Employment Watch

An ominous trend of better-educated unemployed

Degree no longer guarantees a job
Degree.jpg

In line with a global trend, South Africa is experiencing a growing cadre in its work force of better educated unemployed people, especially amongst the youth.

To extract exact figures and then place them it in proper balanced perspective from the just published quarterly Labour Force Survey (LFS) by Stats SA is not easy. The world of statistics with its wide variety of statistical models and percentages not always reflecting other crucial factors like social and racial diversities can be confusing.

One thing that does, however, seem to be clear is that at least in the order 400 000 of South Africa’s officially 5,23 million unemployed are people who are in possession of a tertiary qualification. To this can be added that, in line with improved levels of education, more than 1,3 million of the unemployed have at least a matriculation certificate.

There is broad consensus amongst experts that this situation represents a ticking time bomb in our society.

As far back as 2012 labour market analyst Loane Sharp warned that university degrees or diplomas no longer ensured a job for young South Africans and that about 600 000 university graduates are languishing at home, unable to put into practice what they have learned.

“A growing army of unemployed graduates are now forced to either rely on their families to support them or find jobs as unskilled workers, such as waiters, clerks and office assistants,” she said.

At the same time the employment consultancy Adcorp’s Employment Index revealed that South Africa’s tertiary institutions are failing to produce enough graduates in business-related fields, despite the demand for such skills.

Global problem

This is, however, not a problem restricted to South Africa or even developing nations, where in Kenya for instance 80 000 applications were received recently for 1 000 advertised positions with many degree holders applying for clerical jobs requiring lower level qualifications.

The latest Australian graduate survey found that only 68% of bachelor graduates from the class of 2014 had a full-time job four months after graduating, the lowest since the survey started in the 1980s.

Similar to the situation in South Africa the Australian youth unemployment rate is also double the country’s national average and the average starting salaries have declined for younger graduates who do find full-time jobs.

A report by the International Labour Organisation (IOL) has also found that world-wide the unemployment rate among 15 to 24-year-olds of 13%, or 74 million youths, is set to rise even if those who have stopped looking for work are excluded from the figures.

Globally the youth represent 25% of the total working age population, but make up 40% percent of the unemployed at a rate almost three times higher than the rate for adults.

For the first time ever a “World Youth Skills Day” was declared by the United Nations on July 15 this year. By implication identifying one of the core problems with the high global youth unemployment rate, the special day was created to help foster the education of vocational skills to the youth.

According to a BBC report of a year ago rising joblessness among new university graduates in China and India is creating “an army of educated unemployed that some fear could destabilise these huge economies.”

Roots of the problem

In an article on the subject of the growing number of graduate unemployment Financial Times Magazine last week posed the question: “…are the students that we keep packing off to college really getting the training they need to find jobs?”

Noting the fact that record numbers of students in the Western world are graduating it refers to a report by consulting firm Mckinsey that found that “40% of companies in places such as the US (and even Germany) say they cannot get enough staff with the correct skills. Or, as McKinsey argues, there is a chronic ‘disconnect between workers and work’ — and between education and work.”

Interestingly however, in one of the Western economies that is doing better than most, Germany, still makes use of apprenticeship schemes for labour market related vocational skills.

In line with the global trend at the time, South Africa has also seen the demise of apprenticeship scheme in the wake of the introduction of the Skills Development Act97 of 1998. And, as is happening presently in the United Kingdom, which South Africa mimicked in the 1990s with the establishment of Sector Education and Training Authorities (SETAs) there is a big battle on to get some form of apprenticeships going again.

There are some success stories on this front that are worth looking at. Under the heading: “Apprenticeships Help Close the Skills Gap. So Why Are They in Decline?The Wall Street Journal highlights the US state of South Carolina as a possible case study that can be used.

“Apprenticeships now exist for computer professionals and for certified nursing assistants in South Carolina, where the number of businesses offering apprenticeships has grown to 647 from 90 in 2007. Some 4,700 people who trained in South Carolina's apprentice program are now fully employed,” it is reported.

Conclusion

A warning by the UN correspondent of the Diplomatic Courier, Akshan de Alwis, also holds true for South Africa: “While horrific conflict and financial crises seemingly overshadow the problems of today …, ignoring the youth crisis will have a fatal impact on future economic and political security.”

Also read: Chinese puzzle haunts SA economy

by Piet Coetzer

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