Situational Analysis

Contents

Acronyms........................................................................................................................................3

1. Introduction.............................................................................................................................5

SECTION ONE..................................................................................................................................6

2 Underlying determinants of youth unemployment in the country...........................................6

3 Bottle necks with respect to young people accessing the labour market...............................10

Bottlenecks when seeking employment....................................................................................10

Bottlenecks related to self employment....................................................................................17

Bottlenecks related to social factors..........................................................................................18

4 Current legal framework regarding employment creation.....................................................19

Overarching strategies & plans..................................................................................................19

Strategies & Plans linked to Small Business Support..............................................................21

Strategies & Plans linked to Employment Creation................................................................22

Strategies & Plans linked to Training......................................................................................25

The BBBEE Code and the Charters.............................................................................................30

Other possible sources of funding.........................................................................................32

Other policy options to..........................................................................................................32

A summary of the array of policy and programmatic options...................................................33

SECTION TWO...............................................................................................................................35

5 Best practices in youth employment programmes globally....................................................35

6 Review of the types of interventions generally used to link young people to employment in South Africa.........................................................................................................................................45

a. Interventions: Programmes to address the transition to the labour market......................46

i. Secondary School Interventions......................................................................................46

ii. Work Readiness and Placement programmes................................................................48

iii. Occupational Programmes............................................................................................52

iv. Entrepreneurial Development Programmes..................................................................54

v. Public Employment.........................................................................................................57

b. Learning emerging from the SA experience.......................................................................59

i. Recruit young people who have the competence to cope with the programme.............59

ii. Offer information and guidance to learners on what the programme will provide and what opportunities may exist beyond the programme................................................................59

iii. Recruiting young people who are interested in and motivated to take part in the programme...................................................................................................................................60

iv. Address the relevance of learning programmes............................................................60

v. Providing support to enable young people to access formal employment.....................61

vi. Providing support to enable young people to initiate an enterprise.............................61

1

vii. Ways to design Public Works programmes that meet the needs of youth...................62

7 Institutional Landscape...........................................................................................................62

8 Proposal for a possible project...............................................................................................66

References....................................................................................................................................67

Annexure A: learning for future design of youth employment programmes................................71

Include Annexure A

2

Acronyms

AcronymsABET - Adult Basic Education and Training ALMP - Active Labour Market Policies/ProgrammesCA - Chartered AccountantCRM - Customer Relationships Management CV - Curriculum VitaeCWP - Community Work Programme DFI’s - Development Finance InstitutionsDGMT - The DG Murray TrustDOE - Department of EducationDoH - Department of HealthDoL - Department of LabourDPRU - Development Policy Research UnitDPW - Department of Public Works DSD - Department of Social DevelopmentEMS - Economic Management SciencesEPWP - Expanded Public Works Programme ESSA - Employment Services of South AfricaETDP - Education, Training and Practices Sector Education and Training

AuthoritiesFET/FETC - Further Education and Training/ CertificateFIETA - Forest Industries Education and Training Authority GDP - Growth Domestic ProductGED - General Educational DevelopmentGIZ – German Development CooperationHR - Human ResourcesHSRC - Human Sciences Research CouncilIDC - Industrial Development CorporationILO - International Labour OrganisationJASA - Junior Achievement South Africa JET - Joint Education TrustJIPSA - Joint Initiative on Priority Skills Acquisition MATRIC - Matriculation (school completion certificate)MGNREGA - Mahatma Gandhi National Rural Employment Guarantee Act NARYSEC - The National Rural Youth Service CorpsNEETs - Not employed and not in education and trainingNGO - Non Governmental OrganisationNYDA - National Youth Development AgencyNYS - National Youth Service PES - Public Employment Services RDP - Reconstruction and Development ProgrammeSAGDA - South African Graduate Development AssociationSAICA - South African Institute of Chartered AccountantsSAIE - South African Institute for Entrepreneurship SEFA - Small Enterprise Finance AgencySETAs - Sector Education and Training Authorities SMME - Small Medium Micro Enterprises

3

TTO - Triple Trust Organisation TVET - Technical Vocational Education and TrainingUNDP - United Nations Development ProgrammeUNISA - University of South AfricaUYF - Umsobomvu Youth FundYAC - Youth Advisory CentresYIEPP - Youth Incentive Entitlement Pilot Project YPED - Youth Professional Entrepreneur Development

4

1. Introduction

UNDP has undertaken considerable work in the area of youth unemployment in South Africa as well as globally. This learning and research, as well as other relevant research, is analysed and underpins the proposal for a programme to be facilitated by the UNDP to address the issue of youth unemployment.

This paper has the following structure:

Section One Identifying underlying determinants of youth unemployment in the country Identifying bottlenecks impeding youth employment Assessing the current legal framework regarding employment creation in South Africa

Section Two Best practices in youth employment programmes over the world, especially in countries

with similar GDP/youth employment ratios to South Africa. Describes good practice youth employment programmes in South Africa Considers the array of institutions that are implementing and supporting youth

programmes to address youth unemployment A proposal for a programme that could be supported and indicators potential partners in

the implementation of this programme.

5

SECTION ONE

Section One of this paper considers the underlying determinants of youth unemployment, the bottlenecks impeding youth unemployment. It then considers the extent to which the legislative and policy environment that is place addresses these challenges and creates a framework for creating opportunities to address unemployment.

The importance of addressing this imperative cannot be overstated and is illustrated by the following graphic developed by the Department of Performance Monitoring and Evaluation1.

2 Underlying determinants of youth unemployment in the country

This section looks at the underlying determinants of youth unemployment, which are defined as the macro factors that are outside of our control and will not be able to be addressed by within the scope of interventions proposed within this paper.

1 Young people: Moving our South Africa Forward, National Youth Policy 2014 - 2019: NYP 2020, The Department of Planning Monitoring and Evaluation

6

The first and most important explanation for high levels of youth unemployment is slow economic growth in a context of high structural unemployment. Literature that attempts to explain the high overall rate of youth unemployment generally describe the main determinants of youth unemployment as being a lack of demand from the economy – that the level and growth of economic activity has been unable to cope with the supply of new entrants to the labour market (Budlender2 citing Mlatsheni and Rospabé, Altman and Marock (2008); a study completed by the World Bank.3 suggests that the lack of labour demand in markets where economic activity is too slow for job growth or where there is a demand for labour but employers choose not to hire the available labour pool is a key constraint to youth employment).

The extent that this poses a challenge for interventions addressing youth unemployment is therefore seen when reviewing the nature of the economy in South Africa, which is, at present, characterised by low growth and high levels of job loss. The unemployment Rate in South Africa averaged 25.27 percent from 2000 until 2015, reaching an all time high of 31.20 percent in the first quarter of 2003 and a record low of 21.50 percent in the fourth quarter of 2008. More recently, the overall jobless rate in South Africa increased to 25.5 percent in the third quarter of 2015 from 25 percent in the previous period and the number of unemployed rose 3.6 percent.

The disproportionate numbers of youth unemployed relative to overall population is consistent with international patterns where it is also found that “unemployment among young people tends to be more sensitive at the economic cycles than the unemployment among adults, the number of unemployed youngmen (sic) tends to increase faster during the recession periods and to decrease, in the same way, during the periods of economic increase, than the number of unemployed adults. The most studies conclude the fact that the aggregated economic performance represents a decisive factor of the unemployment rate among youngmen. (Blanchflower si Freeman, 2000)4”.

The above-mentioned article suggests that, “the transition from school to the integration of young generation in the work force market represents one of the most critical and pressing problems of work force market functionality, with a significant economic and social impact”5. The import of the education system in determining access to the economy has also been highlighted by numerous research studies in South Africa as outlined below.

Bhorat6 offers a graphical representation of the nature of these youth transitions across the schooling-labour market continuum in South Africa (Figure 1). Figure 1 illustrates that there are a certain number of youth within the education pipeline, and as they progress through this pipeline there are a series of different thresholds (represented by nodal points in Figure 1) where they either exit education and enter the labour market, or continue with their education. The chosen exit point from the education pipeline will ultimately strongly influence labour market outcomes. However, there are a range of factors that influence both the exit point and the labour market outcome.

2 Budlender, D, Research undertaken for the UNDP/ILO/DoL/NYDA, 2012: this paper was phase 1 of a broader research process undertaken by these organisations. This paper is phase 2 of the same research process. It therefore draws on the phase 1 research extensively so as to avoid duplication of research.

3 World Bank (2010) Active Labor Market Programs for Youth in Africa: A Framework for Engagement (unpublished)

4 Determinants of youth unemployment: a survey of the literature, Iulian CONDRATOV , Stefan cel Mare University of Suceava, Ecoforum. Volume 3, Issue 2 (5), 2014.5 Determinants of youth unemployment: a survey of the literature, Iulian CONDRATOV , Stefan cel Mare University of Suceava, Ecoforum. Volume 3, Issue 2 (5), 2014.6 Bhorat, H, Youth Transitions From Schooling to the Labour Market in South Africa: Characteristics, Determinants and Solutions, Concept Note, June, 2015 (Unpublished)

7

The first transition point, represented by node 1 in Figure 1 represents the decision, while in secondary school, to either continue and complete high school or to drop-out from secondary school and enter the labour market. The article uses National Income Dynamics Study (NIDS) panel data, and estimates that between 2008 and 2012, 50.71% of the youth moving through this pipeline dropped out of secondary education7. A further 3.79% of the youth moving through the education pipeline, exit before completing their high school education but then re-enter the education pipeline (represented by node 2 in Figure 1. They enrol in either a National Technical Certificate (NTC) course or some other form of tertiary education that does not require a complete high school education.The third transition point, represented by node 3 in Figure 1, refers to youth who once completing high school, either continue with higher education or enter the labour market. According to the NIDS data, between 2008 and 2012, approximately one in every four youth who were in the education pipeline in 2008, complete their high school education and then enter the labour market.The fourth transition point, represented by node 4 in Figure 1 represents those youth who continued into higher education after completing their high school education. According to the NIDS data, between 2008 and 2012, 19.27 percent of the youth who were in the education pipeline in 2008, entered into higher education. With regard to tertiary education, a distinction is made between youth who dropped out of secondary school before completion and entered into tertiary education that does not require a complete high school education (e.g. NTC), and youth who completed high school and entered tertiary education (e.g. university degree). We identify these separately, as the labour market outcomes differ across these two groups.

Figure 1: Education Pipeline - School to Labour Market

At each of the transitions points, youth move from the education pipeline to the labour market. The labour market outcome can be one of the following: wage employment, self-employment, unemployment and discouraged work-seeker. Ultimately one could then also consider the post-work transitions of the youth who obtain employment after their education. These transitions refer to whether young people can retain their jobs, and if they do, for how long, and whether this leads to occupational mobility and increased earnings (this is depicted in the block to the right of Figure 1)

7 Using NIDS panel data from Wave 1 (2008) and Wave 3 (2012): From Bhorat, H, Youth Transitions From Schooling to the Labour Market in South Africa: Characteristics, Determinants and Solutions, Concept Note, June, 2015 (unpublished)

8

Utilising this framework, the article suggests the e following summarised overview of youth transitions through the schooling system: Of the 100 young people who enter the secondary schooling system, 51 will drop out. In turn, 26 continue onto completing their matric and then enter the labour market. Finally, of the 100 secondary school starters 4 will enrol into the TVET system (without completing high school), whilst 20 of these starters will complete high school and move onto a tertiary institution.

It is expected that the labour market outcome is strongly determined by the level of education of the youth entering the labour market, and hence the point of exit from the education pipeline. This is illustrated in Figure 2, which shows lower unemployment rates for youth who exit the education pipeline at higher levels of education.

Figure 2: Unemployment Rates By Youth Cohorts

63.60

54.48

31.92

24.34

0

20

40

60

Une

mpl

oym

ent r

ate

(%)

Droppe

d out

Comple

te matr

ic

Droppe

d out,

enrol

led in

NTC or

tertia

ry

Comple

te matr

ic, en

rolled

in te

rtiary

Source: NIDS Wave 1 and Wave 3. Own calculations

These finding are reinforced by numerous research papers, which highlight the relationship between education, skills and access to the economy. Rankin et al in their paper ‘Young People and Jobs during the Financial Crisis’ (Unpublished) show that the challenge faced by young people during the financial crisis is the growing skills bias (with Grade 12 increasingly utilised as a proxy for skills) in the South African labour market. Industries that have traditionally absorbed most unskilled entrants to the labour market now have a lower ratio of semi- and low-skilled jobs. The impact of the growing prioritisation of skills affects young people most adversely, because semi- and low-skilled jobs are natural entry points into work. They indicate that an analysis of Labour Force Survey data reveals that the industries that have traditionally absorbed high numbers of unskilled entrants to the labour market are increasingly shifting to hiring more skilled labour: this is illustrated by the calculations that Rankin et al (2012) make, which show that between 2000 and 2010, the ratio of semi- and low-skilled jobs to skilled jobs fell from 9.6 to 7.1 in mining and quarrying, 5.2 to 2.0 in manufacturing, 17.4 to 4.7 in construction and 7.3 to 3.7 in the wholesale and retail sector. It is indicated that the impact of the growing prioritisation of skills affects young people most adversely, because semi- and low-skilled jobs are natural entry points into work (Rankin et. al., 2012).

9

This section has highlighted that general unemployment can be determinant of levels of youth employment and that education is a key determinant of youth unemployment. This context needs to be borne in mind and it is recognized that if not addressed will continue to result in large numbers of youth being unemployed: however it is suggested in this paper that there are bottlenecks that can be addressed by interventions which would allow a greater number of young people to navigate the labour market. These are addressed in the following section.

3 Bottle necks with respect to young people accessing the labour market

The previous section has highlighted the impact of the economy and education system on youth unemployment. This section focuses more on those barriers or bottle necks that face young people that could be addressed more directly address within the scope of the interventions outlined within this paper.

This paper recognizes that there are a number of factors that could impact on the ability of young people to access work. Critically the data suggests that race, gender, disabilities as well as the urban/rural divide all impact on labour market outcomes. Whilst addressing aspects of this challenge may be beyond the scope of this intervention it is suggested that there are bottle necks that could be addressed that could enable the transition of these different cohorts of young people. For example, research suggests that one of the reasons that young Africans may take a longer time to be absorbed into the labour market than others) is because of their job search skills related to the spatial separation between business centres and the outlying areas where Africans reside as a result of Apartheid planning policies may explain this challenge. Transportation and the affordability thereof could further add to this problem (Banerjee 2008). Recent evidence reinforces this research and also points to the probability of finding employment being strongly linked to family-related characteristics (social networks and belonging to an employed household vs an unemployed household). This is closely related to the ‘insider/outsider’ issues dealt with in more detail in this section. Mlatsheni and Rospabé look at gender issues in the labour market, where they found that only 17-27% of the male/female gap in the likelihood of having wage employment or being self-employed was explained by observable characteristics, suggesting a large element of discrimination. Recent research conducted by the IYF (2015) resonates with these findings but suggest ways in which these attitudes can be addressed through interventions with employers. Similarly young people with disabilities struggle to access the labour market though again programme reports from the Department of Labour suggests ways to overcome these barriers. This is not to suggest that race, gender and disabilities are not critical factors in determining access to labour market, rather it is suggested that in considering other bottle necks there is a need to review these through the lens of these groups, and further that the barriers to enabling access for these groups need to be explicitly addressed within the design of any intervention.

It is also noted that labour law is often referred to as a bottleneck with respect to youth employment. This paper does not focus on the labour legislation per se though it acknowledges that this remains a heated debate. In the following section though there is a discussion about the policies that have been put in place to enable youth employment: many of which serve to address some of the concerns pertaining to existing legislation, for example the wage incentive addresses concerns pertaining to minimum wage for new entrants.

Bottlenecks when seeking employment

10

Other factors that create bottlenecks to youth employment are provided by Marock and Altman (2008) and the World Bank Study8. These Include:

Skills mismatch are the lack of adequate general skills (literacy, numeracy), technical skills, or soft skills (behavioural skills), all of which are identified by employers as necessary for productive employment. It is acknowledged that formal education attainment has already been highlighted as a key determinant to youth unemployment and that these qualifications frequently also serve as a proxy for levels of skills. However it is recognised that there is also the concern that a specific obstacle facing young people is that even with formal qualifications they often lack the foundation skills such as mathematics and English, or other capabilities such as communication or personal presentation and work readiness.

Youth lack job experience. Obtaining a first job is quite a challenge in any context. However, in South Africa it is especially so for historically disadvantaged groups who face the challenge of not having effective labour market networks that can help guide job search behaviour and skills acquisition choices. This issue has since been highlighted in other research documents including: National Treasury which has highlighted that inexperience is a key factor in employment prospects, and suggests that this may explain some of the implicit age discrimination in the labour market (National Treasury 2011).

Job search constraints, including poor information about where the employers (or the employees), also called “matching” and a lack of tools that allow young people to signal their capacities to potential employers. Educational qualifications, such as a matric, operate as a signal for productivity levels in the absence of experience. Without the ability to signal their productivity levels to a prospective employer, young people have no way of showing their suitability for a job. Only completed matric and further qualifications are considered trustworthy by employers in South Africa, hence levels below matric serve no value (Wittenberg, 2002; Duff and Fryer, 2005; Levinsohn, 2007). Young people also lack job search capabilities and networks that are relevant to the labour market.

Youth lack mobility and the resources to look for a job. Related to job search constraints, young people often stay close to home – because of a lack of mobility - where jobs may not be that readily available. Further, as indicated previously transport remains a major challenge for young people.

Social norms, on the labour supply side, where young people may not pursue available jobs due to self-imposed or externally imposed constraints on the types of employment that are appropriate. Recent research by Harambee suggests though that with support young people are able to identify jobs for which they are more likely to qualify. Further whilst reservation wages are often considered a bottle neck to enabling young people to access employment recent studies suggest that these can be mediated and that young women have been particularly open to such feedback9.

The key points highlighted above are given further expression in research about how young people navigate the labour market. It has been well documented that those who are most successful at finding employment have higher social capital (Kraak, 2013; Nudzor 2010; Schoer et al., 2012; Seekings ed. 2012). The concept of insiders and outsiders, and the implications for job search behaviour, is further nuanced in research from Seekings (2012a) where they suggest that in addition to insiders and outsiders there is also a category referred to as privileged youth. Considering young

8 World Bank (2010) Active Labor Market Programs for Youth in Africa: A Framework for Engagement (unpublished)

9 Presentation by Rulof Burger, (with Martin Abel, Patrizio Piraino, Samantha Ndiwalana & Velenkosini Matsebula), Job counselling, productivity signals and employment: A randomised evaluation with the Department of Labour (2015)

11

people in the urban areas, Seekings provides the following definitions in terms of each of these three categories:

Table 1: Categories of Urban Youth

Privileged Youth from more affluent minorities

InsidersYouth from less affluent neighbourhoods, but who share advantages

with privileged peers either through social capital or proximity to employment opportunities

OutsidersYouth from informal settlements, mostly failing to complete

secondary schooling and lack close connections with people who are employed

Reference: Adapted from Seekings 2012a

More often than not, the privileged and insiders are more easily able to find employment while their counterparts, ‘outsiders’, constantly struggle: some can only find interim work, jobs that are unrelated to their field of study or interest and many do this work without an intention of continuing in this employment (Mourshed et al., 2012).

