By Prof. Busisiwe Mavuso
- Treasury is righting the fiscal ship: debt is stabilising and the deficit is narrowing, which gives investors the confidence to back South Africa.
- Growth matters because it creates jobs, and youth employment is now a shared priority for business and government.
- Our skills system is not set up to deliver what employers need, so businesses cannot fill roles while young people cannot find work.
- Paying for jobs instead of certificates works: Jobs Boost placed 7,000 young people in formal jobs at a fraction of the cost of a Seta learnership.
- The BLSA Reform Tracker quarterly review will be released on Wednesday, showing a step up in momentum across more than 200 reforms being tracked.
Last week’s medium-term budget policy statement confirmed my expectation that National Treasury is righting the fiscal ship. Debt-to-GDP stabilised at 78.4% in 2025/26 and is now projected to decline, while the budget deficit is narrowing to 3.9% of GDP this year. That is a hard-won achievement and Treasury deserves credit for it. The risk of fiscal calamity has receded, giving investors greater confidence to put their money at risk and back South Africa for the long term. That is what enables growth.
Growth, ultimately, is the point of sound fiscal management. And growth, too, is a means to a more important end – ensuring our citizens have access to good jobs and can live good lives. Employment, especially, is the prize business is focused on, and I know many in government share that focus.
The business-government partnership has a dedicated workstream focused on youth employment, and several initiatives are under way. Last week Harambee hosted the SA Youth National Leadership Convening on Youth Employment, with the Presidency, Business Unity South Africa, the Department of Employment and Labour, the Department of Higher Education and Training and the Youth Employment Service (YES) as partners. President Cyril Ramaphosa, several ministers and about 250 leaders from business, government and civil society attended. The convening examined several successful youth employment initiatives and how to scale them to find faster solutions to our youth unemployment crisis.
Part of the plan is to drive a demand-led skills revolution. I often hear from business leaders that they struggle to find the right people for the roles they have available. As a result, we sit with two market failures – on the one hand, businesses that cannot grow because they cannot find people with the right skills and, on the other, people who cannot find work. If we can ensure that people are given the skills that companies actually need, we can solve two problems – enabling businesses to grow and enabling young people to get jobs.
But our current skills system, ranging from technical and vocational education and training (TVET) colleges to the sector education and training authorities (Setas) and the rest of the higher education system, is not incentivised to focus on what employers actually need. Imagine if the funding that a TVET college received was indexed to whether its graduates actually got jobs. That sort of incentive would lead to different behaviours, starting with engaging employers to understand exactly what they need and then shaping the training they do with young people, so it delivers exactly that.
A variety of this approach has already been pioneered by the Presidency working with the National Skills Fund. Under the Jobs Boost Outcomes Fund, skills providers received 80% of their payment only if a young person got and held a quality job as a result of the training they undertook. The first phase of the programme, which is now concluding, got 7,000 young people from no-fee schools, with no qualification beyond matric, into good formal sector jobs, and did it at less than a third of the cost of the average Seta learnership. Because the skills providers were at risk if the young people they trained did not get jobs, they focused much more energy on engaging with employers and then customising the support that the young people needed. This is far more effective than handing out certificates at the end of a course, with no guarantee that anyone is actually going to get a job.
Business has also contributed substantially to the YES programme, which is placing 40,000 young people per year with 2,000 companies backing it. It has so far given work experience to 230,000 young people, most of whom are women. The young people it benefits also come from backgrounds that lacked resources, with most having been child support grant recipients. Around half transition into continued employment after their work experience ends.
These kinds of programmes have the potential to make a big difference and show how innovation and partnerships that focus on the needs of employers can create sustainable employment.
South Africa spends a vast amount on education – at 6% of GDP, more than big emerging markets such as Brazil (5.5%), China (4%) and India (4.1%). It also outspends several developed countries. The problem is what we are getting for that money. The fact that we sit with our youth unemployment crisis, despite substantial resources available for education, suggests significant failures in how we do the spending. Shifting much more of that spending into demand-led approaches would get better results, while also unlocking a growth enabler for the wider economy.
Treasury’s success in getting spending under control is only half the battle. In education, as in so many other areas, how we spend matters as much as how much. That is also an opportunity: we can deliver far more for young people without putting fiscal discipline at risk. Government’s programme to professionalise the public service will help by building the capability to design and manage spending that delivers results at lower cost. Business has a direct stake in this. We need skilled people to grow, and we cannot build a prosperous country while so many young people are locked out of work. We stand ready to work with government to make demand-led skills the norm rather than the exception.
