream of visitors walking in and out of the center.
Mafuya’s institution creates a database of unemployed youth within the community with the sole purpose of collaborating with companies that are looking to hire.
By working closely with government, YAC reports to the City of Johannesburg on the state of unemployment in the community.
Dressed in casual wear, the 29-year-old has a friendly and positive approach when he advises potential employees.
“Go and correct the mistakes on your résumé that I explained to you. Make sure your documents are certified and bring it to me as soon as possible. Don’t worry, they will hire you,” he tells a young lady.
With Gauteng province being the economic powerhouse of South Africa, contributing 35% to the country’s GDP, according to recent figures released by Stats SA, unemployment remains an area of concern – 29.6% of people live in the province without jobs.
But the province is not among the lowest performing in the country. With an unemployment rate of 36.6%, the Free State has the highest provincial unemployment rate according to StatsSA, in 2018.
Limpopo, with a prominent rural population, surprisingly, has an unemployment rate of 18.9%, making it the lowest in the country.
Townships in the surrounding areas of Gauteng are still faced with an influx of challenges relating to unemployment.
Adding to the lack of jobs, social issues play a big part.
“We need to start doing follow-ups. Ask how many youth have been employed? Who are not employed? Why are they not employed? Maybe they do not have a correct résumé and we need to figure out why the employees do not choose them,” says Mafuya.
Just a few streets away is a compound adjacent to a block of fading pink apartments.
The yard is divided by a muddy passage with small dwellings on either side.
A smell lingers far beyond the cracks of the cement block as two buckets get noisly filled with hot water to clean chicken.
Alfredah Phuloane introduces herself after she wipes the chicken remnants off her hands using her multi-colored t-shirt.
With Phuloane is her uncle Velile Ndlovu who is her business partner.
“As long as I have chicken, they are going. If I have 55, all of them will be bought. I’ve already sold 25 for the day and we have just started,” she says.
A helper, who didn’t want to be named, gushes: “I love my job and I am proud of it.”
She too, like the 27.5% of the South African population who are unemployed, will celebrate any job that will help them put food on the table.
In 2018, StatsSA announced an increase in the unemployment rate at the end of the third quarter.
According to the Quarterly Labour Force Survey, there are 16.4 million employed people and 6.2 million unemployed people between the ages of 15 and 64 years in South Africa.
The latest figures record that the number of unemployed people in South Africa grew by 127,000 from the 6.08 million in the previous quarter.
StatsSA Statistician-General, Risenga Maluleke, says unemployment, according to the statistics collected, is calculated using the 4×4 rule.
These are job-seekers in search of employment four days a week in a four-week period.
Phuloane, who has been unemployed for three years, took the iniatitive to start the business when she realized there was a demand for freshly-slaughtered chicken in her community.
“At the time, when we were slaughtering the chicken for our own consumption, some people were coming in and asking if we were selling them. That is when we realized people needed chicken,” Ndlovu laughs.
Ndlovu leaves the compound at 4.30AM to stand in a long queue in Linbro Park where he buys the live chickens.
On his return, at around 7AM, he places the fowl in a makeshift coop.
With the helper, who earns a sum of money for her assistance, the trio spend the day processing and packaging chicken for customers.
Three years of unemployment led Phuloane, a former domestic worker, to entrepreneurship.
“If my business does succeed, I want to hire those who do not have jobs. I want to make their lives simple. They can start their own businesses then, because you can’t wait for work. There are no jobs now and it will be difficult,” Phuloane says.
Her uncle on the other hand, who worked as a recycler in a recycling company, decided to quit his job in late 2018.
When Ndlovu rejected a job transfer to South Africa’s capital Pretoria, it suddenly made him one of the thousands without employment.
The formal sector recorded job losses of 65,000 people, and agriculture lost 1,000 employees in the third quarter of last year.
Without the promise of an increase, had he accepted the job in Pretoria, Ndlovu’s expenses would have increased by $111 to travel 41 kilometers to the north eastern part of Johannesburg.
He decided to quit.
“We realized that there is a big opportunity in the township. We are trying by all means to not rely on anyone. We can take our children to school. No one will suffer if they think about starting a business,” he says.