This section explores the strategies that are used by different groups of people and the effect that this has on the outcomes realised – that is their chances of securing employment. The three main employment strategies, or channels, that are pursued by young people are: formal channels, direct application channels and networks. These channels are defined below:

Table 2: Employment Channels

Formal channels Newspaper advertisements, employment agencies and learnerships

Direct application Gate of factories, farms, private homes, as well as waiting at the side of the road

Networks Referrals, making use of friends and family connections

The research suggests that formal channels are more likely to be used by those individuals with higher education/skill levels and possibly some work experience. This provides them both with a basis for developing a CV and applying for a job, and may contribute to an increased confidence with respect to completing a formal application.

The research on the unemployed and their job search behaviours suggests that the majority of unemployed rely on direct methods: it is stated that ‘place to place’ – that is, that young people literally walk from place to place looking for employment (Bhorat et al. 2001; Dinkelman and Pirouz, 2001; Kingdon and Knight, 2001a). However, this method appears to have a very low success rate, and the majority of these young people struggle to gain employment, and remain unemployed.

12

Yet Schöel explains that, as these young people are not embedded in local networks, they have little choice and are forced to engage in direct methods, explaining why this strategy is made use of - despite the limited success achieved with this approach. The research also indicates that searching strategy is conditioned by household structure: That is, those not searching for work live with those not searching for work, and of concern is that these individuals that are not searching for work are more likely to be from larger households, and in poorer households concentrated in rural former homeland areas. This is explained by the reality that these young people have the lowest number of contacts in the labour market as these individuals live in households where there are other individuals who are also not employed and not searching for work. These individuals therefore have the weakest degree of attachment to the labour market (Dinkelman and Pirouz, 2001).

Conversely, those searching for work generally live with others searching for work, suggesting that if an individual comes from a household where individuals are employed, this person is more likely to find employment. Research suggests that there may be multiple reasons for these young people finding employment other than having been forced to look for work by the household: these young people can ‘learn’ lessons as to how to look for work from other household members who can share their own knowledge and experiences about ways to find employment. Further it means that there is a job search culture in the home and others in the household may have used networks as a job search strategy (Schöel 2006).

Critically these young people have access to contacts in the labour market and can therefore make use of the third channel; that of using networks as a strategy. This third channel is thus reliant on being embedded in a locally defined social network and having a high level of household employment and local contacts, which explains why the young people who rely on social networks find themselves in households where other household members are more likely to be employed as this enables the jobs searcher to rely on friends and family to gain access to the labour market.

These individuals are found to have further levels of success as they are able to make use of a mixed strategy including formal, direct and networks..

The findings highlighted above are considered crucial to understanding the way in which young people navigate the labour market. The relative success of each of these channels is highlighted in the table below which shows the results of four studies into job searching behaviour conducted in the last decade. The figures indicate the percentage of respondents in each survey who successfully used the three main employment channels to find work10:

Table 3: Employment channels: various South African surveys (2000–2006) (%)KMP (2000) CAPS (2002/3) DV (2004) SAYPS (2006)

Formal 14 % 16% 28% 22%Direct 20% 16% 27% 14%

Networks 66% 68% 46% 64%Sources: As extracted from Scheor et al. (2012) Khayelitsha/Mitchell’s Plain (KMP) survey, Cape Area Panel Study

(CAPS), Duncan Village East London (DV) survey (Duff and Fryer, 2005), and South African Young People Survey (SAYPS).

The above highlights the importance of networks in accessing employment, and the relatively mixed results experienced in terms of the other channels (noting that Duncan Village results show greater levels of success in formal channels, and relatively lower in networks). This finding was further emphasised by Schöel (2006) who, using econometric analysis, demonstrates that the lack of

10 This is the most recent data there is, however it is consistent with more recent data pertaining to the way in which employers recruit suggesting that the findings from these research processes remain valid. This is further supported by anecdotal evidence pertaining to the way in which young people access employment.

13

social capital restricts individuals in their search techniques and that those with contacts in the labour market increase the likelihood of using social networks than using active search techniques (direct and formal).

The importance of networks reinforces the issue highlighted in the introduction to this paper which pointed to the disparity between ‘insiders’ and ‘outsiders’, as discussed above. The extent to which young people have access to networks is largely contingent on the background of the individual and particularly factors such as the number of individuals that work within their household and immediate community, as well as their access to resources.

The research by Seekings (2012a), uses the Cape Area Panel Study data, and suggests that more affluent minorities belonging to the urban privileged category typically first find work whilst at school or college generally in restaurants, guesthouses, weekend craft markets and shops. These individuals describe finding casual work as easy, ‘as long as one is not too selective’. They take the approach of ‘starting low’, doing odd jobs, and then working their way up. Most of these young people secure work through connections, through people they know. These people understand that sending a CV to a company won’t secure a person a job, and that there is a need to speak to the manager on a personal basis. The research suggests that they understand that there is a need to give a personal display of trust and affirmation. For these people, having an education was not as important to their ability to get their first (often casual) job, as was their understanding about how the labour market works: what employer’s value, and how to ‘sell’ their labour or services. Fundamentally, they understand what constitutes a ‘work ethic’, and their expectations are matched in terms of earnings and the work that is required of them.

Urban insiders are less likely than the privileged category to gain much work experience whilst at school, but having left school they move from job to job, trying them out, before settling on what seems like a long-term opportunity. Their first work tends to be for larger firms, as compared to their more privileged peers, and more often in sectors such as retailing and services rather than in manufacturing (Seekings ed. 2012). They too access jobs through connections, but their connections tend to be employees at these firms rather than owners or managers.

These two groups of people have the advantage of knowing people in the labour market - particularly the ‘right’ kind of people. Either they know owners of companies, or people that work within companies where they could find employment. Privileged youth directly know owners/managers of smaller firms while the insiders know a number of employees who already work at larger firms. Existing employees provide recommendations, and pass on useful information on potential vacancies.

Urban outsiders differ quite considerably from the urban privileged and urban insiders as they lack the initial advantage of possessing social capital, which is difficult to acquire without attending the “right” schools and social clubs, or living in a particular neighbourhood. These individuals struggle to find employment; and consequently fewer have held any sort of job. Those who have dropped out of school have expressed the desire to obtain additional training and access to decent jobs, but research suggests that they lack any sense of how to navigate into the labour market. As outsiders, they lack the skills to approach a manager and demonstrate that personal affirmation of trust, which the affluent so easily manage. In the absence of options, these young people resort to sending out CVs and going door to door in hope of someone employing them, despite the evidence that this is an ineffective searching mechanism (Schoer 2006, Duff and Fryer 2004).

Of equal concern for this study is the finding that suggests that many young people (outsiders) do not always engage optimally with the opportunities that actually exist (Bernstein 2012). This is

14

evidenced by the research from both Cape Town and rural KwaZulu–Natal which suggests that some young people will not accept jobs that are perceived to pay too little, or that offer little employment security (Bernstein 2012; Seekings 2012). It was found that, extending the definition of ‘outsiders’ offered by Seekings, specifically young men from rural KwaZulu – Natal, frequently walk away from low-paid jobs despite the mass unemployment surrounding them in their communities. This is supported by qualitative research undertaken, which also shows that some young people would not take low paying jobs, such as a domestic worker, but would rather seek high paying jobs. These studies conclude that the reservation wages set by young people for formal employment is higher than is likely to be earned (White, 2012), and that if the job is not what the young person is looking for, the young people (‘outsiders’) would prefer to wait for the ideal job rather than gaining work experience in a less than ideal position (Bernstein 2012 and Mourshed et al., 2012).

This research is also evidenced by the CAPS data, which reveals that unemployment is not exclusively a result of the inability to find work, but that it also relates to young people selecting to leave employment for a number of factors. This includes reasons such as pressure in the work place, caused by the type of job (such as the pressure to meet sales targets or undertaking heavy physical labour) or because of personal reasons (such as conflict with the manager): it was found that individuals leave expecting to find a role elsewhere, again demonstrating ‘outsiders’ lack of understanding of, and inability to, navigate the labour market.

Related to the above, studies found that rural youth express less of a desire or willingness to take active measures, which would increase their chances of employment, such as studying further, or gaining experience in other areas. Rural youth feel time is better spent staying at home and maintaining close ties with friends and relatives able to support their basic needs as opposed to doing a job that is ‘not worth their time’ (Bernstein (2012), White ed. (2012)).

Based on the above it is suggested that ‘outsiders’ tend to restrict their choices based on their ideal job preference. The research suggests that ‘outsiders’ choices are not based on an understanding of what is needed to navigate the labour market, or an understanding of the importance of gaining work experience in any work that is available. It is suggested that this decision-making process is related to a lack of understanding as to what is possible to attain, and a tendency to overestimate their chances of finding work (and in particular to find work that they feel is more favourable to them). That is, there is a disconnect between what the young person wants and what is available.

The research suggests that this may be because these young people have no (or little) experience of working and often know very few people who have successfully looked for jobs – there are no, or insufficient, ‘models of success’ for them. Young people, and first time work seekers, have to contend with starting off at a disadvantage of not necessarily knowing what employers are looking for. Specifically, they do not know enough about how the job market works.

The findings of the research into ‘outsiders’ work seeking behaviour is seen to be in stark contrast to the behaviour of ‘insiders’, who have more insight into the functioning of the labour market and recognise that as it is a tough space to navigate, there is a need to acquire an advantage in this search, which includes attaining experience in the labour market.

This section illustrates that young people who are ‘outsiders’ therefore are further disadvantaged as they lack an understanding of the way in which they can acquire the characteristics that employers value, such as work experience. They may also not have realised the need to focus on achieving higher grades at school or on attending training.

15

As indicated previously, over the last decade the labour market has changed in that the ratio of semi- and low-skilled jobs (as compared to skilled jobs) has declined across all sectors, except for the community/social/personal services sector. Research has found that in high productivity jobs11 where more specific characteristics (including higher levels of qualification) mean a smaller pool to choose from, it is more likely that firms invest in more formal recruitment channels which ensure that effective screening methods are used, such as interviewing and testing. This process will also review the level of education that the applicant has and will consider their CV against set criteria.

However, in relation to low productivity jobs (differently termed as low skilled jobs), employers are more interested in those that ‘show potential’ for a specific role. In these cases, it was found that firms are likely to use channels which still produce relatively reliable information about the applicants’ productivity levels but which are less costly: this includes network channels where they rely on referrals made by their own workforce (Rees, 1966 and Schöer & Leibbrandt et al, 2012 and Rankin et al, 2012). This is achieved by use of ‘word of mouth’, and employers indicate that this strategy provides a filtering mechanism because existing employees are likely to tell only those who they deem to have the correct profile about the job (Rankin et al, 2012). This strategy is chosen as it reduces costs, and because there is a mechanism of trust as it is understood that existing employees ‘pre-screen’ candidates which they put forward for the role.

Employers state though that they experience a challenge in determining which person is most suitable for employment. They indicate that as many young people have not worked before, it is difficult for these young people to demonstrate their productivity levels, as the qualifications and results achieved by school-leavers is not considered to be a reliable signal of the relative merits of those applying for jobs. To overcome this asymmetric information problem, the research finds that employers often make use of the screening process followed by friends and family as a signal of productivity levels (Seekings 2012).

It was found that with the economic down turn, social networks have become even more important as a method of employment for unskilled workers. In the early 1990s close to 42% of South African firms “relied on friends and relatives of existing workers” to recruit new blue collar workers (Standing et al., 1996: 338). Between 1998 and 2002, this has doubled on average to 85% for unskilled workers in large and small firms based on data from metropolitan surveys by the World Bank.12 These calculations suggest that network channels are by far the dominant method (84%). Direct and formal only represent 10.5% (the remaining percentages are unaccounted for).

Further insights into the manner in which firms recruit, particularly individuals with higher education, is offered by Budlender citing Pauw et al (2006a) reporting on the findings of a survey of twenty large firms operating in South Africa (referred to in Pauw et al, 2006b). The study focused on firms in which the number of employees varied between 2 000 and 40 000, and the sample covered a range of different sectors. The study found that all but one of the firms employed a ‘pipeline’ strategy in terms of which they recruited youth for entry-level jobs, with the hope that they would then move up. However, most of these firms said that they were not able to fill middle- and senior-level vacancies from among existing employees. They also noted that the ‘pipeline’ strategy runs the risk that youth move on to other employers after the first company has borne the costs of recruitment and training. Nearly two-thirds of the firms had bursary schemes that were linked to recruitment, and saw this as a low-risk effort. Some of the larger firms organised recruitment drives on campuses but most felt these were not worth the substantial expense involved. When such drives

11 Whereby productivity is defined as a measure of skill level assuming a higher skill level leads to higher productivity and vice versa

12 Authors own calculations based on unskilled figures taken from World Bank Greater Johannesburg Metropolitan Survey, World Bank Greater Durban Metropolitan Survey, and World Bank Small Medium Enterprise Survey as reported in Schoer, V et al. 2006.

16

were organised, they generally focused on historically advantaged institutions on the basis that the quality of the graduates was better, the desired courses were offered, and these institutions had increasing numbers of black students.

Firms reported particular difficulties in finding black recruits for engineering, science and information technology jobs. They also reported higher turnover than for other recruits when they found such employees. More generally, the research report notes that many engineering graduates may not want to do ‘front-end’ engineering work, but instead will want to do office-based work.

The research explored the firms’ attitudes to, and experience of, learnerships. Generally, it seemed that the learnership system had not encouraged firms to employ more people than they would have otherwise, but instead was seen as a ‘windfall gain’ as they received financial support from government for these trainee employees. Firms reported that one reason that they did not take on more learners than they were likely to employ subsequently (so as to provide training for the labour market more generally) was that they found it unpleasant when the time came to refuse them a job. Learnerships were generally utilised for blue-collar jobs rather than those likely to be filled by graduates, although the researchers observe that learnerships could be used for teaching soft skills to graduates. Learnerships were also rarely offered at middle management level.

The findings from the employers resonate with what was found with respect to the ways in which young people found work: primarily through networks, with those young people who have greater levels of education finding employment through direct methods. These issues, coupled with the greater emphasis being increasingly placed on the need for specific skills and higher levels of education, need to be borne in mind in the formulation of relevant interventions.

Bottlenecks related to self employment

Finally, in looking at where young people who are employed find work, it was found that approximately 80% of employed young people are employees (that is wage earners) and work in formal sector jobs in the private sector (Rankin et al, 2012). Thus conversely it was found that very few young people pursued self-employment as an option.

The limited numbers of young people seeking self-employment is confirmed by other data, which shows that in 2010 there were 1.1% young people classified as self-employed, as compared with 8.8% in the 35-65 year age group (ibid). This low level of participation in self-employment is explained in multiple ways: young people lack the savings and start-up capital and it is hard for young people to access finance without any backing and with no employment track record. Further, they lack the experience and skills gained through work experience and often do not feel confident to attempt a business on their own. In addition research suggests that a young person, entering the labour market, might need to earn an income from early on, yet most start-up businesses take a while before they start to generate profit. Young people also indicate that they would prefer the guarantee of a regular income as compared to the uncertainty related to a new business venture that may initially require sacrifice in terms of income, particularly in the early phases (Rankin et al 2012).

These factors are reinforced by the World Bank Study,13 cited previously, which concludes that the key obstacles to self-employment is that young people lack the money, know-how, and social

13 World Bank (2010) Active Labor Market Programs for Youth in Africa: A Framework for Engagement (unpublished)

17

networks that are the bases for successful small firm start-up and survival.

Bottlenecks related to social factors

In addition to the above-mentioned obstacles to young people accessing the labour market, research also points to the multiplicity of social factors relating to youth that also impact on the ways in which they engage with the labour market. Critically this relates to substance abuse and the related issues pertaining to sexual and reproductive health. These factors are summarised in the diagram below developed by the Department of Performance Monitoring and Evaluation.

18

4 Current legal framework regarding employment creation

The previous sections have highlighted the challenges and obstacles pertaining to youth unemployment. Government, often working with the social partners, has put in place policies to support growth and employment creation that frame a number of initiatives. These either directly speak to, or include provisions for, supporting youth to effectively transition into the labour market. These initiatives include the five Accords, such as the Youth Accord; the Industry Charters and the BBBEE Code; other legislation such as that relating to employment equity and skills development, as well as broader labour legislation; and specific programmes such as the Jobs Fund.

Overarching strategies & plans

The National Development Plan

Cabinet Lekgotla adopted the revised NDP 2030, entitled “Our future-make it work”, on 6th September 2012. The NDP aims to ensure that all South Africans attain a decent standard of living through the elimination of poverty and reduction of inequality. The core elements of a decent standard of living identified in the Plan are described as: housing, water, electricity and sanitation; safe and reliable public transport; quality education and skills development; safety and security; quality health care; social protection; employment; recreation and leisure; clean environment and adequate nutrition.

With respect to youth, the National Development Plan states that many developing economies are experiencing a “youth bulge” and indicates that a large economically active population can contribute to falling poverty rates, though it indicates that much depends on whether this population is activated. The Plan suggests that these changes in demography, particularly the increase in the numbers of people in the working-age cohort, can be a dividend or a burden.

The NDP highlights a number of areas in which there is a need for interventions that specifically target youth: for example, one of the key proposals that they make relates to the need to break the disincentive to hiring young, unskilled work seekers by incentivising the employment of young, unskilled work seekers. They further indicate that there is a need to support small business development and specifically that training should be provided for school leavers and unemployed youth. The NDP also states that the public sector should establish programmes run by well-trained ex-entrepreneurs who have first-hand experience of the sector; the government should incentivise the private sector through tax breaks to set up mentoring programmes; established small enterprises should be offered wage subsidies to take on apprentices and to offer youth placements. The NDP also states that there is a need to provide skills development for students currently in school with a focus on grooming an entrepreneurial attitude. This should include reviewing the curriculum with a view to encouraging entrepreneurial thinking and creating the skills necessary for start-ups. They propose that the review should consider focusing education into technical and academic streams after grade 8, and establishing vocational and technical training for students in grades 9 and 11.

A process has been put in place to explore the implications of the NDP for the medium term in a manner that ensures that there is a focus on key priorities. This is given expression in the revised Medium-Term Strategic Framework.

19

The Medium-Term Strategic Framework

As indicated above, the MTSF has beenrevised taking into account the NDP and the learning from the outcomes. The MTSF represents an integrated strategic plan for the medium term and provides an overarching plan that incorporates the 12 outcomes (discussed below).

