Integrating youth into the workplace

Presentation to the 25th Annual Labour Law conference

02 August 2012

Deputy Director General: Public Employment ServicesMr. Sam Morotoba

Department of Labour

Presentation Outline

1.Youth Unemployment Challenges

2.Why must we prioritize youth

3.Current Interventions targeting youth

4.Integrating Youth into the Workplace

5. Department of Labour interventions

Unemployment levels: April to June 2012 Labour Force:

•Unemployment reached 4 470 000, which is a decline on year to year comparison as unemployment level

was 4 538 000 in this quarter in 2011.

•Of the total unemployment level, 1 924 000 are new entrants into the labour market..

•1 458 000 of the unemployed are people who lost their jobs.

In this quarter male unemployment is a bit higher that female unemployment.

•Of the total unemployed people 59.3% do not have matric while 33.5% have matric as their highest level of

education.

•Only 6.3% of the unemployed have tertiary education qualification.

•Unemployment is still high among young people as they constitute just more than 3 quarters of the

total unemployment population.

•Of the 4.4 million unemployed 1 291 000 are young people between the ages of 15 – 24.

•1 870 000 young people between ages 25 -34 were also reported unemployed in quarter 2 of 2012 (April to

June is quarter 2 for StatsSA).

•This gives us a total of 3 161 000 young people who are unemployed, making up 70.7% of the total

unemployment level.

Employment Levels: April to June 2012 Labour Force:

•Overall Employment increased over the year from 13 125 000 to 13 447 000 to June 2012.

•Community services was the highest contributor (3 012 000) to employment with a steady increase across the quarters since Q1 in 2011.

•This was followed by Trade with a total of 2 966 000 people employed in the sector in this quarter.

•Finance and manufacturing also added significantly to the levels of employment with 1 737 000 and 1 678 000 respectively.

•However, they both experienced employment decline over the year with manufacturing being the biggest looser as 57 000 employment was lost since June 2011.

Long-term unemployment1 has risen in several G20 countries

Percentage of total unemployment, 2007 Q3-2011 Q32,3

Countries shown in ascending order of the incidence of long-term unemployment in 2011 Q3.1.Persons unemployed for one year or more..2. 2008 Q2-2011 Q2 for Argentina; 2007 Q2-2011 Q2 for the Russian Federation and 2008 Q3-2011 Q3 for South Africa..3. Selected urban areas for Argentina and Brazil. Source: OECD estimates based on various national surveys.

Some G20 countries face large jobs gaps1

Percentage of actual employment, annual averages based on quarterly estimates2,3,4

Countries shown in ascending order of jobs gap in 2011.1.The job gaps at a particular date is defined as the increase in employment required to restore the ratio of total employment to the working-age population to its value in 2007 Q4. 2 Selected urban areas only for Argentina and Brazil. 3 Employment data before 2011 have been adjusted to take account of the introduction of new population estimates from the 2010 Population Census.4. Data refer to persons aged 15-72 for the Russian Federation and aged 15-64 for South Africa.

Source: OECD estimates based on OECD Economic Outlook projections for the OECD countries and national Quarterly Labour Force Surveys for the other G-20 economies.

Policy challenges contributing to youth unemployment

•Rapidly-expanding labour supply that may not be in synch with economic growth and job creation;

•Large youth cohorts that put the education and training systems under significant stress;

•Significant weaknesses in basic or foundation education, including less–than-universal access for

girls, the poor and those living in remote areas;

•Persisting barriers to access to further education;

•A widespread informal economy and, in some cases, significant incidence of child labour;

•Larger rural/agricultural sectors, with sharp disparities between rural and urban areas;

•Weak infrastructure and administrative capacity to support skills development and matching in the

labour market (qualifications frameworks, teacher training programmes, training equipment, career

guidance, labour market information);

•Some of the institutions to support vocational education and training (e.g. unions and employers

associations) may be weak.

2. Why must we prioritize Youth?A smooth transition from school to work is key to giving youth a fair

chance in the labour market

1. Youth face particular challenges in making a successful transition from school to work and laying the foundation for a good career. A successful insertion in the labour market at the beginning of one’s career

has a profound influence on later working life, while it can be difficult to catch up after an initial failure.

2. High youth unemployment and under-employment have negative economic and social effects not only for the individuals concerned, but also for societies, especially when

discouragement and exclusion boils over into social unrest.

3. Equipping youth with skills relevant to the labour market is critical to their success in the labour market and is a key responsibility of the education system.

4. Well-designed vocational education and training programmes can play a key role, providing technical skills and blending workplace and classroom learning to facilitate successful transition

from school to work. e.g. Germany’s dual system provides one well-known example of a successful model.

5. Active labour market programmes, job-search assistance and even learnerships and skills programmes for low‑skilled youth, can make a difference in facilitating the transition to employment for young j obseekers.

Why is investing in youth a policy priority? Skills are crucial for global prosperity

1. Skills are key drivers of the prosperity of nations and the life chances of individuals. The benefits of getting skills policy “right” are high.

2. To be able to deliver effectively required skills, education and training policy must be combined with labour market and other policies that promote the creation of more and better jobs.

3. How policies are implemented and adapted to local economic reality and how partnerships are built among different key stakeholders (social partners, NGOs) are critical for the success and sustainability of outcomes.

4. Countries are increasingly competing on skills, yet the scope for movement of people, goods and services and investment across borders means there are potential synergies to be achieved by having effective skills strategies in place in all countries.