Social engineer Action Setaka, from the organization ACTIVATE! Change Drivers (ACD), who advocates for the unemployed, says there is a copious amount of injustice hampering access to employment.
It is even worse in the townships.
ACD is a network of young people interested in driving change for the public good of the country through innovation and activism.
For Setaka, unemployment has become a commodity for business and institutions to exploit those desperately in search of work.
From the seemlingly endless amount of documentation required when applying for governmental posts, to the costs of printing and accessing the internet at internet cafés, money is required.
It does not end there.
“Transportation costs for traveling to interviews; posting of résumés cost money, which benefits the internet cafés; data to browse job opportunities and mobile networks make money out of this. Searching for employment requires money, yet you find people who claim that our young people are lazy and, therefore, they are not prepared to find work,” Setaka says.
The dire plight of the jobless youth in Alexandra is not in isolation.
Similar circumstances reverbarate throughout the townships of South Africa.
Another township, much like Alexandra, with compounds filled with shacks, is swarming with people seeking jobs for survival.
Located in the northern part of Johannesburg, Diepsloot has the highest concentration of unemployed people in Gauteng.
This is according to the Gauteng City-Regional Observatory (GCRO)’s Mapping Unemployment publication, released in August 2018.
The location, established in 1994, has grown into a community with a population of more than 160,000 with an estimate of “24,737 shacks alongside more than 5,000 formal housing units, such as RDP (Reconstruction and Development Programme) houses, self-built houses on serviced sites, and a small number of bank-financed houses,” as quoted in Diepsloot, a brochure compiled by the Johannesburg Development Agency.
Based on the StatsSA 2011 census, the GCRO map shows the concentration of unemployed people in areas that had rates worse than the provincial median in 2011.
According to GCRO statistics, “the square kilometer areas with the highest concentration of unemployed people are observed in townships such as Alexandra and Diepsloot and contain 4,965 and 8,758 people”.
Diepsloot’s South African Youth Project (SAYP) general manager, Clifford Legodi, says gaining access to employment for unemployed youth in townships is harder than it is for youth who grow up in urban regions. This points to a system exclusion due to the lack of access to resources.
Thus, the development programs that will meet the demands of the working environment will, in turn, open up opportunities.
It starts with breaking norms.
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“Young black people or previously disadvantaged communities are still using the traditional method of taking a taxi, printing a résumé or going to the offices. We felt that it was important to incorporate an online skills program. You look at their online presence. How they apply for a job online. Are they actually keeping a good online profile and how to secure opportunities in time?” Legodi says.
SAYP is a youth development organization aimed at the empowerment of young people by giving them the skillsets to utilize the opportunities around them.
This is done through the ‘Power Through Jobs’ program offered by the non-profit.
Life skills, work-readiness, and getting a job are some of the main points of focus for the youth of the township.
Online job-searching skills have been implemented in order to keep up with the evolving working environment.
Through encouragement and continuous skills development, Legodi says the notion of staying in one position will fade away, and the youth of Diepsloot will aspire to climb the corporate ladder.
“If they can conduct themselves in a professional manner, they will gain credibility,” he says.
The population is dominated by black people and for Legodi, the lack of opportunities within their reach means that those who are able find employment will have to travel long distances to get to work.
“Diepsloot has its own reputation that is quite limiting for young people to get opportunities out there.
“The media also has a bit of an influence, bad news sells. A lot of the things you see are about the crime, but everyone is treated equally within the community,” he says.
“The mistake we have been making in the past when it comes to addressing unemployment, is that we tried to develop a program that put everyone in the same box. We tend to forget that people come from different geographical locations and they are exposed to different lifestyles.”
Twenty-nine-year-old Thapelo Tau sits in a living room watching television.
It is noon and he is catching up on his favorite shows in the home he shares with his mother and two sisters.
“I have been unemployed for five or six years. It has been difficult to look for work. Many people here give up and they just sit at home and watch television,” he says.
He spends most of his time on his phone and reading.
“You may take your documents to look for work, but when you leave, they tear it up. We just give up because there is nothing we can do. I have an uncle who has been looking for work for a long time. He just stopped looking,” Tau says.
When approached for comment, the uncle dismisses the interview in vernacular.
“We are looking for work. We can’t even speak English,” he says.