The MTSF states that investment in quality education, as well as in skills development should form the bedrock of the government’s approach to addressing the challenges of the youth. It also emphaises that to eliminate structural unemployment will depend to a large extent on the progress made in growing the economy in an equitable manner, underpinned by a growing skills base. The MTSF suggests that in turn, progress in these social areas will contribute to economic growth.

12 Outcomes

The 12 Outcomes outline the key changes that are required in order to achieve defined outputs. Of particular import for this programme are the outcomes that relate to the economy (Outcome 4: Decent employment for inclusive growth) highlights the strategies that government will utilise to support employment creation. Further, the outcome that focuses on skills development (Outcome 5: A skilled and capable workforce to support an inclusive growth path) indicates the targets to be achieved.

New Growth Path

A key output of Outcome 4 was the development of the New Growth Path (NGP). The NGP sets out the key drivers of growth and specifically jobs in the short to medium-term. It indicates that over the short to medium term, it (the state) can support labour absorbing activities, especially in the agricultural value-chain, light manufacturing and services, cost-effective infrastructure. In the longer run, increasingly support knowledge- and capital-intensive sectors. A summary of these key drivers and related jobs are as follows (taken from the NGP):

Infrastructure and spatial development: Public investment can create 250 000 jobs a year in energy, transport, water and communications infrastructure and in housing, through to 2015. The jobs are in four activities: construction of new infrastructure; operation of the new facilities; expanded maintenance; and the manufacture of components for the infrastructure programme. In addition to these four activities, the impact of the massive infrastructure programme on job creation across the economy (“the multiplier effect”) will be substantial.

Agricultural value chain: The NGP targets opportunities for 300 000 households in agricultural smallholder schemes plus 145 000 jobs in agro-processing by 2020, while there is the potential to upgrade conditions for 660 000 farm-workers. Initial projections by the Industrial Development Corporation (IDC) suggests that mining can add 140 000 additional jobs by 2020, and 200 000 by 2030, not counting downstream and side stream effects.

Seizing the potential of new economies: technological innovation opens the opportunity for substantial employment creation. The NGP targets 300 000 additional direct jobs by 2020 to green the economy, with 80 000 in manufacturing and the rest in construction, operations and maintenance of new environmentally friendly infrastructure. The potential for job creation rises to well over 400 000 by 2030. Additional jobs will be created by expanding the existing public employment schemes to protect the environment, as well as in production of biofuels. The Government’s Integrated Resource Planning process (also known as the IRP2) targets for renewable

20

energy open up major new opportunities for employment in manufacturing new energy technologies as well as in construction. In addition, the NGP targets 100 000 new jobs by 2020 in the knowledge-intensive sectors of ICT, higher education, healthcare, mining-related technologies, pharmaceuticals and biotechnology.

Investing in social capital and public services: The social economy includes myriad not-for-profit institutions that provide goods and services, including co-ops, NGOs and stokvels. If the sector grew in South Africa closer to international norms, we can anticipate 260 000 new employment opportunities. The public services can also generate 100 000 jobs in health, education and policing by 2020 as well as substantial opportunities through public employment schemes.

Spatial Development: Rural development programmes can achieve a measurable improvement in livelihoods for 500 000 households, as well as stimulating employment in other sectors. In terms of employment in South Africa, increased export to SADC alone can generate almost 60 000 direct jobs by 2015 and around 150 000 by 2020 with additional employment growth arising from South Africa's position as a financial, logistics and services hub and from collaboration around regional infrastructure and investment.

Strategies & Plans linked to Small Business Support

The key government institutions that provide small business support include the Small Enterprise Development Agency (Seda) and the Small Enterprise Finance Agency (Sefa).

Seda is an agency of the South African Department of Trade and Industry (the dti). Seda indicates that its mission is to “develop, support and promote small enterprises throughout the country, ensuring their growth and sustainability in co–ordination and partnership with various role players, including global partners, who make international best practices available to local entrepreneurs”.

Seda assists individual(s) to develop their business ideas into a business plan. Applicants pay 10% of the costs of the development of the Business Plan and Seda funds the remaining 90%. Seda’s services also include mentorship and training to ensure the entrepreneur is in a position to manage his/her business. Once the Business Plan has been developed, Seda assists and supports the individual(s) registration of the business. Once individuals have a business plan for a viable business they can approach Sefa for finance (discussed in more depth below). Seda has 43 branches around the country, some of which are located next to Sefa offices to assist individuals to make the transition from the one institution to the other easier.

Aside from the services provided to individuals, the organisation has created a programme, which aims “to manage different business incubators, facilitate technology transfer and quality interventions.” This programme is known as the Seda Technology Programme (STP) and as part of this, the Agency has over the years facilitated the establishment of 42 business incubators across the country. According to Seda the incubators are structured so that they provide a more protected environment for emerging small business. Incubators are organized into different sectors14 such as IT, furniture manufacturing, agri-processing and small-scale mining. Those businesses that form part of the incubator are housed in one space where they can access the full range of Seda services such as business infrastructure, strategic guidance, financial and legal advice. The aim is to create an environment of learning and sharing information and experiences.

14 The full list of incubators is attached as Annexure 4

21

SEFA, which falls under the Department for Economic Development, was established on 1st April 2012 as a result of the merger of South African Micro Apex Fund, Khula Enterprise Finance Ltd and the small business activities of IDC. Sefa's website states that its mandate is “to foster the establishment, survival and growth of SMMEs and contribute towards poverty alleviation and job creation.” Sefa provides the following services:

- Finance to SMMEs on a wholesale and direct basis- Business support services and capacity building- Creating strategic partnerships for sustainable SMME development and support- Monitoring the effectiveness and impact of finance provision and capacity development in

the SMME sector

Sefa’s target audience is survivalist, micro, small and medium size businesses and co-operatives; special emphasis is placed on sectors such as services (retail, wholesale and tourism); agriculture; construction (small construction contractors) and mining (small miners). The range of the loans offered is as follows:

Segment ThresholdsSurvivalists and Microenterprises R500 – R50 000Small and Medium Enterprises R50 000 – R5 millionJoint Ventures and Financial Institutions (Wholesale lending) R20m – R100m

Aside from the direct loans Sefa offers, it also works in partnership with the private sector to provide additional financing. Through such partnerships Sefa has been able to support and encourage the growth of small business in a number of sectors including mining, construction and property; agriculture and panel beaters as well as a specific initiative to develop black sugar cane farmers in Mpumalanga and the Pongola region of KwaZulu Natal.

In order to apply for finance an SMME must adhere to generally accepted governance practices; comply with relevant labour laws; have a tax clearance certificate from SARS; have the ability to create new jobs as well as the desired level of development impact15. Sefa will not finance speculative real estate deals or trading, listed companies; loans to refinance existing debts; people under debt review; political or religious entities; companies involved with child labour, arms, gambling or “morally harmful” industries – tobacco, liquor, sex trade.

The one gap that was highlighted with respect to the priorities of these programmes relates to the stage before the individual is ready to develop their business plan. It is possible that Seda could expand its role and include this additional element for youth (possibly with additional resources made available to the programme through the NSF). Other opportunities to provide young people with support with respect to small business development may also be available through initiatives funded by the Jobs Fund (discussed below) as well as the SETA (also discussed below).

Strategies & Plans linked to Employment Creation

Jobs Fund

The Jobs Fund was established by government with the stated aim of leveraging the economy’s capacity for innovation and investment in the generation of sustainable employment. The objective

15 Other requirements include being a SA citizen, being a legally constituted including sole traders with a fixed physical address and operations must be conducted inside SA

22

of the Jobs Fund is to co-finance projects by public, private and non-governmental organisations that will significantly contribute to improving long term sustainable job creation.

The Jobs Fund has a number of guiding principles, which include: Emphasis on sustainable jobs: sustainable in the jobs Fund language refers to a job that

is created and continues beyond the tenure of the grant – in other words, it is not dependent on long-term state subsidies.

Strong emphasis on innovation and systemic impact: The Jobs Fund prioritises projects that demonstrate job creation potential combined with “doing something differently”. This might include new business or training models, production techniques, developing new products, or establishing new markets.

Matched Funding requirement: Every applicant, regardless of whether civil society, private or public sector, must put forward a matched funding contribution to the project in line with the required ratios. For public sector – this is 20 cents for every Jobs Fund rand. The source of this matched funding is closely assessed.

The Jobs Fund has four identified funding windows: Enterprise Development

o This window co-finances innovative business development projects or enterprise support programmes with the potential to create sustainable jobs. The role of the window is to lower the cost and risk barriers that inhibit innovative, private sector-led enterprise models, partnerships, ideas and projects that will directly enhance sustainable job creation.

Infrastructure o The infrastructure window involves the co-financing of critical missing

infrastructure that creates trading opportunities; enhances access to markets; improves the business environment for enterprises and catalyses employment linked investment.

Support for work seekerso This window provides co-financing support to innovative initiatives and

programmes that directly link active work-seekers, especially young people, to formal sector opportunities and employment placement. This window targets initiatives that develop (train, upskill, prepare) and place (in existing vacant positions or in new positions) work seekers in formal, permanent employment opportunities (identified, matched and secured).

Institutional capacity buildingo Funding from the institutional window aims to improve the capacity and

efficiency of public institutions responsible for facilitating job placement, job creation and the functioning of the labour market. Once-off interventions/ projects that will improve operational efficiencies, remove barriers to doing business, catalyse innovation and thereby scale up the potential for job creation will be targeted.

A number of projects are already being supported by the Jobs Fund and it is suggested that certain of these projects, which already have funding, could partner with the UNDP and possibly support interventions identified through this process.

Expanded Public Works Programme (EPWP) and Community Works Programme

In terms of governments’ commitment to job creation, it has supported public employment initiatives over the last ten years or so. One of its key programmes is the EPWP. Documents pertaining to the EPWP state that the programme provides an important avenue for labour

23

absorption and income transfers to poor households in the short to medium-term. The EPWP promotes the use of government expenditure to create additional employment opportunities by introducing labour intensive delivery methods and additional employment and skills programmes for the participation of the unemployed in delivering needed services. An example is the Zibambele programme, an initiative of the KwaZulu-Natal department of transport, which contracts households to maintain rural roads by ensuring good roadside visibility, maintaining the road drainage system and road surfaces, and clearing road verges of litter.

A component of the programme is the provision of performance based incentive allocations to eligible provinces, municipalities and non-profit organisations to incentivise them to increase job creation efforts in expanded public works programmes by shifting towards more labour intensive methods of construction. The disbursement of funds to provinces, municipalities and non-governmental organisations are based on set job creation targets to ensure the creation of work opportunities in the infrastructure, environment and culture, social, and non-state sectors. Issues emerging from these policies

The Community Works Programme (CWP) is one of the programmes within the EPWP and it is implemented under the auspices of the Department of Cooperative Governance. CWP contributes to developing public assets in poor communities. It offers two days of guaranteed work to individuals in the community and in this way provides income security and work experience for participants, and promotes social and economic inclusion.

By December 2014, 159 621 participants were employed at 148 operational sites. It has been indicated that over the medium term, the CWP will provide work opportunities to 255 000 people and will grow the number of operational sites to 348. The project focuses on rural areas though it is also being implemented in urban areas.

National Rural Youth Service Corps (NARYSEC)

NARYSEC was established in September 2010. It states that its goal is to recruit and develop rural youth; and to perform community service in their own communities.

NARYSEC's specific key objectives are:

To recruit unemployed youth in rural areas. To train the youth through Further Education and Training programmes linked to the

identified developmental community projects in rural areas. To develop youth with multi-disciplinary skills through civic education. To increase the number of rural communities receiving support in their self-development

through the Comprehensive Rural Development Programme (CRDP).

The programme intends to work across rural wards. Its aims to work in all 2 920 rural wards and it is intended that the programme will lead to the employment of more than 10 000 youths. NARYSEC's recruitment process insists on 50/50 gender balance per rural ward.

Wage incentive

The wage subsidy has been legislated with the intention of reducing the cost of labour to an employer, which reduces the cost to company. This is seen as relevant as the cost of labour is perceived to be too high to attain full employment (Fedderke, 2012). The subsidy could in effect lower the labour cost, resulting in labour being a cheaper input in the production of goods and services. This in turn provides a compelling incentive to make production more labour intensive.

24

Hence the demand for labour and employment would increase. Research by Rankin and the University of Witwatersrand show that a subsidy improves employment chances by at least 25% (Paton 2013).

The subsidy is available for a maximum of two years for new entrants: Up to 50% of learner stipends are deductible as a special subsidy. For learners paid R2,000 per month this results in a R1,000 per month tax subsidy on your PAYE. Thus far there is still a debate about the extent of the benefits of this subsidy though there is evidence that it is being utilised.

Strategies & Plans linked to Training

The Human Resource Development Strategy

The Human Resource and Development Strategy for South Africa16 outlines how the skills requirements for South Africa will be met. This is set out in eight core commitments (each with associated strategic priorities, strategic objectives, indicators and activities).

Of particular import for this programme are the interventions that relate to further education and training and skills development. Key institutions in this regard are the SETAs as well as the NSF. The former drives the skills implementation in sectors and is central to funding for training within their respective sector. The latter funds a range of skills development initiatives that enable unemployed individuals to access the skills required for the labour market.

The National Skills Development Strategy (NSDS) and related skills legislation

Whilst the HRDSA outlines the broad HRD imperatives, the NSDS focuses on South Africa’s skills development priorities and provides indicators to measure progress in its implementation. These were set out in the first National Skills Development Strategy which covered the period 2001-2005 and were then revised in the second National Skills Development Strategy: 1 April 2005 – 31 March 2010. NSDS III (2011-2016) builds on NSDS II and I and is aligned with government’s strategic priorities.

NSDS III has a number of core pillars: a summary of these strategies include: Sector strategies, programmes and projects (that are aligned to government and

industry development strategies and that are developed with, and supported by, sector stakeholders).

Relevant sector-based programmes addressing the needs of unemployed people and first-time entrants to the labour market will be developed and piloted by SETAs, with roll out being planned, managed and funded, where appropriate, in partnership with the NSF.

Professional, vocational, technical and academic learning (PIVOTAL) programmes. These are programmes, which provide a full occupationally directed qualification. PIVOTAL courses will normally be offered by arrangement between a SETA, an educational institution, an employer and a learner.

Programmes that contribute towards the revitalisation of vocational education and training, including the competence of lecturers and trainers to provide work-relevant education and training, and promote occupationally directed research and innovation.

16 Note that the current document is still labelled ‘Draft’ although it has been taken forward in practice by the work of the HRD Council of South Africa

25

Incentives for training and skills development capacity in the cooperative, NGO and trade union sectors, including community and worker education initiatives, contributing to effective training of youth and adults.

Partnerships between public and private training providers, between providers and SETAs and between SETAs, addressing cross-sectoral and inter-sectoral needs.

An increased focus on skills for rural development to support government’s prioritisation of rural development.

The skills levy, which represents the 1% of payroll that employers are required to pay, funds the skills system. This money is allocated to SETAs and the National Skills fund to fund the NSDS as well as the Sector Skills Plans emanating from the SETAs. Of import is that it is noted though that at the point of this paper there is a discussion about the restructuring of the NSDS and the SETA landscape: this includes the manner in which the levy is allocated and can be utilised. 17 The conclusions of these discussions will have implications for the above and in particular for the way in which this intervention can engage with SETAs and funding for skills development in the future. As the process is currently on-going the final agreements will be captured as a post-script to this document so that it can be considered in the financing of the proposed projects

The Accords

There are five Accords supporting employment creation, these include:

Basic Education Skills Development Youth Accord Local Procurement Green Economy.

For the purposes of this paper the skills development accord and the youth accord are discussed in more detail though a high level summary of the other three are included.

Basic Education Accord Focused on enabling the social partners to adopt historically disadvantaged schools and to support other programmes geared at systemic improvements in the basic education system. As shown above, weaknesses in basic education are major contributory factors to youth unemployment, and improvements in the education system can only assist in supporting youth to transition into employment.

Local Procurement Accord The intention of the Accord is to stimulate the domestic economy by encouraging local procurement. It is suggested that this will lead to greater numbers of job opportunities in general, which will have a spin off effect on employment opportunities for young people. This issue was then reinforced in the youth accord, which highlights the need to support young people to initiate and develop enterprises.

Green Economy Accord This Accord has specific targets for the training and employment of young people, specifically in relation to the manufacturing and installation of solar-water heating systems, where it is specified that at least 80% of new employees in this area will be young people.

17 Department of Higher Education and Training, Government Gazette, 10 November, 2015

26

Skills Accord

To support the achievement of the outputs outlined in the National Skills Development Strategy and the Delivery Agreement, and to further involve the social partners in this work, a Skills Accord has been developed which has been signed by all the social partners. This emanated from the NGP, which proposed a development policy package that focuses on “stepping up education and skills development” with a particular focus on: Engineers; Artisans; Workplace skills; Further Education and Training (FET) Colleges and professionals, technicians and ICT skills. The Skills Accord took this further and outlines commitments in eight key areas: these 8 commitments and a summary of related targets agreed upon include:

Expand the level of training using existing facilities more fully: employers - in collaboration with SETAs - commit that 30 000 new artisan learners will enter training this financial year. This target includes 31% government sector (Defence, Local government etc.), 13% SOEs (Eskom, Transnet etc.) and the balance of 56% coming from the private sector.

Make internship and placement opportunities available within workplaces: Companies will annually make 12 000 placements/internship spaces available for students who complete their certificates at FET Colleges, 5 000 internships for 3rd year students at Universities of Technology who need the work experience as part of their qualifications, and opportunities for training exposure in a work environment for at least 16 000 lecturers at FET Colleges. This will be phased in, with 20% of the target to be achieved in 2011, 50% in 2012 and 100% from 2013.

Set guidelines of ratios of trainees: artisans as well as across the technical vocations, in order to improve the level of training: Businesses should set targets of the ratios of trainees: qualified personnel they should have, in order to ensure that there are sufficient numbers of persons in the training pipeline.

Improve the funding of training and the use of funds available for training and incentives on companies to train: Business should improve spending on training -beyond the 1% compulsory training levy - to between 3 percent and 5 percent of payroll (total salary bill) on training. Further, the NSF will be used to support skills that address the priorities of the new growth path. Business and labour commits to ensuring that part of the Mandatory grant (10%) is used for funding workplace training for university of Technology students as well as FET college graduates. All parties support the commitment by government in the new growth path to revise the Broad-based Black Economic Empowerment scorecard to give more prominence to training and skills enhancement.

To set annual targets for training in state-owned enterprises: For state-owned enterprises as a whole, at least 20 000 persons will be enrolled as apprentices and learners between 2011 and 2015.

To improve SETA governance and financial management as well as stakeholder involvement: Business and labour commits to improving the seniority of their delegations to SETA Board meetings.