3.South African Policy interventions and programs

• New Growth Path -Confronting Youth Unemployment: Policy options for South

Africa- National Youth Policy and Regional Youth Charters-Government Department and private sector youth, women and people with disability plans.- National social partners coordination structures

• Social Security and Retirement Reform- People With Disability grants- Social Income Grants to impoverished Children and Youth meeting means test up to 18 years.

South African Policy interventions and programs

• Education and Skills Development– Categories of no school fees schools; Bursaries and Study Loan

schemes.

– 1% Skills levy and apprenticeships, learnerships and internship

programs wherein participating learners receive allowances.

Employment Services

Public Employment Services offered free to Work seeker Registration, career counselling & information, recruitment and selection, job matching and have proposed an Employment Services Bill to provide the Minister and the Department with the necessary power to intervene in other areas.

South African Policy interventions and programs

• Special Employment Programs– Funded mainly from workers Unemployment Insurance and

Compensation Fund Reserve Investment, Pensions Funds Bonds, Government grants and procurement

– Public enterprise major infrastructure projects; Sheltered Employment & Subsidized Factories; Social Plan & Training Lay Off schemes, Small Business Development, Cooperatives development, Sports, Arts and Culture etc.

Government Poverty Alleviation Works Programs • Public works programs, Community Works Program, Land

Reform, Working for Water etc, provide participants a standard poverty alleviation income.

Key actions for a virtuous circle of stronger, sustained growth and more and better jobs

4. Integrating Youth into the Workplace

3. Policies to address youth unemployment must be integrated with other Strategies

Policy Interventions: Employers Views re intervention to alleviate youth high unemployment levels

Employers amongst others want:•To be allowed to establish special Social Investment programmes targeting youth, PWD and women. •To introduce new forms of work organisations, distant production process, flexi hours and outsourcing in order to create more employment and to meet the needs of the youth of today. •Governments to increase provision of free employment services for young people in order enable employers to quickly select and place people in employment. •Increased support to a network of small business to development for young people. •increased network that will allow developing countries youth to have access to learning opportunities in developed countries institutions in order to gain experience and knowledge.

Trade Union perspectives to address youth unemployment levels

Trade Unions are of the view that:•There were social, political and economic aspects that must be addressed simultaneously when developing youth employment policies•Companies should resist from compounding the situation by requiring young people to provide proof of unrealistic experience and entry requirements.•The need for a processes to define the concept of unemployment so that interventions can be consistent given that more than 60% people of participate in informal economy. •The need to address challenges posed by very low minimum wages at Industry that discourages people from entering formal employment and also encourages those in formal employment to exit employment to join the informal economy.•Youth Jobs Pact could be agreed to that include discounted wages coupled to skills development, apprenticeships and a minimum floor of labour standards. •Government must target bulk infrastructure investments and procurement as a means to increase employment creation.

 

• Sectors with potential for growth: Climate changes impact on Industries expansion and shrinking. 2030 relative to the business-as-usual scenario

-50-40-30-20-10

01020304050

% deviation from BAU in 2030 Employment Value added

Job reallocation will likely increase more in some countries than in others

• Extra reallocation in 2030 relative to business-as-usual scenario

• Reallocation tends to be larger for energy exporters

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

Extra reallocation relative to BAU in 2030 (scenario 1)(% of total employment)

Labour market reforms to boost job creation

• Some policy challenges:

– Boosting labour demand in the short-run: e.g. net hiring subsidies which support companies that decide to expand their workforce can be a cost-effective way to boost job creation in the short-run

– Promoting adaptability of labour markets: this involves ensuring effective protection of workers while also encouraging firms to hire formally and invest in human capital

– Tackling different dualisms: temporary/permanent; formal/informal; urban/rural; youth/older)

Effective social protection

• Providing adequate safety nets while minimising benefit dependency:– Adequate safety nets to support job search and

prevent the risk of poverty and exclusion…

- combined with enforced job-search requirements and effective re-employment services

– Adjustment of max duration of UBs during major downturns should be considered

– Social assistance targeted to those in need can go a long way in reducing informality and promoting long-term investment in human capital and health of children.

Activating the job seekers

• Access to safety nets has increasingly been made conditional on an active job search, following the “mutual obligations” principle

• …but identifying effective re-employment programmes for the unemployed is not easy– Job-search assistance programmes tend to be most

cost-effective – Training programmes work best when they are carefully

tailored to local or national labour market needs – Given administrative capacity can we also consider

make participation in programmes compulsory after a certain period of job search

Human capital investment

• Key to promote employability in the formal sector and contribute growth framework

• Need to adopt a “life-cycle” approach:– Promoting early childhood education and care;– Improving the quality of learning provision and equality

of access;– Strengthening vocational education routes (e.g. dual

schooling systems);– Facilitating STW transitions via e.g. apprenticeships – Tackling skills mismatches;– Expanding skill investments in mid-career.

Department of Labour interventions to assist companies to employ people including youth

Employment Services Bill 2010

•Free Employment Services Provision

•Registration of workseekers & vacancies, Job Matching, Career Counselling

•Employment Schemes

•Labour Migration Management

•Regulation of Private Employment Agencies

•Promotion of Employment of People with Disabilities

•Productivity promotion

Unemployment Insurance Fund and Compensation Fund investment with the PIC and other Labour Law amendments.

THANK YOUTHANK YOU

Deputy Director General: Public Employment ServicesDeputy Director General: Public Employment ServicesMr Sam MorotobaMr Sam Morotoba

Tel: 012 309 4782Tel: 012 309 4782Fax: 012 320 0792Fax: 012 320 0792

Email: sam.morotoba@labour.gov.zaEmail: sam.morotoba@labour.gov.za