English is widely considered the language of access in this nation where there are 11 official langages. Those who can’t speak the language are almost always immediately excluded from public participation.
“The problem that we have seen with people from townships is self-confidence. They get afraid when they have to leave their comfort space. They then need to present themselves in a different way, they have to adjust to a different lifestyle to showcase an approach,” says Legodi.
Afri-Berry founder and director, Relobohile Moeng, says the language barrier is one of the biggest challenges for the youth in the townships. Going the extra mile for an intern who lacked verbal communication skills, she offered mentorship and guidance. “The confidence part I had to build in, as her mentor,” attests Moeng.
Townships have the undying potential to contribute greatly to the country’s aggregate economic growth; this can be achieved only if the high populations are granted the opportunity to play their part in the economy. Alexandra and Diepsloot are testament to the facts.
In the interim, Ndlovu, much like the rest of the unemployed population, strives against all odds, hoping against hope to continue to put food on his own table whilst feeding his community.
South Africa’s Informal Sector: Why People Get Stuck In Precarious Jobs
South Africa has a jobs crisis. In the fourth quarter of 2018, 6.14 million people were out of work, an unemployment rate of 27.1%, which is one of the highest rates in the world, along with sub-Saharan African countries like Lesotho, Mozambique and Namibia.
South Africa’s labour market has another important distinction. Only about three million people who are working – about 18% of all employed (16.53 million) – are in the informal sector. That’s much lower than other developing countries. For example in India and Ethiopia, up to 50% of those with jobs are employed in the informal sector. The figure is as high as 90% in Ghana and Mali.
There are two schools of thought around the role and value of a country’s informal sector. Some argue that it’s an important alternative to the limited opportunities available in the formal sector; a survivalist strategy that allows those without much formal education to work and earn money. In addition, others argue, the informal sector is also an important space for entrepreneurs.
But there are some who disagree, arguing that employment in the informal sector tends to be poorly paid and precarious. A mere 20% of informal sector employees are hired permanently, compared to 70% of those in the formal sector.
Little is known about how many people transition between the two sectors, a phenomenon called “churning”. Addressing this knowledge gap is important for a number of reasons. These include the fact that informal workers may be spending some time in the formal sector, getting valuable skills and work experience to boost their chances at formal employment, with the hope that they eventually settle permanently in the formal sector, which would be good news.
Conversely, knowing whether there’s a high rate of transition from the formal to the informal sector would be cause for concern because it would suggest high rates of retrenchment and fewer formal job opportunities.
We set out to understand “churning” between South Africa’s formal and informal sectors. To do this we analysed data from the country’s National Income Dynamics Study – a study that was conducted four times between 2008 and 2015 by the Southern Africa Labour and Development Research Unit based at the University of Cape Town’s School of Economics.
We found there was a lot of movement between the informal and formal sectors during these years. But there were very few instances of people making successful, lasting transitions from informal to formal sector employment.
This emphasises South Africa’s skills mismatch. The formal sector requires skills that those in the informal sector simply don’t have. More education and support is necessary to bridge this gap.
Our data were drawn from the National Income Dynamics Survey, which is the first national household panel study in South Africa. It examines the living standards of individuals and households over time.
By analysing data from the four waves of the study we were able to make some key findings about churning, and about the informal sector more broadly. These included:
- Only 8% of those surveyed were inactive (7%) or unemployed (1%) in all four waves – that is, throughout the seven-year period. About 54% were employed in one to three waves, meaning they worked transitorily but not continuously;
- only 3% worked in the informal sector in all four waves;
- only 12% always worked in the formal sector during the seven years under review; and,
- 8% of individuals worked throughout the seven years under review but transitioned between the two sectors.
These results clearly indicate that a high proportion of the labour force participants have been in and out of employment (which is not surprising, given the country’s high unemployment rate), some workers enjoy the privilege of always working in the formal sector, and most importantly, churning between the informal and formal sectors definitely takes place to some extent.
The findings also emphasised how precarious the informal sector is. For instance, 67% of those who started off working in the formal sector in 2008 remained there seven years later. This suggests that for those who initially secured work in the formal sector, retrenchment likelihood is not as high as perhaps anticipated. The retention figure in the informal sector was just 39%. Only 27% of those in the informal sector successfully transitioned to the formal sector.