To align training to the new growth path and improve Sector Skills Plans: A review of all Sector Skills Plans will be undertaken to ensure that they focus on skills development that is aligned to the new growth path and its manufacturing-driver, the IPAP 2 and that they set targets for skills required to improve industrial and workplace performance and in particular for the number of apprentices to be enrolled in each sector, as well as the training of professionals and training programmes that leads to a qualification. It further indicates that workplace skills plan requirements will be incorporated into the Sector Skills Plans to ensure that these are aligned to the national goals set out herein and that training practices are transformed in South Africa’s workplaces. The SSPs should then set

27

out a funding plan to support the targets set out in such Sector and workplace Skills plans and parties will work closely with relevant government departments.

To improve the role and performance of FET Colleges (now TVET Colleges): The parties see value in a programme that encourages businesses to ‘adopt’ FET colleges. Business commits to working with FET Colleges to: Develop a plan for workplace exposure for FET college lecturers (this is seen as crucial particularly in the engineering sciences and in other scarce-skill and rapidly changing areas); Support efforts of engineers on their payroll to teach either part time or as guests, at FET colleges; Offer support, such as sponsoring machinery for the training laboratories in their adopted colleges.

The Youth Accord

The Youth Accord is the most recent of the Accords. It was signed on 18th April 2013 at the Hector Peterson Memorial in Soweto by government, organised business, organised labour and community and youth formations. The elements of the Youth Employment Strategy contained in the Accord cover the following areas:

Education and Training:Improve education and training opportunities for the gap grouping between school- leaving and first employment.

Second chance matric programmes for those who did not pass or have poor results Expanding the intake of FET colleges as part of building a stronger vocational and technical skills base among young people to complement the current focus on academic training Developing a stronger roles for SETAs and other institutions to help to address the challenge faced by young people in sector and workplace programmes Expanding the target in the National Skills Accord, including for the State –owned Companies

Work exposure: Connect young people with employment opportunities; through support for job placement schemes and work readiness promotion programmes for young school leavers and provide young people with work experience.

Build on the labour centres of the Department of the Labour and the career fairs that the government has introduced. This forms part of the development of public employment services in South Africa. Private sector initiatives with employment commitments will be encouraged. All state departments should introduce a focused internship programme, aiming at employing their interns over a period of time equal to 5% of the total employment of the departments State-owned enterprise will develop placement opportunities for FET and University students who need work experience as part of completing their studies. Private sector companies will be encouraged to provide a range of work-exposure programmes, which include vacation programmes, summer internship, job shadowing as well as employment of young people in permanent jobs. Large local companies will be engaged to make firm and clear commitments. Build on successful examples elsewhere in the world of work-sharing18 arrangements. This can ensure that part-time

18 The ILO notes that globally this is referred to as job-sharing as work sharing refers to short-term arrangements, which are implemented to mitigate a temporary decline in production due to unforeseen downturns in a business. They suggest that work-sharing arrangements specifically do not involve hiring additional staff but rather shares the

28

opportunities are made available to work-seekers to increase the number of persons with income and work experience, given that the very exposure to regular work supports and builds further employability.

Public sector measures: Increase the number of young people employed in the public sector, through coordinating and scaling up existing programmes under a ‘youth brigade’ programme.

The following should include clear youth intake targets: The Expanded Public Works Programme as well as the Community Work Programme, which should aim to absorb at least 80% of new entrants from the ranks of young people Rural development programmes, using among others the NARYSEC programme to help rebuild rural communities, assist with rural basic infrastructure such as fencing programme and road maintenance as well as addressing food security programmes. Develop a Green Brigade, focused on the Working for Water, Working for Energy, Working for Fire and other environmental programmes and road maintenance as well as expanding food security programmes Health brigades, to expand home- based care as well as health and wellness education to communities as part of the NHI, auxiliary services in health care facilities Literacy brigade, to utilize young people to expand literacy training of adults Other suitable areas of focus as identified from time to time, such as a Maintenance Brigade to undertake small, regular maintenance of assets and premises that are not currently maintained adequately or at all.

Youth target set-asides: Youth target set-asides need to be considered in particular industries, particularly new industries where young people can be drawn in large numbers and should be progressively realised.

The solar water heater installation programme, which should be made a youth focused sector, employing only young people in the core installation activities, and supporting youth cooperatives and youth – owned enterprises as providers of installation services and maintenance for solar water heating programme The rest of the green economy, where at least 60% of the labour intake should be drawn from the young people, and based on realising this target, the parties should endeavour to improve this further to 70% The infrastructure programme, where a target of at least 60% youth employment should be set for new projects and activities, together with training opportunities for young people The Business Process Services sector, which includes call centres, where a target of 80% of new employment should be explored and aimed for.

Youth entrepreneurship and youth cooperatives: Youth cooperatives and youth entrepreneurship should be promoted.

Public agencies such as Sefa, SEDA and the Job Fund will be encouraged to develop and strengthen dedicated programmes for the youth enterprises and youth co-ops. Consideration will be given to the use of the BBBEE Codes to strengthen private and public sector commitment to improve youth employment. The state can assist in a number of ways, including:

available work with existing staff in order to avoid lay offs.

29

Simplified registration of co-operatives and youth enterprises Technical support in enterprises development Support with demand for products, eg school nutrition programmes and procurement programmes Funding support that can complement private sector finance

Private sector measures: Work with the private sectors to expand the intake of young people, with targeted youth support and incentives approved by all constituencies.

It is important to improve private-sector youth absorption given that most sustainable new jobs are expected to be created in the private sector.

Business organisations have endorsed the youth employment strategy as a practical and concrete way in which partnerships can be developed. They will undertake discussions within their structures to identify specific actions that can be taken to improve youth employment.

It is agreed that specific measures will be developed by the end of March 2013 to give effect to this, with concrete commitments by the participating companies. It is agreed that such specific measures will be developed and announced by national youth month, June 201319.

The BBBEE Code and the Charters

The amendments to the BBBEE Act and the Codes fundamentally change the BBBEE framework and is an expression of the Government’s intention to promote and implement BBBEE. Up to now Government policy has been based on the “voluntarist” principle that the manner in which a firm applies BBBEE is to be decided by the individual firm having regard to its own business needs and that the BBBEE framework simply provides a methodology for measuring the BBBEE rating of the firm. Although the BBBEE Act and Codes did not impose legal obligations on firms to comply with BBBEE targets, a firm’s BBBEE status is an important factor affecting its ability to successfully tender for Government and public entity tenders and (in certain sectors like mining and gaming) to obtain licences. Private sector clients also increasingly require their suppliers to have a minimum BBBEE rating in order to boost their own BBBEE ratings. The new BBBEE framework also introduces penalties in certain circumstances. This is an important departure from previous Government policy.

The amendments to the BBBEE Act introduce a number of new measures including to: establish a BBBEE Commission to play an oversight and advocacy role with regard to BBBEE and investigate complaints relating to BBBEE, BBBEE transactions and “fronting practices; introduce various criminal offences for misrepresenting or providing false information regarding a firm’s BBBEE status or engaging in a “fronting practice”; introduce a statutory right for Government and public entities to cancel any contract or “authorisation” awarded due to false information on BBBEE status; impose an absolute obligation on Government and public entities to take the Codes into account in their procurement policies and in issuing licences and authorisations (previously they were only obliged to do so “as far as reasonably possible”); impose an obligation on South African listed entities to provide a report to the BBBEE Commission on their compliance with BBBEE. All Organs of State and Public Entities are measureable. All Measured Entities that undertake any economic activity with any organ of state or public entity are measureable.

The priority elements of the BBBEE code includes:19 Some announcements have been made with respect to programmes but whilst the date has passed there are no

clear details of these measures

30

OwnershipSub-minimum = 40% of Net Value points = 3.2 points

Skills Development (SD)Sub-minimum = 40% of total weighting points = 8 points

Enterprise and Supplier Development (ESD)Sub-minimum = 40% of EACH of categories = 16 points

Generics must comply with all 3 priority elements

Specifically with espect to skills development the code proposes that the skills development included should:

Contribute to country’s economic and social development goals by developing skills that enrich decent work and sustainable livelihoods

Promote development of industrial skills base in critical sectors (production and value adding manufacturing that are labour intensive)

Support ‘Professional, Vocational, Technical and Academic Learning’ programmes through work integrated learning (apprenticeships, learnerships, internships, professional placements)

Strengthen skills and human resource base to support employment creation with an emphasis on skills development and career pathing.

Skills Development Expenditure includes any legitimate expenses incurred for any Learning Programme offered to its employees as evidenced by an appropriate accounting record.

The following diagram highlights the points allocated in terms of skills development:

The Charters place significant emphasis on the importance of supporting the development of enterprise initiatives, and in a number of charters the net profit after tax to be invested to drive these interventions is indicated.

The Charters also have a number of requirements for business to undertake skills development: in many cases the Charters stipulate an amount, which is over the prescribed 1% skills levy and also

31

suggest a matrix of programmes that can be supported with this investment. These regulations also specify target groups for this skills development, and in particular state that these programmes should be made available to black employees. Many of them also indicate that young people should be beneficiaries of these programmes.

Most of the charters recognise the need to address the socio-economic imperatives of the communities in which their workplaces are based. For example, the Forestry sector outlines the need to provide services and amenities to the rural poor: this includes the provision of housing for workers and their families, support to health and HIV/AIDS programmes, provision of community education facilities, environmental conservation programmes, community training in fire prevention and conservation, and support with rural road maintenance. Quite specifically the charter states that the industry is also aware of the important role of forests in providing livelihood opportunities for poor rural households and makes a commitment to ensuring regulated access to non-commercial forest products such as firewood, building poles, medicinal plants and edible fruits by local communities.

Other possible sources of funding

Corporate Social Investment

In addition to government funding imperatives, there is also substantive funding made available by companies through corporate social investment. These focus on a range of areas related to youth including, but not limited to: Support to and in schools (whole school development, learner support, teacher development etc); Support for FET Colleges (again this includes support for the college, as well as learners and practitioner development), Provision of bursaries; Supporting bridging programmes and academic and psycho-social support programmes for students in universities; Supporting placement into the workplace for new entrants through to the professions; as well as youth development programmes – including those that develop networks and leadership skills.

It was found that many of these corporate funders mobilise other private sector agents to invest in the expansion of delivery – where programmes are found to be successful – and also share their learnings with relevant parties (including social partners as well as government departments). Interviewees suggest that this enables interventions to increase substantially in scale and scope and offer useful learning for other stakeholders.

Other policy options to

Transport and Job Search Subsidies

Previous apartheid laws have meant that over a decade and a half into democracy, residential areas continue to be defined, in the main, by race in South Africa. One of the arguments often made for the economy’s high unemployment rates, is that spatial apartheid does not allow for optimal search behaviour amongst the unemployed. It is extremely expensive for unemployed young people resident in poor communities at the fringes of metropolitan areas or rural areas to go out and search for jobs, this is part of the reason for so many people falling into the ‘not economically active’ category (Bhorat 2012).

A transport subsidy attempts to bridge the gap between outsiders living further away from the market place, by enabling them access to opportunities and making it more affordable to find employment. This is seen as critical as the unemployed are often in on the fringes of metropolitan areas or in outlying rural areas, far from any employment opportunities, and they lack both the

32

networks and skills to access employment opportunities in urban areas. The unemployed in these areas are often too budget-constrained to go out and search for work hence the cost of looking for work is unaffordable. The incentive to look for work is low given the low probability of finding a job coupled with the high cost of transport.

The National Planning Commission is currently exploring the possibility of a transport subsidy and has instituted a randomised control trial to assist government to understand the impact of such an intervention. In addition the possibility of a job search subsidy is being explored which could include transport as well as costs related to Internet usage and photocopying.

A summary of the array of policy and programmatic options

This section has highlighted the policy options that have been conceptualised in South Africa, and indicates additional proposals that are being suggested. The approaches suggested, are consistent with the types of interventions that are suggested by the World Bank. These are included here as a useful summary of the array of options that are available, and the constraints that different choices may address.

33

These options, and the manner in which they have succeeded in addressing the various constraints outlined are considered in the following section.

34

Constraints/ Market Failures

Programmes

Possible short term interventions Necessary longer term measures

Lack of Labour Demand

Low job-growth economy Wage subsidies (employee or employer based)Training subsidiesPublic service/public works programsEntrepreneurship/self-employment programs

Macroeconomic stabilityInvestment climateJob generating growth

Employer discrimination Wage subsidies to employers for hiring target groups Employee mentoring

Labour regulations

Constraints to Self-Employment

Lack of financial, human, and social capital

Comprehensive entrepreneurship programsMicro-financeMentoring between established and new entrepreneursBusiness development services

Financial systemsTVET reformsStronger social services

Skills mismatch Inappropriate general education

Second Chance ProgramsEducation equivalency programs

Education reforms

Technical skills mismatch Training + programsInformation about the returns to technical specialtiesOn-the-job training (Internships, formal or informal Apprenticeships)Accreditation of training centres

Demand driven TVETPrivate-public partnership

Soft skills mismatch Reform teaching methodologies to incorporate soft-skillsLife Skills Programs

Education curriculumTVET curriculum

Job matching Job intermediation centresJob counsellingFinancial assistance for job searchMedia and traditionally based information

Labour market reforms

Job search constraints

Signalling Skills certification Training centre accreditationSecondary school diplomas

TVET reformsPrivate-public partnership

Social norms Social constraints (external or self-imposed)

Beneficiary targeting scheme to bring adolescent girls and young women into the programsHome-based work, Flexible work hoursChildcare options and other social support systemsTraining in non-traditional skills Adjust program content/ structure to account for initial differences

SECTION TWO

5 Best practices in youth employment programmes globally

This section considers the key learning from international programmes about ways in which to support youth employability. The lessons, which are drawn from evaluations that have been completed for these programmes, are categorised according to emerging themes. In many cases, the evaluations focus primarily on impact, and the team has had to try and distil the lessons.

The selection of programmes that were reviewed were those that are focused on young people and that fall within the following categories:

• Improving secondary school learner competence / second chance programmes• Work readiness and placement programmes• Occupational programmes• Entrepreneurial development programmes• Public employment or deployment programmes

The review identified programmes that had been well documented and that had completed an

evaluation that was accessible. In addition an attempt was made to ensure that the programmes were representative of developed, transition (new European countries) and developing countries. However, it is noted that there is variability in availability of evaluative, reliable data across programmes. The programmes selected for analysis within this research were based on the need to understand how programmes fare in countries that have experienced the broad range of constraints identified in the table and therefore this report covers a broad range of associated programmes, also they had reasonable evaluative data that allows an analysis of the effectiveness thereof in addressing constraints.

The table below indicates the programmes that were selected for this overview:

Table 4: Outline of Selected International ProgrammesCategory Country Programme

Second chance programs

USA Job Start

Denmark Youth UnemploymentProgramme

Portugal Inserjovem

USA Youth Incentives Entitlement Pilot Project

Chile Chilecalifica

35

Category Country Programme

Multi-Service Programmes, incorporating

Occupational Training Work Readiness and Placement

Chile, Peru and Argentina Jovenes Programs for Comprehensive Job Training

Dominican Republic Youth Training ProgrammeEl Salvador, Peru, Paraguay, Panama, Brazil, Colombia, Venezuela, Dominican Republic, and Bolivia

Entra 21 (internships)

Belgium First Job Initiative

UK Job Centers Plus, New Deal for Young People in the UK

US Jobs Corps

Employment subsidies Czech Republic Job Brokering

Bulgaria Subsidised employment for young long-term unemployed workers

Belgium Subsidised employment for young long-term unemployed workers

Australia Special Youth Employment Training Program

Training Subsidies Kenya Jua Kali

Public Works / Deployment programs

Bulgaria Temporary Employment Programme

Jamaica Youth Service

Youth entrepreneurship

Peru Young Micro Entrepreneurs Qualification Programme

Indonesia Youth Professional Entrepreneur Development (YPED)

The learning from the selected programmes is captured below, organised into key themes:

Theme 1: Targeting strategies

a) Targeting Strategies must ideally be geared to preventing long-term unemployment

Generally, international programmes to enhance youth employability state that they place emphasis on the importance of enrolling youth in the programme before they have spent too much time in unemployment. The priority of the programme is to then ensure that the barriers that young people experience in accessing employment are addressed; so that when the programme is completed the young person is no longer unemployed. These two conditions are seen as critical for preventing long-term unemployment.

36

However learning from these programmes suggests that the effectiveness of targeting may determine the extent to which the programme succeeds in the above- mentioned objective, that is, that of addressing long-term unemployment.

Effective targeting focuses on ensuring that the programme reaches the appropriate groups of disadvantaged youth and, of equal import, that the programme ensures that the interventions are suited to addressing the needs of these groups in the particular context concerned.

Targeting strategies vary significantly across countries: In many European countries the target is youth who need to make the transition from education into the labour market and/or those youth who have been in the labour market but are now unemployed and have been for an particular length of time.

For example, in the Belgium First Job Agreement programme, preference was given to those youth who had been in unemployment for less than 6 months: this was a departure from previous strategies in the country which tended to focus on long-term unemployed and represents the growing understanding of the importance of intervening early.

Other examples include the Danish Youth Unemployment programme as well Portugal’s Inserjovem: both of which target youth that have been unemployed for 6-months or less.

To enable this target group to move into employment, programmes typically rely on a combination of financial incentives (allowances or stipends), job search skills and employability skills. In the Danish Youth Unemployment programme, specially designed programmes of ordinary education or on-the job training are offered to youth who have fallen out of the education system. This programme lasts for 18 months, during which time youth continue to receive 50% of their unemployment benefits. For Inserjovem, the youth continue to receive benefits as long as they remain in the programme, and the support to the youth continues until they find employment.

In the UK and some European countries, enrolment in these programmes is linked to potential sanctions: youth who are unemployed are required to enrol in the programme or face losing their unemployment benefits. This provides an effective mechanism for “passive targeting”, as youth are enrolled in the programme when they seek to retrieve their unemployment benefits. For example, in the UK, the New Deal programme placed youth in a Gateway period after 6 months of unemployment, during which they receive intensive training or work experience in order to fast track their transition to employment. This programme was ended by the Coalition government in 2011 and replaced with the Work Programme that began in the summer of 2011.

Programmes in countries that are considered ‘transition countries’, such as Eastern Europe and Central Asia, also target unemployed youth with low levels of education. In these programmes they focus on raising the skills levels of this target group: they offer a combination of institution-based occupational training and/or work-based training and/or internships, which are combined with wage or hiring subsidies. They report that this is necessary given the significant barriers to employment in these countries, the level of job precariousness amongst youth and the lengthy periods for which young people are unemployed.

Programmes in the USA are focused on addressing barriers to employment for disadvantaged youth through ensuring youth complete their schooling (such as in the Youth Incentive Entitlement Pilot Project (YIEPP) and JobStart). Here, programmes are voluntary and there is a bias towards self-targeting – they suggest that youth that qualify for the particular programme will be drawn by the specific nature of the service offered.

In the JobStart programme, for example, the programme was explicitly targeted at youth who were between 17 and 21 years of age, did not have a high school diploma or GED, read below the eighth-grade level, and were “economically disadvantaged” (defined primarily by household income

37

or receipt of social security benefits). These explicitly stated criteria attracted the targeted economically disadvantaged youth with low reading skills to the centres. In addition, the reputation of the site in the community and its perceived service focus appeared to have a strong influence on who applied for the program. Those sites with a history of providing basic skills instruction and not occupational training attracted youths who were more interested in GED attainment, while those centres that emphasised occupational skills training seem to have attracted youths who were more interested in job skills and immediate employment than in education.

Similarly, in the Latin American countries, the focus is on assisting young people from low-income families who are less likely to access employment opportunities and who are prone to risk-taking behaviours. Examples of these are the Jóvenes and Entra 21 programmes, which actively target economically, disadvantaged youth. Entra 21 tries to ensure that the youth that it targets apply to the programme, by putting in place a financial scheme that provides an incentive for youth to register in the programme. The agencies reach out to youth from a wide range of geographical areas and make sure they have a presence in each of the communities targeted. In the Jovenes programme, there was a deliberate filtering process to ensure that they worked in those neighbourhoods, which have the highest number of houses operating below the poverty lines.

Although most Public Works programmes are not directed towards youth, they have been widely used to provide short-term opportunities for long-term unemployed that have low levels of education and are at risk, particularly in economies that are in crisis. Public Works projects have also been used in post-conflict countries to stabilise and re-integrate youth who have been victims of conflict. Bulgaria implemented a large-scale Public Works programme (temporary employment scheme lasting 5 months) to try and mitigate the effects of the transitional economy, with low employment opportunities, on sustained unemployment. Its primary objective was to reintegrate the unemployed on social assistance into the labour market, restore work habits and motivation, and reduce dependency on the social security.

The programme was effective in attracting large numbers of long-term unemployed youth through wage and other incentives, but employers reported low levels of productivity and the need to invest substantially in mentoring and firm-level supervision to address poor work habits and discipline at the workplace. Ultimately, however, employment outcomes were low - only 8% of programme participants found employment at the end of the programme.

Public Works have a built-in self-targeting mechanism – by setting the wage offered at no more than the prevailing market wage for unskilled labour, they invariably attract the most disadvantaged groups, although the uptake of the service is generally low. However, they can also have the unintended stigmatising effect on youth who participate in such a programme, which can undermine longer term employability.

b) Providing good information is an effective mechanism for targeting

Both the Latin American programmes and the JobStart programme have demonstrated the important role of providing information in encouraging the targeted group to apply to the programme. These programmes use strong media campaigns, which specifically target youth in their particular communities and demonstrate that if the programme objective and services offered are clearly articulated, individuals will most likely self-target. That is, that articulating the particular set of services that will be provided by these programmes, will more likely ensure that the youth that are being targeted will be most attracted to what the programme offers (and conversely that those who don’t need the programme are unlikely to apply). For example, highly skilled youth are unlikely to enrol in a programme that focuses on developing entry-level skills.

38

The Entra 21 programme ensures it has visibility and had a clear marketing strategy in the communities concerned. This marketing strategy is attuned to reaching disadvantaged youth. In addition, the NGO’s who acted as service providers are well known and respected in their communities. As such it achieves success in reaching its target audience, which are youth that have completed secondary schooling and that are from low-income households.

The Peru PROJoven program, which is a variant of the Jovenes programmes implemented across various Latin American countries, uses dissemination and information campaigns directed to community leaders and local authorities. It also broadcasts PROJoven activities and goals on television and radio, with printed ads in the press, and distribution of pamphlets and other printed materials in localities where poverty rates are higher. They suggest that this allows for a form of self-selection to take place, in that young people that are more motivated, because of a desire to achieve and/or because they are more disadvantaged, will respond to the information about the benefits also the opportunity costs associated with voluntary participation are lower than otherwise would be the case if they had multiple opportunities.

c) Appropriate selection processes

International learning suggests that successful outcomes from youth programmes depend in the first instance on effective recruitment and selection processes. Ideally, youth should be selected on the basis that they are most suited to the programme demands and are therefore most likely to succeed. However, youth programmes face the challenge of having to balance off targeted selection with the equity and access requirements of the programme. Selection is particularly critical in programmes that rely on self-targeting.

In general, the first stage of selection will seek to verify that the young person meets the eligibility criteria (i.e in terms of poverty levels, educational background etc.). This provides the first filtering mechanism in the selection process.

Final selection of participants onto programmes may invariably involve a trade off between equity and appropriate targeting. When seeking to provide training opportunities for youth, it may not be possible to stick closely to the criteria where high levels of inequality prevail. A key challenge here is the tendency of training providers to select the best candidates that meet criteria and more likely to succeed, resulting in particular educationally disadvantaged youth being left out and further marginalised.

It was found that once a programme has established selection criteria, it is important that this is communicated to whomever is undertaking the selection. Experience from the international examples suggest that for example, participating centres/ training providers should be given clear guidelines about the appropriate selection of candidates. This approach can form part of the public tender process and equity requirements can be built into the contractual requirements of the training providers ensuring that these training providers will be unable to or discouraged from unfairly creaming the best candidates and neglecting others.

Further, the Jovenes programmes demonstrates the importance of not allowing training providers to make the final decision on which youth are selected for the programme, as it is in their interest to only select those youth who are likely to succeed which could work against equity requirements. This was also demonstrated in the Peru PROjoven programme: labour offices will pre-select a pool of youth who have chosen to enter particular training programmes on a first-come-first-served principle. This pool, which exceeds the number of spaces available, is sent to the training

39

institutions for final selection. The evaluation found that these training institutions invariably chose those youth who were most likely to succeed in the training – this was known as “cream-skimming”.

On the other hand, the targeted selection in the Entra 21 was driven by the placement targets and was viewed, not as undermining equity, but as a means to prevent dropout and ensure placement targets were reached. Youth were selected on the basis of their motivation and ability to succeed. This was done through a written application, combined with interviews and, where possible, should also include other assessments. These screening processes were time-consuming and presented particular challenges when taking the project to scale.

International learning also suggests that small business selection should be based on those that are likely to sustain businesses and create profitable enterprises. The Young Micro Entrepreneurs’ Qualification Program in Peru is a good example of how pre-selection can operate – though it also highlights the challenges inherent in such an approach. The target group is that of: economically disadvantaged young people; that are between the ages of 15 to 25 years of age; that possess entrepreneurial skills and/or own a small and/or informal business (with less than a year of operation); and, that are residing in the localities targeted by the programme. A jury selected the projects or business plans on the basis of a feasibility analysis as well as a determination as to which businesses promised higher profits. It was reported that this competition intimidated a great number of participants with the result that few candidates submitted proposals. However, the evaluation suggests that this process strengthened the likelihood of successful outcomes.

Theme 2: Programmatic strategies

a) Outsourced trainingEvaluations of youth programmes suggest that governments are moving away from the role of

direct provision of training and focusing more on addressing market failures in information and financing, while leaving more of the delivery to private providers. The rationale for this approach is that it suggested that this market-driven approach can stimulate demand-driven programmes on the part of training providers. The key objective of these programmes is to stimulate an effective market for training, which is geared specifically to the needs of disadvantaged youth. The Jua Kali programme in Kenya is a good example of this, as training providers responded to the particular needs of the enterprises and were competitive in their pricing, although it also proved difficult to manage which opened the door for high levels of corruption.

In another example, it was seen that public tenders were prevalent in the Jovenes programmes. It was found that the public bid process attracted good quality courses at good prices. It was also indicated that a key requirement of awarding the contract is that there must be an internship phase and training providers were therefore incentivised to identify niches markets for skills in order to ensure that they could find internships.

In JobStart, however, the use of outsourced agencies was not very effective, particularly in terms of retention and placement of youth. Many outsourced providers were unwilling to accept the youth as they did not meet their entry criteria. Therefore, occupational training programmes, which were an integral component of the JobStart programme, were not always available to these youth and this resulted in lower participation amongst these youth relative to other youth who were provided such training within the JobStart centres. Furthermore, outsourced training providers appeared to have little incentive for and paid little attention to job placement activities. In addition, placement activities generally were undertaken towards the end of the occupational training component of the programmes, many youth were not given the opportunity to benefit from such placement activities.

40

A further challenge, as found in the Jua Kali project, was the challenge of overseeing outsourced providers. Administration needs to be highly efficient to ensure providers are paid timeously but there also needs to be strong governance to avoid corrupt practices or poor quality on the part of providers.

b) A Skills-First ApproachThere is general agreement in the international evaluations that low education and skills levels

are critical barriers to long-term employability. The bulk of youth programmes therefore focus on upgrading skills. This approach is taken as the evidence suggests that skills-first interventions are suited to disadvantaged youth who lack skills to enter the labour market. It is indicated though that work-first interventions are suited to skilled workers who are job ready.

JobStart and the Chilecalifica programme in Chile both focus on strengthening the foundational skills of young people. Similarly, the Danish Youth Unemployment Plan prioritised human capital investment rather than placement, with the intention of raising the qualification base first. The assumption underlying this approach is that skills will open job prospects, and skilled workers will gain a competitive edge in the labour market.

The key challenge associated with a skills-first approach is to ensure the content (skills and knowledge) and level sufficiently match the demand from industry. For JobStart, the objective is to assist youth to obtain their GED and then do further vocational training. However, while the project was successful in increasing the number of youth with a GED, the participants did not remain in the vocational training for a sufficient period of time to achieve the necessary skills levels for industry. Similarly, some youth were not able to access further training because they did not meet basic requirements for entry as their skills levels were not high enough.

The challenge related to achieving the correct content and level of skills training necessitates closer working relationships between providers and employers, as is the case in strong vocational education systems such as Germany and Switzerland. In the Jovenes programme, providers were incentivised to find niche training markets and internships and the market driven approach was subsequently integrated into the formal training system in Chile.

The Entra 21 programme required agencies to have market intelligence in the design of their programmes in order to reach their target of 40% placement of the participants in jobs. This included conducting surveys with employers to understand their entry-level skills requirements and the challenges they experience in hiring youth. Agencies also used secondary data sources such as labour market studies; although this was reportedly not highly effective as data was difficult to find. In addition, they created a business advisory group to guide programme planning and design. The placement of participants in internships also provided the basis to get feedback from employers on the effectiveness of the programme.

Similarly a skills-first approach applies to some successful entrepreneurship programmes. The Youth Professional Entrepreneur Development (YPED) in Indonesia is targeted at university/college graduates and works in cooperation with local universities. In the YPED graduates are provided with 30 days of training on motivation and self-development, entrepreneurship, business management including marketing and development of a business plan. The graduates are then placed in remote village areas to further improve their knowledge and skills through the establishment of village cooperatives using a revolving fund scheme. Some also conduct peasant business development in rural transmigration areas.

41

c) Individual Action Plans

The international studies suggest that activation strategies for youth are best supported by the development of individual action plans, which lay out action steps and monitoring mechanisms for the young jobseeker. This approach individualises the intervention, by providing a unique plan suited to the particular individual, so as to address the individual’s specific challenges, and enables the young person to take some responsibility for their transition to employment.

The Inserjovem programme and the UK New Deal programme both use individual action plans to determine the process of getting into employment. Similarly, many of the Eastern European countries work with each registered unemployed jobseeker to develop an individual action plan, which outlines the activities and obligations of the youth in seeking employment. In Poland this action plan is compulsory after a period of registering for benefits, while in the Czech Republic it is voluntary. It often includes a mutual contract between the jobseeker and the public employment services agency, thus making the actions obligatory on the part of the jobseeker. These plans are reportedly particularly useful for youth that face multiple barriers, including lack of skills, limited labour market experience and various social issues, in that the plan can address each of the barriers in a systematic manner to maximise the support to the young person.

The individual action plans must include a rigorous job-search plan for benefits to continue – should the youth not follow the plan or refuse to take a suitable employment opportunity, they risk losing their benefits. Such plans appear to work best where there is availability of jobs, as they will invariably involve job search assistance. In addition, it is clear from the Inserjovem programme that, while job search assistance is a highly cost-effective approach, it is not effective without a clear focus on skills upgrading. A key risk is that individual action plans themselves are labour intensive and high caseloads may limit the capacity of PES personnel to effectively monitor progress and manage sanctions where young people are not following the agreed upon plan.

Theme 3: Incentives

There is a substantial base of evidence that demonstrates the effectiveness of incentives in getting youth into - and retaining youth in - programmes. However, many youth programmes appear to combine a ‘carrot and stick’ approach in order to reinforce the dual function of incentives and sanctions. These incentives and sanctions may target youth in order to support entry and retention in skills training, or employers by compelling them to take on youth and subsidising such employment.

Programmes such as JobStart offer a range of incentives to participants including childcare, transport, meal allowances and incentive payments. However, this is only if youth reach certain milestones. Despite this, the programme struggled to retain participants for long enough to achieve the expected skills levels, partly due to the programme being voluntary and having no sanction for dropping out. The Jobs Corps, which preceded JobStart and provides the model for JobStart, offered residential facilities for participants and this assisted with greater retention than the non-residential option but with substantially higher costs being incurred by the programme. In the Youth Service Jamaica programme, an intensive entry-level job preparation program was provided for one month (residential camps) followed by a six month internship / job placement. Volunteers also received a stipend each fortnight.

42

It was found that in order to be attractive to the young person, the benefits from the programme should exceed unemployment benefits, for example a Public Works programme may offer higher income than if the youth collects unemployment benefits. This was the case with the Australian Special Youth Employment Training Programme.

Most other programmes are either stronger on incentives or sanctions. The YIEPP incentivises youth to remain in and complete secondary schooling by providing access to work while they were studying and thus alleviating the economic reasons for dropping out. A reduction or removal of benefits was a strong sanction if beneficiaries did not participate or dropped out.

For example, access to training and employment placement opportunities. In the Belgium First Job Agreement benefits are safeguarded if offered as a carrot, as long as the youth is looking for a job. Multiple options for mainstream jobs are made available through the support of the Public Employment Services. Similarly, the Inserjovem provides access to a high level of personal support in job searching but requires the participants to honour their commitment to the programme or face a loss of unemployment benefits.

With respect to employers, subsidies are an effective incentive for hiring youth, particularly in the short-term and for long-term unemployed youth. These incentives can take the form of a direct wage subsidy or a reduction in social contributions. The Belgium First Job Agreement demonstrated that employers can be required to meet a quota of young employees - or face sanction – but continue to receive the incentives that are offered to employers if they agree to having these youth in their employ.

For incentives to be successful in the longer-term, they should stimulate not just placement but also the retention of youth in sustainable jobs. For example, incentives can be extended beyond the initial placement or training incentive towards a further incentive if the employer retains the young person for an extended period of time. In the Belgian First Job Agreement, employers who retain low-skilled young people under a written fixed-term contract of employment, may receive cost reductions similar to those in the hiring subsidy. The subsidy lasts 2 years: during the first four quarters the reduction is 75% of the base amount of social insurance contributions; and from the fifth to the eighth quarter it is 50%. Furthermore, for retention of skilled workers, 10% reduction of the employers’ social security contributions is given for the year following the first job agreement.

Theme 4: Integrated delivery incorporating workplace learning

The need for internships and placement is given particularly high levels of prominence in developing countries where no formal apprenticeship systems exist. The Latin American Programmes (Jovenes and Entra 21) demonstrate the importance of programmes incorporating a comprehensive set of services to meet the holistic needs of unemployed youth and ensure employability. They are both demand-driven programmes, with Entra 21 being the most successful in implementing a demand-driven approach.

In the Entra 21 programme, internship hours were considered part of training time. The amount of contact time was dependent on the nature of skills being developed, but the curriculum had to integrate lifeskills and technical skills, and incorporate internship time. A general principle was to ensure that the lifeskills input complimented or reinforced technical skills rather than being offered separately. The project emphasised the importance of monitoring training partners closely to ensure that life skills were well integrated with technical content throughout the training process – this was constantly emphasised throughout the project. However, the one challenge related to the lack of

43

specificity with respect to the lifeskills inputs resulted in a lack of consistency, both in terms of the content and the types of lifeskills that were addressed.

Internships in the Entra 21 programme typically occurred after each component of classroom instruction was concluded, although there were attempts by some agencies to alternate classroom and internship hours. In one centre in Colombia, three types of internship were on offer, with varying intensity:

a six months internship comprising intensive on-the-job experience with a wage incentive, a two month internship providing work experience without pay but with a basic stipend, and a short duration for youth (variable) who did not perform well in the classroom and need

reinforcement in a particular skill area in order to master the content.

However, the agencies all found that Identifying internship opportunities was time consuming and took more effort than they anticipated. Even those agencies that had pre-existing links with industry struggled with the investment of time and energy needed to establish the relationships and manage the internships.

In addition to the internship, the Entra 21 programme included a job placement component, which was new for the majority of agencies and set it apart from most youth programs in Latin America and the Caribbean when the program started. Although networks were the predominant source of employment, the participants cited the placement services as the second most important service. Placement services were offered up to three months after the completion of the programme, although some programmes began offering the service while participants were still in the classroom. As youth were spread out across geographic areas, the agencies had to devise effective management structures to deliver the programmes through decentralised teams and outsourcing agreements. The job placement component was predominately delivered either through a job placement unit within the organisation, where dedicated people in the project sites who were hired purposively to fulfil this role, or through outsourced agreements. The latter was the least common approach as the organisations generally wanted to directly engage with employers. However, given the demands for placement, and the training providers were not always equipped to manage the placement aspect. To address this challenge, some organisations hired a job placement coordinator with private sector experience: this was considered critical, a central part of their job was to understand the needs of businesses. It was found that if youth were located in multiple cities or regions, the coordinator needed to create a decentralised team and delegate the job placement to each site.

The importance of this approach is supported by research relating to the importance of work experience for young people. The Vanoverberghe study notes that those young people that have prior work experience find work significantly more quickly than others. This is confirmed in Burns (2008) and in the work of Mlatsheni and Rospabe (2007) and Banerjee et al. (2006).

The comprehensive approach to youth development is also applied successfully in entrepreneurship programmes, and it was found that in general, entrepreneurship skills seem to yield better results when they are acquired in a comprehensive training context. For example, the Peruvian Young Microentrepreneurs Training Scheme involved a package including theoretical classes, counselling and follow-up services, on-the-job training and credit: this was found to be more effective for business development than the provision of managerial training alone.

In summary

44

This section tries to distil some of the key themes and lessons emerging from the international programme evaluations. It is noted that whilst not all the programmes that were reviewed had an exclusive focus on youth; however, as indicated, the programmes that were selected above had a strong bias towards youth.