The country’s many social inequalities were evident in the data. Black women without school leaving certificates aged between 25 and 44 years were most likely to remain in the informal sector. Highly educated white men living in the urban areas of Gauteng and KwaZulu-Natal provinces were most likely to successfully transition from the informal to the formal sector.
Filling the gaps
Given what we’ve learned from this research, how might the government and policy makers deal with those who “churn”?
First, the country’s education system must do more to produce skilled labour in the areas the economy requires. Formal firms could help here, by providing assistance and information on what skills are needed and how to develop these. This implies that strengthening the partnership between industry and universities is important, as this would help those who are able to access higher education.
Those who don’t go on to higher education, or don’t complete their secondary schooling, also need to be helped. The government should more actively provide workshops and specialised assistance to enhance entrepreneurship skills and advise small informal firms on growth strategies. These incentives will assist in their growth, long-term sustainability and successful transition to the formal sector.
In addition, larger, more established formal firms can also play a role by helping to develop and train informal sector workers and providing expert guidance to informal firms. This assistance can be incentivised through tax reductions and the prospects of a larger collective market via the informal sector.
Lastly, the government should continuously alleviate the numerous barriers to the informal economy. These include limited credit and training opportunities, poor infrastructure and the red tape that makes it difficult to start a business.
–Moegammad Faeez Nackerdien Lecturer, University of the Western Cape
–Derek Yu Associate Professor, Economics, University of the Western Cape
SMMEs Meltdowns Continue Because Of Eskom Power Cuts
Small medium and micro enterprises (SMMEs) that are feeling the strain from Eskom’s load-shedding are appealing to the South African government to come up with a solution, because they are forced to shut their doors.
South Africa has been experiencing stage 4 load-shedding from the beginning of March. As a result, power cuts are forcing small businesses to shut their doors as swiping facilities and security cameras do not function.
Johannesburg based Gim Bekele, who owns a clothing store in Randburg, says they are losing a significant number of customers as a result of load-shedding.
“When there is load-shedding we are forced to closed the shop because people can’t come in when it is dark. The cameras are not working as well as the cashier machines,” he says.
“So that means we lose out on a lot of money. On a normal day without load shedding we make above R5,000 but when there is load shedding, it is a struggle to even reach R1,000,” says Bekele.
Bekele says between the loss of customers and an increase in the monthly expenses he can no longer afford to pay his employees.
“I had to let go of two employees because I could no longer afford to pay them. The rent is high, and now we are barely meeting our sales target because of load shedding, how could we continue to pay for their salaries as well?”
“We can’t even afford a generator at this point,” added Bekele.
Another entrepreneur, Shaodong Zhuang who owns a takeaway shop in Randburg says his stock is compromised.
“I usually sell fresh meat and some of my meat gets spoiled and I have to throw it away,” says Zhuang.
I am basically making a small change. Our government is really not good. The people are suffering heavily because they are not running things properly.
Energy expert Adi Nchabeleng says that small businesses should brace themselves because there won’t be any turn around soon, but they could expect to see some form of solution a year from now.
“It is a delayed reaction that caused this whole advent of load-shedding. The current executive and the new democratic dispensation inherited the current dispensation of Eskom years ago and they didn’t do anything with any of power stations. They just used them as they are,” says Nchabeleng.
Nchabeleng says that it is unfortunate that small businesses have to take the heat for poor planning.
“If they do not have enough electricity reserves it means their shops and businesses must be closed. A lot of people are going to be out of jobs… So the impact of load-shedding on businesses is so severe.
“In order for the business to survive, you need to spend R500 ($7,25)-R1,000 ($14,49)daily, just to make sure that the generator has fuel, and I don’t think the government understands the seriousness of this matter,” says Nchabeleng.
“They have not woken up to the reality of what the people go through,” he added.
He advises that in order for small businesses to weather the electricity crises, they need to reduce their expenditure but he does not foresee that as the best solution for employees.
“The usual expenses that the majority of businesses will choose to cut are their staff. They will say ‘when we have load-shedding we don’t need workers.’ We cannot go for that solution, we need to look at a much more different solution in relation to businesses,” says Nchabeleng.
He believes that the South African government should take responsibility for providing SMMEs with assistance.