It was found that the primary messages from these evaluations suggest that there increasingly needs to be a focus on a skills-first approach with strong focus on catching youth before they have been unemployed for an extended period of time, there is a need to have a balance of sanctions and incentives to retain youth in programmes and demand involvement of employers, and there is value in creating a demand-driven market for youth programmes, managed through private sector institutions and NGOs - as long as the conditions are clearly set out and monitored. Finally, the integration of services is effective in consolidating the employability of youth, particularly through on-the-job application of skills and potential placement in sustainable jobs.

With respect to institutional issues it was found that the majority of programmes are executed through the Ministries of Labour Public Employment Services. Some programmes, such as Entra 21, operate through private non-governmental agencies.

6 Review of the types of interventions generally used to link young people to employment in South Africa

This section of the report considers the nature of the interventions that are currently being implemented in South Africa and an analysis of the learning emanating from the interventions that have already been implemented, highlighting some examples of good practices that have emerged from this process.

This relies on an extensive review of the interventions implemented in South Africa. Methodologically this included accessing as many evaluations of programmes that the research team could, reviewing these, and then follow up interviews with individuals in some of these programmes in order to clarify certain issues that emerged from the evaluation and to explore certain issues in more depth. In addition, the team interviewed individuals from organisations, which have been intensely involved in designing, resourcing and implementing programmes for unemployed young people over the past decade in order to explore the learning that has been developed through these processes. Particular attention was paid to understanding the factors that are perceived to enable young people to make the anticipated transition (A detailed review table can be found in Annexure A.)

This took into account the issues raised in the previous sections of this report, which outlined the many, and diverse, reasons why young people struggle to access the labour market in South Africa, as well as some of the policy interventions, which have been developed, by different role players, to respond to these. Across all sectors of society, there is a recognition that South Africa cannot continue to have generations of young people who complete their schooling and are then disconnected from any opportunity to generate an income. Some key issues emerging from this policy analysis suggests that to address this challenge there is a need to ensure that the following is in place:

Incentives for employers to overcome their reluctance to employ school leavers Greater investment in ensuring that young people leaving school have the attitudes and

skills which better equip them to take up available opportunities

45

Publicly funded interventions to engage young people in constructive activities while the number of formal jobs remain inadequate to absorb all work seekers

Greater development of an entrepreneurial capacity, will create support for young people.

Critically, there is the constant caveat inserted, that for any youth employability interventions to succeed it is necessary for the economy to grow in a manner that absorbs greater numbers of workers.

This analysis found that interventions to address these imperatives could generally be categorised in the following manner:

Those that focus on improving the ability of secondary school learners to make a transition into further learning and the workplace

Those that enhance the work readiness of young people and support the placement of young people

Those that support the development of occupational competence Those that enable entrepreneurial development Those that create public employment opportunities.

a. Interventions: Programmes to address the transition to the labour market

i. Secondary School Interventions

Programmes aimed at improving secondary school learner competence which were reviewed, focused primarily on improving learners abilities in maths and science and in entrepreneurial education (which tends to focus on understanding what is required and developing entrepreneurial attitudes).

For example, the National Youth Development Agency explored several ways of improving maths competence particularly for matriculants. In some programmes, they contracted organisations with subject matter expertise, and deployed them to both improve the capacity of class room teachers and to provide extra curricula support for learners. In one programme, student teachers were recruited from a university and placed in schools to provide additional support to teachers. The evaluation of this programme pointed to learning that was acquired through its implementation. This includes the finding that there was initially resistance from classroom teachers to having outside trainers monitoring their work. However, the evaluation suggested that in cases where the principals and senior teachers embraced the programme there was a substantial improvement in both the performance of the teachers, and learners’ confidence in the subject. Further, it was found that in many cases the programme only gained momentum in the latter half of the year, and while learners indicated they found the support useful, and believed they had improved their knowledge and confidence to engage with the subject, the time was insufficient to substantially improve exam performance. This highlighted the need to consider the lead time for the programme more carefully in the future so that this can be accommodated in the programme design.

In another example, in the Investec Pro Maths programme, (supported by Investec) which has been working incrementally in more and more schools since 2005, it was suggested that for a maths support programme to be effective, it should begin in Grade 10. Their programme requires learners to attend additional classes from Grade 10: the frequency of these classes increase each year and by Grade 12 the learners are attending three extra classes (which are held during the week and on the

46

weekend). Evaluations of these programme show exceptional improvements in the results of the learners: it was found that while they averaged 20% in their Grade 9 exams they successfully passed in matric – in many cases achieving high marks in their exams. The evaluation conducted also points to the finding that because the programme has run continuously for several years the staff has become increasingly engaged and relationships of trust have been developed. The presence of the programme over time has also meant that learners in lower grades have a high level of awareness of the benefits of the programme and so are enthusiastic about becoming involved in the programme by the time they reach Grade 10.

Another interesting example, which highlights the extent to which school support programmes can be integrated into longer term interventions that focus on employment, is that of Go for Gold. This programme is an integrated, four-phased programme: at a high school level it supports Grade 11 and 12 learners with mathematics, science, life skills and computer skills development. This is then followed by a one-year job shadowing/internship in the Built environment (that is, the construction sector). Learners can then enter either learnerships or tertiary education in preparation for careers in the Built environment and ultimately those that succeed access employment in the Built environment. This programme found that it was best to work with Grade 11 learners as this was early enough to have an impact but late enough for the young people to be able to decide whether they wished to pursue this route. It has been found that these students are very motivated and there is a very high level of completion at all levels of the programme.

Over and above support with mathematics, science, languages and life skills it was also found that there were programmes that focused on developing an entrepreneurial attitude in the schools. For example, the NYDA has also supported programmes which aim to raise the awareness of learners about opportunities to start their own businesses and to gain some practical experience of the skills required for this to succeed. Several interventions were run with multiple schools in two provinces. A service provider experienced in entrepreneurial education developed the learning programme, and ran classes with secondary school learners, which required learners to research and set up entrepreneurial initiatives. The evaluations found that learners had significantly improved their awareness of small business activities in their community, their confidence to explore such an activity, and in some cases learners started income generating projects that continued to supplement their household incomes while they were at school.

Another such intervention has been implemented by the South African Institute for Entrepreneurship (SAIE), which was started by the Triple Trust Organisation (TTO) in 1996 “in recognition of the critical need for easily accessible financial literacy training materials for both the small enterprise sector and for schools”20. The SAIE aims to eradicate poverty by creating entrepreneurs through the participation of learners in the BusinessVENTURES schools programme. Individuals from the programme state that the programme was initiated in schools because they “believe a Grade 12 learner exiting school should be entrepreneurial, they do not have to start a business necessarily. The overall aim of the programme is to change mindsets, but can you teach a learner to change their mindset? We say this is difficult to do and in order to change mindsets the teaching styles and learning styles must change. Our materials have tools, which build learner independence, which is an important entrepreneurial habit. In a classroom the teachers drive the learning experience and what we have done is provide tools that sees the learner taking on some control of learning. The teacher then becomes a facilitator, guiding learning, as opposed to doing the traditional talk-and-chalk, teacher-centred approach”. It was explained that the SAIE has designed and developed over time a pack of entrepreneurial materials, which are fully integrated with the DOE’s curriculum for EMS and Business Studies and aligned with CAPS for learners in Grades 7-12. It was indicated that previously they worked in all grades but EMS has been removed as a subject for

20 http://www.entrepreneurship.co.za/page/about_us

47

lower grades and so they now focus on Grades 7-12. SAIE has tracked learners who used the SAIE materials and have completed Grade 12 and found the following impact: 65% of learners pursue further studies in commerce and they further indicate that ultimately 58% of learners pursue self employment (though it would appear from the data that some that pursue this option do this out of necessity rather than as an opportunity-driven decision).

ii. Work Readiness and Placement programmes

The cluster of programmes that fall into this category tend to provide young people with information and advice on opportunities. Some provide work readiness training, others also assist the person to identify the opportunities for which they are most suited. Some place young people in a work opportunity (which could be in a job or for a fixed period of time) so that they can obtain experience and develop the skills required for the work place. They have varied target groups: open to all, minimum of a matric, minimum a post-schooling qualification. These programmes include those that were reviewed as part of previous research completed by the UNDP/ILO/NYDA and DoL by Budlender (2012) and these findings have been integrated into this report where relevant.

The field of work readiness and placement programmes is increasingly seen as important: although, as illustrated by the research, many employers prefer informal employee search mechanisms, employment centres can serve as information clearing houses to lower the search costs for employers and employees and to increase the quality of job matches. In the most basic centres employers post job openings and jobseekers reply directly to employers of interest. A more comprehensive full-service centre could employ staff that sort though job applications and interview potential employees on behalf of the employer. Other services could be offered to potential employees such as developing training plans, skills development opportunities and to help young work seekers manage competing work and non-work demands (Wurmli, 2010).

Public Employment Services (PES) aimed at improving job-search efficiency and job-matching within the labour market have been put in place in South Africa to target the disadvantaged and the long-term unemployed. The Public Employment Services are framed by the Employment Service Bill (published in the Government Gazette No. 35844, 2 November 2012), which sets out specific provisions to assist young work seekers to find employment, including the following: Providing opportunities for new entrants to the labour market to gain work experience (Section 2(1) c); promoting employment of youth and other vulnerable work seekers by establishing work schemes for the purpose of enabling youth to enter employment, remain in employment or be placed in opportunities for self-employment (Section 6(1)); and providing vocational and career counselling, (Section 5(2)).

The Department of Labour gives practical effect to this legislation through its employer services, which registers vacancies and provides placement services for work seekers and the unemployed through access points at local labour offices. Some of these centres also offer counselling to work seekers although counsellors are not available in all centres.

South Africa has around 135 Public Employment Services known as Labour Centres spread throughout the country. However, it is not clear the extent to which these do, or even could expect to, affect employment: research by Bhorat (2012) suggests that there is no such relationship between per capita labour centre expenditure and the unemployment rate within districts. This finding may relate to the reality that, despite the Bill, there is significant under-investment in South Africa. Comparisons across a handful of countries show that South Africa spends the least in this area. For example, in relative terms, this amounts to 76 times less expenditure on Public Employment Services than South Africa’s middle-income country counterpart – Brazil (Developing an

48

appropriate Public Employment Service model for South Africa, March 2010, Research undertaken by Singizi/DPRU for the Department of Labour, commissioned by GIZ).

The National Youth Development Agency is a youth service agency, which is established by the NYDA Act, 2008 (Act 54 of 2008). Its funding is primarily from government and it provides a number of services that aim to facilitate the job search and match jobs to the requirements and skills of young work seekers. NYDA is a national organisation but it also has a provincial presence. Each province has a board, which has its own full-time chairperson. The chairperson may, among other tasks, try to source opportunities through engaging with business leaders and political leaders. In addition, there are full-time employees who have overall responsibility for the database and also actively source opportunities through engaging with companies.

NYDA supports the Graduate Development Programme and Job Preparation Programme, which aim to enhance the employability of jobless graduates and matriculants by providing job preparation, for example work related life skills, computer literacy, CV preparation, interview skills etcetera as well as job development support that helps young people find work placements.

NYDA also supports 14 Youth Advisory Centres, which are walk-in centres established within communities as a one-stop service centre where young people can access all NYDA products and services including career counselling. There is no charge to either youth or employers for the service.

The process of application for a job involves two steps. Firstly, a young person must complete a beneficiary profile. NYDA’s customer relationships management (CRM) system then checks whether the person is eligible (for example, that they are under 35 years of age and that they are either South African or a permanent residence). If eligible, the youth can complete a job application form or apply for some other form of assistance such as microfinance or business assistance. These tasks can be completed by visiting one of the 14 branches, faxing or emailing their curriculum vitae to the NYDA, or even by phone. In the report by Budlender it is indicated that NYDA also hope to provide on-line registration.

Currently, some of the 14 youth advisory centres do not have JOBS officers. In a review of these centres, Budlender states that the absence of JOBS officers causes delays in attending to work seekers as well as in inputting their information on the database. Thus NYDA reportedly has 6 000 curriculum vitae across the 14 centres, but not all of these are in the CRM system. It was further indicated that while all but one of the branches have four or more computers that youth can use free of charge to input their information, the reality is that the level of computer literacy tends to be low and there is reportedly no one from the NYDA to assist. NYDA staff members also indicate that computers are not sufficient when youth arrive in groups. A further challenge is that whilst previously the CRM system was able to match youth and opportunities, after changes were made to the system this is no longer possible. NYDA staff members therefore have to use the search facility to find matches.

It was explained that where an opportunity arises, the general rule is that the names and details of approximately three youth are put forward to the employer for each opportunity. The CRM system generates monthly reports, which show placements. These placements are recognised where there is a written confirmation letter from the employer and an indication that some sort of payment will be made to the young person. NYDA observes that they are concerned about the potential geographical and urban-rural bias in that it is much easier to find employment in urban areas.

49

NYDA has piloted certain initiatives with the Department of Labour Public Employment Services, and there are examples in which NYDA provides specific support for young people that enter the public employment centres.

Other placement services that are in place include those run by SAGDA. which has as its mission: “to develop students [to] prepare for the world of work and empower graduates to actively participate in the economy through high impact programs, viable partnerships and research” (Maqubela, 2012). Budlender, in her review of SAGDA, indicates that the Association was registered in 1997 as a Section 21 company. An unemployed graduate initiated the association, as a vehicle to assist other unemployed young graduates: the Nedbank Foundation provided assistance in the form of an office, furniture, telephone and similar assistance. The Foundation also subsequently provided stipends for office bearers of the Association. SAGDA currently has an office in Johannesburg, and is in the process of finalising a memorandum of understanding with the Department of Labour, which would allow SAGDA to use their offices. SAGDA is also in the process of developing a memorandum of understanding with the Development Bank of Southern Africa for use of their Stellenbosch-based telecentre infrastructure and technology.

One of SAGDA’s first initiatives was to establish a database of unemployed youth. The numbers registered on the database remained relatively small until 2010 when SAGDA developed a memorandum and articles of association that established it formally as a membership organisation. Budlender reports that at the time of the research, there were more than 2 200 graduates on the database from 2010, 2011 and 2012 (although it was indicated that this number includes some duplicates).

The graduates registered on the database are beneficiaries rather than members. They receive free services. The members, who pay fees for membership, are divided into five categories, namely universities, public and private colleges, municipalities, companies, and sector education and training authorities (SETAs). There are three categories of membership – primary, secondary and tertiary – with different benefits. Primary members, for example, can serve on the board of directors, can receive 100 copies of the quarterly Top Graduate publication, and can get access to a maximum of 100 graduates for placement. Membership fees are set at R20 000 per annum for primary membership, R15 000 for secondary and R10 000 tertiary.

Budlender comments that one of the characteristics that distinguish this database from the others is SAGDA’s commitment to providing assistance, to those who register, within three months of registration. However, despite this, only a relatively small proportion of those who register find a placement in this period and by end September 2012 SAGDA had succeeded in placing a total of only 154 graduates since January of the same year (Maqubela, 2012). The registered graduates are, however, assessed using an assessment form as well as, at least in some cases, through meeting with the resident psychologist and career advisor. Budlender indicates that based on the assessment, they should have, within the 3 month time frame, received some assistance. This could include access to a graduate empowerment seminar, being assisted in determining their desired career path, or receiving training in business writing, communication, and business ethics. They may also be placed in an internship programme, which earns them a stipend and provides exposure to, and experience in, a workplace. It is indicated that SAGDA also aims to provide further support once graduates are placed: this could include assistance in finding a further job (if it’s an internship) as well as access to industry- and occupation-specific talks.

In addition several other graduate development programmes supported by NYDA were also reviewed. These programmes engaged young people who had undertaken tertiary studies in interventions designed to increase their ability to find employment. Some specifically aimed to give

50

people the professional experience they required in order to register with professional bodies; others sought to provide graduates with work experience, and some of the generic skills (such as computer training, a driver’s licence and the attributes desirable in the work place), which make people more employable. Others provided work experience and weekly classes where graduates would review learning questions, which had arisen for them in the work place, with mentors.

The Graduate Development Programmes reviewed engaged varied numbers of people. On average however, one service provider would work with approximately 50 graduates. The duration of programmes varied from 4 months to 12 months and the average cost per learner was approximately R7 500.00. None of the programmes tracked learner performance beyond the end of the project, and the numbers reported do not necessarily reflect the impact of the programme. However, while most participants reported that the experience had been valuable in that it exposed them to the work environment and gave them greater confidence in searching for work, generally less than 20% of participants were employed at the time of the evaluation.

Other placement initiatives are also being implemented by other parties: Provincial and local Government have a number of programmes in place where they are assisting to place young people in industry as well as in the public service (many as interns). In addition the private sector has established a number of initiatives to support improved placement of young people into the workplace.

For example, the Harambee Youth Accelerator is an initiative of the Yellowwoods Trust (and five of its investor businesses: Hollard, Clientele, Telesure, Direct Axis and Nando’s). It was established to enable young people that have a matric qualification and either no work experience (or very limited) to access work. Harambee has spent significant effort in developing relationships with employers – assisted by the fact that it was employer initiated. This entailed working with these employers and expanding the employer base – so as to convince them to actively prioritise the employment of school leavers into new entrant positions. Harambee’s proposition is that they will source, screen match – and where required bridge - young people to the job, and thus reduce the likelihood that the young person will not be suitable, competent or unreliable. Before recruiting young people Harambee maps the job with the employer, and then profiles the top performing employees currently doing this work. This generates a “profile of the attitudes and behaviours most desirable in this job” which is then used as the basis of the recruitment strategy. Any additional skills such as numeracy, competence in certain software or other skills are also identified.

Harambee recruits young people through established youth programmes, community networks and word of mouth. The Harambee process then includes an initial screening (to ensure that the applicants are disadvantaged, between the ages of 18 to 28 years of age, unemployed, have a matriculation (matric), and have had less than a years work experience). Those young people that qualify are invited to participate in a range of assessments (both written and interviews), which enables Harambee to assess the applicants mathematics and communication skills as well as generate a personality profile. The applicants receive feedback on this assessment to enable them to better make decisions. Further, based on the assessment those applicants that meet the requisite criteria are then engaged in a development programme. For certain jobs, such working in entry-level retail or food services, this may simply be interview preparation and some basic training on the attitudes required in the work place. For jobs requiring specific competence, such as working in a call centre, the preparation (bridging) programme can be between two and three months. The programme focuses on the technical skills required for the workplace, understanding the work environment and also rigorously monitors indicators such as punctuality, curiosity and peer engagement.

51

Harambee has instituted a strong monitoring and evaluation system and will be tracing young people that go through the programme, as well as employers to understand the impact of the programme against critical indicators such as: the number of young people placed in employment; the sustainability of the employment; the extent to which employed young people progress within the workplace and the extent to which these young people support a network of other young people to access employment and can make a contribution to the income of their families.

Thus far Harambee has placed over 800 candidates and has achieved the targeted retention of over 85%, at the 1-year mark. They have also secured 4,000 additional placement commitments for the coming 2 years. Anecdotal feedback relating to the programme suggests that employers are satisfied with the quality of the employees at this point in the programme, and, in interviews with employers, it has been suggested that there has been a significant reduction in churn. Harambee suggests that important lessons continue to be learnt as the programme is implemented: for example, they indicate that they have recognised the importance of employers adapting their management culture and process to support the absorption of first time employees into the workforce. They suggest that another learning pertains to the funding model, which they suggest has the promise of an effective and sustainable private-public partnership model for addressing youth employment.

Harambee has, since it launched, had a step-up in scale having been awarded grant funding from the Jobs Fund. Recently Harambee has identified the need to work proactively with the DoL Labour Centres to source young people and this partnership offers significant opportunities for expanding the impact of both programmes

Another similar programme has been initiated by the Redcap Foundation supported primarily by Mr Price though there are other donors: The Foundation realised that a key issue that they needed to address was that of unemployment and with this in mind they started Jumpstart in 2007. Initially it provided work experience for youth that had completed lifeskills training with a local NGO, with the anticipation that between 25-50% would be taken up into employment. The Jumpstart Program seeks to give unemployed youth between the ages of 18 and 30 a ‘jump start’ to their careers by providing youth with the opportunity to gain work experience, with a targeted outcome of 60% employment. Mr Price has partnered with Non-Profit organisations that provide training to unemployed youth. Mr Price then gives their candidates the opportunity to gain practical work experience in a Mr Price Group store, after which they receive a certificate. Where such placements are successful, store managers will offer many of the youth positions in the store.

The Jumpstart programme highlights the value of, effective screening with the possibility of support to address any gaps that may emerge so that by the time the learners enter the programme they are able to cope with the learning requirements of the programme. It also highlights the importance of providing young people with life skills that are of a consistent quality, and that have been shaped by the needs of the employer, so as to enable the young person to successfully enter the workplace. This is then complemented by a brief workplace experience, which provides the young person the chance to ascertain whether they wish to enter the sector, gives them access to a network and also provides a chance for the employer to establish the extent to which the young person is likely to be a good fit within the company. Other learning from this vignette relates to the value of working with a network of NGOs that have experience in working with young people and can source individual young people from a range of places. The programme also demonstrates the value of having multiple opportunities available to young people, so that different cohorts of young people can be placed including those that do - and those that do not -have a matric.

52

iii. Occupational Programmes

These are accredited learning programmes which could include learnerships; skills training programmes or apprenticeships. These programmes were also referred to in the research undertaken by Budlender: this paper referred to research by the HSRC (Kruss et al, 2012) which interestingly found that both learnerships and apprenticeships are better at providing for female, black and lower socio-economic status individuals than the further or higher education systems. The research indicates that despite this, higher-skilled learnerships continue to be dominated by white and male learners, and African and female participants are over-represented in learnerships, which relate to services occupations. Further, this research suggested that these learnership opportunities were concentrated in metropolitan areas.

The HSRC research also suggests that those who completed learnerships or apprenticeships are likely to find employment. Of those doing apprenticeships, 70% found employment immediately after completing while a further 6% found a job relatively soon afterwards. Of those on learnerships, 86% were employed within a short period of completion. Budlender highlights the finding from the HSRC research that most of the jobs found were permanent positions, however it is noted that the research did not track these learners beyond initial placement. Other evaluative research, for example the Business Trust Tourism Learnership Project case study, found that many young people that found employment then lost it because of disciplinary issues, or in some cases, that they young people chose to leave, as they were not satisfied with the wage and/or the work.

In the evaluative work undertaken by the NYDA, which has supported the implementation of a substantial number of learnerships in partnership with FET Colleges, it was found that there were a number of common challenges:

Learners were not able to cope with the subject matter of the course and as a result completion rates were very low;

Relationships between the providers and the employers were often not in place, and as a result the work based learning components were poorly conceptualised and therefore badly implemented;

Many young people had not understood either the course requirements, or the opportunities which would be available after completion, and therefore became frustrated when the programme did not meet their expectations and/or the work was not what they were anticipating;

There were often delays in making funds available, which affected the payment of stipends and provision of equipment;

In a number of cases, learners who managed to complete the programme and write the final assessments, did not receive their certificates due to various problems in the accreditation arrangements;

Further, with regards to the institutional arrangements: it was indicated that these typically required high levels of cooperative management and funding from multiple institutions such as SETAs, the FETCs, NYDA and in some cases government departments. The evaluations suggested that this often made the programme difficult to implement effectively and that this worked against the programme achieving the desired impact.

However despite many challenges some programmes had significant success. Three examples implemented by different parties, which offer insight into what can make a programme effective, are offered here (these also draw on evaluations completed):

53

An FET College in Limpopo had identified a number of employment opportunities in the tourism industry associated with game parks. They worked with employers to identify their needs and their willingness to employ young people who had the necessary competencies. They then selected young people who exhibited existing interest in the employment areas (cooking), and who had the necessary academic skills to cope with the course work. Although the programme did not offer a full learnership, the skills programme was tailored to employer requirements. All the learners at the end of the programme were employed.

An FET College in East London used a similar method to identify opportunities in the automotive industry. The learning programme was designed with the employer and when learners undertook their work place experience, the College provided a mentor to assist learners make the links between their classroom theory, and to provide support if they struggled with a task. The programme had a much higher pass rate and employment rate of graduates than most of the other programmes.

The Forest Industries Education and Training Authority (FIETA)21 ran an extended learnership in furniture making across South Africa. In addition to the formal learning programme, they funded colleges to run business incubators for a sustained period beyond the programme. Learners who had completed the course were encouraged to form small companies who could receive business support from the college, use the tools and equipment of the college and receive technical support from college staff. The FIETA programme was one of the very few learnership programmes, which tracked learners beyond the completion of the programme. The findings of the tracer study suggested that significantly more young people had exited into self-employment than any of the other programmes reviewed. It also suggested that the incubation support had been found to be critical, and recommended that such support needed to be in place for a sustained period of time (potentially two years) so as to allow learners to access it on a needs basis.

These programmes generally run for 12 months and cost between R18 000 and R55 000 per learner. Data on completion and employment rates varied significantly across programmes, and it is not possible to make general findings. However in programmes where the majority of learners passed the learning programme and entered into employment after the programme, at least three of the success factors identified above were in place.

iv. Entrepreneurial Development Programmes

This includes a diverse range of interventions which support young people as they set up businesses including the provision of finance; an array of training; business incubation and mentorship and support as the business is established. This is an area that is extremely contested with a number of studies suggested that young people, who lack work experience are not an appropriate group to target for entrepreneurial development. Many of these studies suggest that where young people do initiate a small business it is out of necessity and its likelihood of success is lower. Further, most of the evaluations reviewed as part of this study, focused on school based entrepreneurial support (as referred to previously). However, there were a number of other interventions to specifically enable young people to initiate their own businesses for which we had access to evaluative findings and these are considered here:

The National Youth Development Agency has invested significant funds and energy in entrepreneurial development, and staff members interviewed suggested that they have had some success, citing two examples of programmes they believed were particularly positive.

21 FIETA has since merged with other sectors and has become the Fibre Processing & Manufacturing Seta

54

Interviewees highlighted the example of the Auto Café, which was developed out of a partnership with Massmart and Builders’ Warehouse. The intent was to develop young people as franchisees. UYF paid participants a stipend and Massmart and Builders’ Warehouse provided space at their stores and mentored and coached them to provide a full set of retail services. 15 young people were placed in each participating store and were then coached to become fully-fledged store managers. However, there was no data about the current status of this project.

The second example was a project implemented in partnership with Nestle around the 2010 World Cup – the bike ice cream programme. Participants were trained in all aspects of selling ice cream and then provided with pedal powered ice cream carts. If people were successful they were able to obtain a scooter, and it was reported that in some cases participants were ultimately able to open up mini warehouses.

The NYDA staff members, reflecting on these experiences, made a number of observations – which resonate with learning from other studies about youth entrepreneurship in South Africa. These comments include that:

South African young people have had limited exposure to entrepreneurship and express much greater interest in formal employment opportunities. Whereas immigrant youth in South Africa engage easily with the idea of “doing the manual work of making the wire animals” and “developing your business strategy”, many South Africans see the manual work as the end of the opportunity (these comments highlight the importance of the entrepreneurial education highlighted previously).

Programmes which carefully assess youth interest and competence prior to engaging them in entrepreneurial development programmes have higher success rates: for example, they commented that the Ikusasa supplier development programme assessed youth against multiple criteria as part of the selection criteria suggesting that this was critical to the success of the programme.

Further, interviewees indicate that low levels of numeracy among many school leavers have an impact on entrepreneurial capacity and interventions should consider how to provide additional support.

Finally, they indicate that much of the NYDA’s success in providing financial loans to young people has been when they invest in individuals or companies who already have highly developed technical and business skills, and simply require capital to expand their companies.

NYDA indicates that as a result of their learning, they will be shifting focus and will in the future no longer be offering SMME loan finance to young entrepreneurs. They will instead, grant finance in the form of micro-finance grants for survivalist and very small youth entrepreneurship initiatives as well as cooperatives grants for greater participation of youth in the cooperatives sector. The grant finance will start from R1 000 to a maximum of R100 000 for any individual or youth cooperative. Due to the financial constraints of the agency just over 37 000 young entrepreneurs will be supported in this financial year. NYDA states that strong non-financial support programme which will include a suite of services and products shall be a requirement for awarding grants in order to ensure preparedness of enterprises or cooperatives as well as sustainability. This suite will include, thorough assessment of business ideas, technical training, mentorship and coaching, relevant entrepreneurial training and support, after care and market linkage support and constant monitoring and evaluation. NYDA indicates that they will enter into a formal agreement with SEFA and IDC as well as other DFI’s in the near future to assess and hand over qualifying enterprises for funding by government funded institutions and commercial banks.

55

Other programmes reviewed tended to support these findings. For example, an initiative in the retail sector is that of the Clothing Bank, which runs a small business training programme for women of all ages: the Clothing Bank has developed relations with the major clothing retailers and they offer retailers a win-win efficient and cost-free solution to get rid of their excess stock. Excess stock is donated to the Clothing Bank and retailers can claim enterprise development points for the donation as the programme contributes towards the development of emerging enterprises. The Clothing Bank receives approximately 30 000 garments a month and the clothes are used “as a tool to teach unemployed mothers how to run small businesses. The clothes become the supply to the businesses. We are a training organization, using the clothing to teach the practical aspects of small business. We teach a wide range of skills and the key skill is the ability to trade. We are not asking participants to come up with a unique business model as the model is supplied to them”. The Clothing Bank implements a two-year small business training programme centred on selling clothes and this provides participants with the opportunity to earn at least R3500 per month.

The Clothing Bank states that whilst they have tried to work with young women they often do not succeed stating that the young women they work with remain dependent. They suggest that there are only 3 cases where a young woman was successful and one of these one was a Zimbabwean citizen, commenting that:

“Youth have many choices and they try various options so they lack perseverance because of this; because they are women they think their white knight is going to rescue them, which happens periodically....they come and go depending on how their life is going which we do not tolerate – you are either in or not, they are expected to stick it out through whatever is happening on a day to day basis.”

The Clothing Bank stated that to address this they consulted with Junior Achievement South Africa (JASA) for guidance but found JASA’s “success rate was almost as dismal. Working with them did not improve the performance of our young women dramatically”. The Clothing Bank suggest that their key learning is that interventions with young people should have “stronger support systems; and extensive one-on-one coaching which would cost more but closer support would be provided”. The Clothing Bank also indicate that such an intervention would need to include the provision of support for young women, who may have substance abuse issues or who may be grappling with physical abuse. The Clothing Bank believes both these should be addressed prior to joining the programme as a small business project could feed addiction and increase violence as partners power is threatened.

This example highlights the real commitment that goes into nurturing small businesses so that they succeed. This includes a lengthy period of training, incubation and support. It also involves consistent monitoring to address any issues that arise. This example illustrates the specific challenges related to enabling young people to initiate a small business – and highlights the issues that need to be taken into account. This does not suggest that this is not a possibility for young people but strongly emphasises that for such interventions to succeed there will be a need for very careful selection and strong support systems to be built into the programme: this would need to include one-on-one coaching which would cost more but would improve the ability of the young person to succeed.

The need for careful selection and training coupled with extended mentorship is reinforced by Ikusasa International which states that they rely on a two-phase candidate assessment, they indicate that this is based on 4 building blocks and 22 criteria. They also support the identification of opportunities and then provide training. Candidates are required to pass the training modules with

56

80%, and they then provide extended one-on-one mentorship. They state that this is critical to preparing a strong force of competent entrepreneurs. The programme is not only for young people – however they suggest that a large number are young people and that businesses succeed because of their focus on enabling candidates to, “emerge mature with a strong sense of taking responsibility for themselves and their business and this is due to the programme focus on attitude change. Candidates are guided to shift the dependent paradigm to a responsible, mature and independent paradigm”.

v. Public Employment

Public employment programmes are state initiatives aimed at providing unemployed people in poor communities the chance to earn an income while contributing to the development of South Africa. Since 2004 all public employment programmes have been required to report on the work opportunities they create through the Expanded Public Works Programme (EPWP). The EPWP essentially requires government departments to spend funds in a manner that intentionally creates work for the poor.

The EPWP is a nation-wide government-led initiative aimed at drawing a significant number of unemployed South Africans into productive work in a manner that will enable them to gain skills and increase their capacity to earn income. The initiative is coordinated by the Department of Public Works (DPW) and is implemented by government departments and through institutions of civil society. The EPWP commenced in the 2004/05 financial year and targets were set for a five-year period ending on the 31 March 2009.

DPW, as the lead department of the EPWP, then initiated a process to extend the implementation time frame of the EPWP by a further five years. The second phase of the EPWP significantly increased the targets for EPWP job creation, based on the findings of the EPWP mid term review (undertaken in 2008), the achievements of the first phase, and the introduction of the EPWP wage incentive. Since 2009 the EPWP has begun to embrace ways in which civil society organisations can participate in the implementation, and to more actively identify how young people can benefit from the programmes. Several different types of programmes are run under the EPWP umbrella. These include:

The Community Work Programme The national environment poverty alleviation programmes such as Working for Water and

Working on Fire National Youth Service programmes (such as NARYSEC) Rural Roads Rehabilitation programmes e.g. Zibambele in KZN Home and Community Based Care initiatives through provincial departments of Social

Development and Health Kha Ri Gude Mass Literacy Campaign And a pilot initiative to support not-for-profit organisations to initiate work activities in their

communities

Although the institutional arrangements for the programmes differ substantially, common features include payment of a daily wage to workers; clearly defined tasks with measurable outputs; alignment with the development objectives of that sector or local area and compliance with basic health and safety requirements for the area of work.

57

One of these programmes, the Community Work Programme (CWP) was initiated in 2007 and then recognised as a new component of the EPWP. In two years CWP’s growth has been from 1500 participants in 2009 to 99,179 participants in 2011. By 2014, the target is to establish a presence for the CWP in every municipality. The CWP provides participants with regular part-time work, typically two days a week or the monthly equivalent – adding up to 100 days a year. It is an area-based programme, targeting poor communities in rural and urban areas, and is designed as ‘an employment safety net and not an employment solution’, providing a minimum level of regular and predictable work while wider policy processes to create decent work take effect (TIPS, 2010).

The Seriti Institute, an organisation which acts as implementer for many CWP sites, believes that there is a need to develop a youth development companion programme, which can engage younger workers in additional activities such as life skills or raising awareness of study and other opportunities.

Similar international work programmes to the CWP exist such as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). This programme was established as an act within the constitution guaranteeing a minimum of 100 days of wage employment to every rural household with unemployed adult members willing to do unskilled work. The aim of this act is to provide a fall-back employment source when other employment alternatives are scarce or inadequate. This programme achieved a far higher scale than any other programme has managed. By mid 2010 more than 55 million households were participating in the scheme – this is equivalent to approximately 4.5% of India’s population. In South Africa, the equivalent participation rate would be about 2.2 million people (Philip 2012).

The Kha Ri Gude Mass Literacy campaign engages over 70 000 volunteers across South Africa. The programme director notes that most of the volunteers are young people, and are engaged in the programme because they have nothing else to do. New partnerships with the ETDP SETA have allowed the programme to fund bursaries for 1 000 volunteers to register for teaching courses at UNISA and they hope this can be expanded.

Another key Public Works programmes is the National Youth Service (NYS) programme, which has been designed for unemployed young people. It was initially intended to provide young people with substantial experience of service (work) that benefited communities and to build their own competence; a qualification in an area where there was economic demand and a substantial programme of personal and citizenship development. The NYDA report that they have had the same challenges in providing a structured learning programme as reported by the EPWP and state they now tend to focus on providing the experience of work through a service project, and building civic awareness.

Lovelife and City Year South Africa are both NGOs, which have run NYS interventions for more than ten years. Lovelife has more than 8 000 volunteers nationally who work to support DoH and DSD Clinics and Drop In Centres, and run peer awareness and school based HIV programmes in hundreds of South African communities. The programme recruits young people who already volunteer in their communities and are well known by the different agencies they will support. Although the programme provides no structured learning, there is an extensive network of regional staff to support the volunteers in their work. An evaluation of Lovelife showed extraordinarily high levels of post project placement among participants. Almost all the Groundbreakers (volunteers who lead and receive a stipend) had left their one-year programme and continued on to employment or further learning. One of the most urgent needs of the Lovelife programme is to ensure the second tier of volunteers, the Mphintshis, are able to access the equivalent of the EPWP wage incentive for the days that they work.

58

City Year South Africa, which recruits 18-24 year old matriculants to spend a year providing after school and homework support in Gauteng primary schools believe that one of the most important factors for a successful programme is that young people want to participate, and find motivation in the additional value they add to the lives of the people they serve. They believe that participants who, during the programme, learn to see themselves as valuable and an asset, and who have high levels of empathy and engagement with the schools during their year of service, are far more likely to sustain their search for employment beyond the programme, even when it is difficult. They believe that it can take 6-24 months for a person to find a job after they complete their service.

The EPWP Unit is aware of the need to have programmes that directly meet the needs of young people and is committed to addressing the challenges related to public employment programmes internationally: recently the NYDA has agreed to a partnership with the EPWP Unit which will allow them to access the wage incentive to support civil society NYS interventions. It is anticipated that the NYDA pilot of civil society NYS programmes, to be supported by the EPWP wage incentive, offers substantial opportunities for careful monitoring and massification.

b. Learning emerging from the SA experience

The review of programme experience in South Africa and the fact that there is now a substantial body of experience from programme evaluations, has allowed the team to extrapolate some key learnings related to what makes programmes most likely to succeed.

i. Recruit young people who have the competence to cope with the programme

It was found that learning programmes which define the competencies that young people need to succeed in a programme and/or the workplace (e.g. not just have matric but the specific communication, literacy and numeracy competence that they require to cope with the learning programme and ultimately the workplace) and then assess applicants for this ability prior to selection report significantly higher numbers of youth completing the programme and graduating from the programme.