“I would suggest that the government compensate the losses incurred by small businesses. This is a direct cost problem; this is not something that happened sporadically. The government knew that there was going to be load-shedding, they knew that there was not going to be enough power available,” says Nchabeleng.
Chilling Words From The Man Who Broke The Bank Of England
The multimillion-dollar circus called Davos rolled into the Swiss ski-resort yet again, in January, in all its big deal bombast and bean counting glory. This year, African debate was scant: the man who broke the Bank of England foretold of a broken world laden with fear and doom; there was scary talk of cyber terrorism; just another day, another Davos, for the World Economic Forum.
If you want an example of how the dash of Davos can descend into self-parody, you should have taken a look at the huge banner draped across the posh Belvedere Hotel throughout the World Economic Forum in the mountain ski-resort.
It was on the main street through Davos where thousands of delegates slip and slide to scores of functions – with at least one or two slipping over every day – along a line of shops taken over by big money corporate sponsors.
Much more money is being made elsewhere in this ski-resort: the people who live here go away for the week and let out their homes for a king’s ransom; $30,000 for the week is nothing unusual.
Most people saw an irony in the banner, yet clearly the people who spent a fortune on putting it up there couldn’t have.
“Free trade is great,” says the banner on behalf of Brexit-bound Great Britain.
“Didn’t someone tell them they were about to leave one of the greatest free trade zones in the world?” says one passer-by with a cynical chuckle.
The crack summed up some of the irony that swirls around when cohorts of bean counters, highly-paid administrators and bosses gather in an Alpine icebox to solve the problems of the world.
The bigwigs weren’t there and this year, there was less buzz and fewer queues outside the briefing rooms.
Donald Trump, who made a big splash at Davos last year, stayed at home trying to figure out his government shutdown. The four ‘Ms’ – May, Modi, Macron and Mnangagwa weren’t there either; at least two of them tied up with fighting fires, from Brexit to economic meltdown, in their own backyards.
Empty hot seats, at Davos, at a time when the world is crying out for the wisdom of sage leaders.
Instead, it was left to business leaders, like the Australian-born CEO of billion-dollar turnover infrastructure giant Arup, Greg Hodkinson, to cut to the chase.
“We need clear political leadership in this fractured world… otherwise we are going to get easy political leadership preying on people’s fears,” says Hodkinson at one of the first panels of WEF 2019, on infrastructure.
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Hodkinson, who has worked in infrastructure for 40 years, also said investment in infrastructure could no longer ignore the future, or the deteriorating environment.
“Carbon should be priced into infrastructure projects and that will act as an economic trigger for private money to come in because not only will it mean more revenue, it will help us put more money into saving the environment,” says Hodkinson.
According to the WEF Global Risks Report for 2018, some of the top risks by impact are posed by the elements: floods and storms; water crisis, plus earthquakes, tsunamis, volcanos and electric storms.
“By 2040, the investment gap in global infrastructure is forecast to reach $18 trillion against a projected requirement of $97 trillion. Against this backdrop, we strongly recommend that businesses develop a climate resilience adaptation strategy and act on it now,” warns Alison Martin, Group Chief Risk Officer, Zurich Insurance Group, in the report.
The money is there, according to Hodkinson, but needs to be channeled with foresight.
“Even if someone is building a car parking garage, I ask what else can they do with it because they won’t need it one day,” says Hodkinson.
“The money is there. Investors sank six trillion dollars into United States junk bonds last year; if investors are prepared to roll the dice on junk bonds, what about infrastructure investment?”
Investors, on this day at Davos, heard that 65% of world infrastructure projects are unbankable without government guarantees. Private money is needed to fill the gaping infrastructure gap, yet negotiations between investor and government officials can prove difficult.
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Just ask Heng Swee Keat, the Cambridge-educated finance minister of Singapore, the former Parliamentary Private Secretary to the father of infrastructure on the industrious little island who harnessed private money for public good – the legendary late premier Lee Kuan Yew.
The finance minister warned relationships between public and private sectors could be “lumpy”.
“I remember a man coming to me and saying he was never going to invest in infrastructure in your country again, I asked him ‘why’ and he said, because the last time we invested and made money the government came back to us and asked ‘why are you making so much money’,’’ chuckled Swee Keat.
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