While providers are often anxious to give “as many people as possible” the chance to participate, recruiting learners who will not be able to cope with a learning programme means they are more likely to fail or drop out, and this will have negative implications for them personally, and means funds are spent on projects with low success rates.

Associated with this learning is the need for programmes to actively identify applicants who do not meet the assessment criteria, and either provide them with the competencies that they require prior to undertaking the programme, or refer these young people to other interventions, such as adult learning centres, so to improve their competence and prepare them for other opportunities.

ii. Offer information and guidance to learners on what the programme will provide and what opportunities may exist beyond the programme

59

It was also found that programmes which are able to clearly articulate to applicants, both prior to and during the programme, the intent and expectations of the programme, maintained higher levels of participation and placement beyond the programme, than those where participants were unclear.

This includes information about what the programme will require from participants (e.g. classroom attendance and passing assignments; reporting for work or full participation in other activities), what the conditions of the programme are - many programmes reported that disputes about stipends and work place opportunities were common reasons for people to drop out – and what opportunities could be taken up by learners beyond the programme.

The ability to communicate changes in the programme conditions were therefore also considered critical: it was found that whilst institutional arrangements often meant that stipends or allowances were paid late, programmes which anticipated this and kept learners aware of the process were able to negotiate the difficulties and prevent drop out.

iii. Recruiting young people who are interested in and motivated to take part in the programme

Programmes which recruited young people based on their demonstrated interest in the programmes, and which tested this prior to finalising participation, also achieved better results.

National Youth Service projects in health for example, reported they achieved the best results when they recruited young people who already had an active history of volunteering in the sector. An FET skills programme in catering, carefully assessed applicants existing experience and interest in the food industry and was then able to graduate and place all the learners in employment beyond the programme. Participants who demonstrate this motivation are more likely to be pro-active in sustaining their participation, even when they encounter challenges.

Programmes which actively develop and test this motivation as part of the learning process also have high levels for success. Examples of this include enforcing learner punctuality, completion of assignments and reviewing non-participation or poor performance as a regular activity.

iv. Address the relevance of learning programmes

Very few of the evaluations obtained reviewed the learning programmes which had been developed. This makes it difficult to establish the extent to which the curricula and available materials are appropriate for the courses being offered.

However, what was found was that with respect to occupational programmes, where employers understand the programme content and find it sufficient for the job opportunities being identified, programmes were able to successfully place learners at the end of the programme.

There was also evidence that results further improved where employers were engaged in the design of the programme, specifying entry requirements and informing the learning institution of the kind of competencies required for employment.

60

In addition, it was found that this was further enhanced in those programmes where the providers engaged mentors who had experience in the industry, and who were able to work with learners during the training sessions and in the workplace, so as to assist the learners to make the linkages between the theory and the practice.

v. Providing support to enable young people to access formal employment

It was found that it is critical that young people, that have limited networks, are supported to access opportunities. This involves a number of steps: including assessment, matching and where necessary bridging. Critically, it then involves working with employers to encourage them to recruit new entrants with limited experience, and also entails preparing the young people for any selection process that employers may have in place, as well as for the workplace (in terms of both work readiness and an understanding of what to expect in the workplace).

To complement the above, it is suggested that there are a number of possibilities emerging about possible incentives that could be put in place: for example, one idea which has been tabled for several years is that participation in a public employment programme can earn a participant a “voucher” to access further learning. Another option that has been piloted and is being discussed, is that of the wage incentive. This has also been shown to have possibilities where coupled with other forms of support (as outlined above).

vi. Providing support to enable young people to initiate an enterprise

Successful entrepreneurial programmes in secondary schools tended to include several activities:

They helped learners understand the concept of entrepreneurship and gave specific examples of people who have achieved success in this area

They engaged learners in practical activities such as starting small businesses and experiencing at first hand the need for market research; budgeting and product development

They helped learners identify ways of exploring entrepreneurial activities while they were still at school, and identifying possibilities beyond school.

For out of school learners two types of entrepreneurial development programmes were dominant:

The first intended to recruit people interested in business activity, with no tangible skills development interventions to be provided. These programmes had to clearly define the technical and general skills participants would require and then assess applicants in relation to these prior to recruitment.

The second aimed to support people who had completed a learning programme to establish income generating opportunities using those skills at the end of the programme. Lessons for success in these programmes included making learners aware of the entrepreneurial opportunities while they were still engaged in the technical training; providing dedicated business incubation support through access to tools, workshops and advice beyond the programme, and a recognition that learners may require 2-3 years of this support before they become fully independent.

61

It was also noted that employers are increasingly building entrepreneurial development into supplier development programmes so that there is a market for the goods/services, although other programmes emphasise the need for diversity of markets so as not to develop dependency.

vii. Ways to design Public Works programmes that meet the needs of youth

In the second phase of the EPWP, projects began to focus on providing only the training required to undertake the work, rather than on skills training that enables individuals to exit into an economic activity: this change took place as it became clear that for many projects, there was not sufficient time, nor capacity, to allow substantial skills training. However, it was recognised that the situation is slightly different for 18-24 year olds who participate in public employment programmes. The intent for this group of beneficiaries is not that they remain within the programme, but that it provides structured activity and some income while they assess other opportunities which they may pursue.

The CWP reports that 18-24 year olds have higher literacy and numeracy rates than the older workers, and thus they are usually employed in the leadership positions on site. This means they work at a slightly higher rate and for more days. CWP staff believe that in many communities, school leavers now see the CWP as a chance to “progress” and network, and not as a keep busy programme. They also report that young people are eager for any training opportunity, and prefer work which engages them in activities such as community education or building relationships and skills. The CWP and the NYS also report that in programmes where youth undertake work, and demonstrate leadership, which is valuable to communities, the status of the young people increases, and they are more likely to remain with the programme, and in a number of instances, are able to access employment because of this.

7 Institutional Landscape

In order to consider the manner in which a possible project could be implemented there is a need to consider the array of institutions that are implementing and supporting youth programmes to address youth unemployment. There is limited data available on the institutional landscape, however a survey22 that was recently completed provides some useful insights in this regard. The survey clustered organisations in terms of four distinct categories related to the functions performed by the organisations. Categories are defined with a view to bundling similar initiatives such that a basis for comparison is established. The categories are as follows23:

“Clearing-house”: The clearing-house category includes the development of a database comprised of work-seekers and/or employers, with some degree of assessment and/or screening to filter or categorise entries. In relation to the supply of labour, the clearing-house functions that were considered comprise (i) sourcing and screening work-seekers, (ii) conducting assessments and/or psychometric tests of work-seekers, (iii) developing a database of labour-supply, (iv) channelling work-seekers and (v) providing career guidance to work-seekers. In relation to demand for labour, the clearing-house functions comprise (i) mapping the demand for labour, and (ii) engaging with employers to increase awareness of supply-side initiatives.

22 The survey was completed by Genesis on behalf of Yellowwoods, 2015 (unpublished)23 Note that a full list of organisations included in the sample is available providing a useful directory of organisations undertaking related work.

62

“Learning & Employability”: This category refers to functions that relate to the provision of (i) work-readiness training to work-seekers, both with regards to behavioural training / development of soft skills and minimal technical training / development of hard skills, (ii) training to address functional competence gaps (e.g. English communication and mathematical skills) that are required in order to meet the entry requirements of employers, (iii) sector-specific training, which is intended to give candidates exposure to what is expected in the working world but is not employer-specific training, and (iv) work experience or work exposure that is essentially temporary in nature. With reference to the demand-side, this category includes the provision of support to employers to facilitate or educate around hiring of work-seekers from the bottom of the pyramid.

“Linking & Placement into education, work or entrepreneurial activity”: This category is primarily concerned with the function of connecting work-seekers to employers. The connecting function may be performed through various means such that candidates are linked to a wide range of work opportunities that are aligned to market needs and their profile of success, including (i) securing interviews of candidates with employers and (ii) providing physical/digital space whereby the employer and work-seekers can meet/engage, and (iii) placing candidates into fulltime jobs having been equipped with the basic skills, behaviours and mindset to adequately function and retain their jobs.

“Transition into self-employment/entrepreneurship”: This category refers to the functions of (i) developing entrepreneurial skills of candidates and (ii) supporting/assisting candidates in the establishment of small enterprises.

Based on these categories the following institutional landscape emerged:

Figure 3: Number of organisations per category of service provided (Number of organisations)

Clearing-house

Learning and Employability

Linking and Placement

Transition into self-employment/entrepreneurship

0

20

40

60

80

100

120

94

109

93

52

Figure 4: Number of organisations operating per province (Number of organisations)

63

GP WC KZN EC LP MP FS NW NC Nationwide0

10

20

30

40

50

60

70

80

9080

76

6158

45 4440 38

3530

Number of Organisations

Source: Genesis Analytics

Figure 5: Percentage of total organisations serving industries, by industry served (% of total organisations)

0%5%

10%15%20%25%30%35%40%45%50%

Source: Genesis Analytics

Number of organisations per source of funding (Number of organisations)

64

0

10

20

30

40

50

60

70

59

49

41

3125

11 10

1

19

Source: Genesis Analytics

The study draws the following conclusions based on the sample:

1. It is clear that there is much activity in the youth employment space in South Africa, across the nation, but predominantly in urban areas - although this is not captured in the data but is evident from the locations of the largest and most innovative initiatives. Although widespread, the provinces with greatest activity are Gauteng, Western Cape and Kwa-Zulu Natal perhaps reflecting the relatively large service economies of the provincial cities within these provinces. Any evaluation subsequent evaluation of best practice should therefore look to these provinces as the starting point of inquiry.

2. There is a broad swathe of industries where there is significant supply-side activity. Disaggregating industries according to the StatsSA categories, indicate that organisations in the directory serve all of the industries listed. The most common industries served are the ‘administrative and support activities’, ‘education’ and ‘information and communication’ industries. The least served industries include ‘real estate activities’, ‘public administration and defence’ and ‘electricity, gas, steam and air conditioning’ industries.

3. The majority of the organisations that responded to the survey operate on a small scale, supporting less than 500 candidates on average per annum. This is indicative of the challenges perceived with operating at large scale in the youth employment space.

65

8 Proposal for a possible project

During this assignment we have considered a vast number of evaluations undertaken both nationally and globally. We have also considered policy documents, discussions and debates taking place about youth in the country as well as elsewhere, and have reflected on the context of young people in South Africa. A substantive amount of work has been done, many lessons have been learnt – some point to challenges, but there are also really positive examples of programmes that are successfully enabling young people to make the transition. These lessons from this report and previous work completed are captured as Annexure A to this report.

Work with Department of Labour and other institutions (such as Harambee) to broaden and strengthening employment services. It is noted that there is already research24 that is taking place about ways in which the Public Employment Services can be strengthened through low cost initiatives. This includes three interventions: Reference letter template (Previous employers provide job-relevant information about job-seeker); Certificate (Indicates score on basic numeracy and English language test) and Counselling (Group session with labour centre counsellor (combined with action plans, peer support and reminders). There has also been considerable research undertaken at Harambee – and there are also three on-going RCTS exploring impact of enriching workseeker programmes, access to information and financial literacy – these all point to ways in which these programmes can be further strengthened. More recently programmes such as the International Youth Foundation are exploring ways to integrate work readiness skills into foundational learning programmes that provide access to apprenticeships and learnerships are also being explored and could be further strengthened.

It is proposed that there is a need to build on strengths of the system and consider ways of supporting partnerships and linkages that can strengthen the way in which public and private institutions interface to maximize their respective strengths. This should include specific interventions to grow those aspects of the programme that have been found to have the greatest impact. It is noted that these initiatives are already funded by government and in the case of Harambee the Jobs Fund and the private sector: this means that any engagement with Jobs Fund would need to indicate the specific contribution that this programme will have to the existing landscape.

Supporting a youth service/internship programme that brings young people into the system and sees them deployed to support youth employment initiatives including the Employment Services as well as other initiatives. This could include a formal skills programme (such as in the case of NARYSEC) and would include a structure workplace experience for these young people that would enable them to attain their qualification and also strengthen youth employment services.

With respect to programmes to support foundational learning, occupational training, entrepreneurial development and public employment programmes: it is suggested that further work needs to be done in this regard to determine if there are particular ways in which the UNDP can add value in these areas and based on this a more proposal be developed.

24 Presentation made by Rulof Burger (with Martin Abel, Patrizio Piraino, Samantha Ndiwalana & Velenkosini Matsebula), Job counselling, productivity signals and employment: A randomised evaluation with the Department of Labour, 2015 (unpublished)

66

References

Altman, M and Marock, C (2008), Identifying appropriate interventions to support the transition from schooling to the workplace

Banerjee A, Galiani S, Levinsohn J, McLaren Z, Woolard I. 2008 Why has unemployment risen in the New South Africa? The Economics of Transition 16(4): 715–740. DOI: 10.1111/j.1468

0351.2008.00340.x

Bell, D., & Blanchflower, D. (2010). Youth unemployment: déjà vu?.

Bernstein, A (2012) Coping with unemployment – Young peoples strategies. The Centre for Development and Enterprise, Johannesburg, South Africa.

Betcherman, G., K. Olivas, and A. Dar. 2004. “Impacts of Active Labor Market Programs: New Evidence from Evaluations with Particular Attention to Developing and Transition Countries.” Social Protection Discussion Paper 0402, World Bank, Washington, DC.

BHORAT, H. 2003. The post-apartheid challenge: labour demand trends in the South African labour market, 1995-1999. DPRU (Development Policy Research Unit), Working Paper 03/82.

BHORAT, H., LEIBBRANDT, M., MAZIYA, M., VAN DER BERG, S. and WOOLARD, I. 2001.Fighting poverty: labour markets and inequality in South Africa, UCT Press, Cape Town.

Bodibe, O. and Ndungu, K. (2010). Youth Wage subsidy and the spectre of a two-tier labour market.

Branson N, Wittenberg M. (2007). The Measurement of employment status in South Africa usingcohort analysis, 1994–2004. South African Journal of Economics 75(2): 313–326.

Chandra, V., Moorty, L., Rajaratnam, B. & Schaefer, K. 2001. Constraints to growth and employment in South Africa. Report 1: statistics from the large manufacturing firm survey. Informal discussion papers on aspects of the South African economy No. 14, World Bank Southern Africa Department,

Washington D.C.

Chandra, V., Moorty, L., Nganour, J.P., Rajaratnam, B. & Schaefer, K. 2001. Constraints to growth and employment in South Africa. Report 2: evidence from the small medium and micro enterprise firm survey. World Bank discussion paper 15, World Bank Southern Africa Department, Washington

D.C.

Cloete, N. (2009). Responding to the educational needs of post-school youth. African Minds.

Centre for Development and Enterprise, July 2008, South Africa's Door Knockers:Young people and unemployment in metropolitan South Africa

67

Centre for Development and Enterprise. November 2012. Coping with Unemployment: Young people’s strategies and their policy implications. CDE workshop: Johannesburg.

DINKELMAN, T. and PIROUZ, F. 2001. Individual, regional and household determinants of labour force attachment in South Africa: evidence from the 1997 October household survey, Trade and Industrial Policy Secretariat (TIPS) Working Paper 1-2001.

Dolton, P. & O’Neill, D. (1996). The Restart Effect and the Return to Full-Time Stable Employment. Journal of the Royal Statistical Society, Series A, Vol. 159, No. 2, pp. 275-288.

Duff, P. And Fryer, D. (2004) The dynamics of job search and microfoundations of Unemployment. Evidence from Duncan Village. Forum Paper

Ellwood, D. (1982), 'Teenage Unemployment: Permanent Scars or Temporary Blemishes?' in The Youth Labor Market Problem: Its Nature, Causes and Consequences, edited by Richard B. Freeman and David A. Wise, pp. 349-390. Chicago: University of Chicago Press, 1982

Fedderke, J. W. (2012) , The Cost of Rigidity: The Case of the South African Labor Market (December 2012). Comparative Economic Studies, Vol. 54, Issue 4, pp. 809-842, 2012. Available at SSRN: http://ssrn.com/abstract=2188794 or http://dx.doi.org/10.1057/ces.2012.25

Jeanne Gamble and Carel Garisch, Youth Development in South Africa - A Misereor Research project: Summary of Key findings, April 2007

GCIS (Government Communications and Information System), 2011. Statement on theCabinet Lekgotla of 26–28 July 2011, Pretoria.www.info.gov.za/speech/DynamicAction?pageid=461&sid=20345&tid=38379Accessed 13 February 2013

Katz, E. 2008. “Programs Promoting Young Women’s Employment: What Works?” Paper presented at The World Bank Launch of the Adolescent Girls Initiative, “The Adolescent Girls Initiative: An Alliance for Economic Empowerment,“Washington, DC, October 10.

KINGDON, G. and KNIGHT, J. 2001b. “What have we learned about unemployment from microdatasets in

South Africa.” Social Dynamics 27(1): 79-95.

Kraak, A (2013): State failure in dealing with the NEET problem in SouthAfrica: which way forward?, Research in Post-Compulsory Education, 18:1-2, 77-97

Levinsohn, J. (2008). Two policies to alleviate unemployment in South Africa. CID Working Paper No. 166. Harvard: Centre for International Development.

Mourshed, M., Farrell, D., & Barton, D. (2012). Education to employment: designing a system that works.

National Treasury, Confronting youth unemployment: policy options for South Africa, Discussion Paper, February 2011

Nudzor, H. (2010). “Depicting Young People by What They are Not: Conceptualization andUsage of NEET as a Deficit Label.” Educational futures 2 (2): 12–25

68

Paton, C. (2013) Study shows benefits of youth wage subsidy. Business Day Live 5 March 2013. Accessed on 20 March 2013: http://www.bdlive.co.za/national/labour/2013/03/05/study-shows-benefits-of-youth-wage-subsidy

Pellizzari M. (2011) Employers’ search and the efficiency of matching. British Journal of Industrial relations 49(1): 25-53.

Philip, K. (2012). The rationale for an employment guarantee in South Africa. Development Southern Africa, 29(1), 177-190.

Rankin, N., Roberts, G., & Schoer, V. (2012). The Challenges that Young South Africans Face in Accessing Jobs: Could a Targeted Wage Subsidy Help?.

Rankin, N. Gareth, R. Schoer, V. and Shepherd, D. (2012) Young people and jobs during the financial crisis. (ed)

Rankin N & Schoer V (2011) Youth employment, recruitment and a youth-targeted wage subsidy: Findings from a South African firm level survey.

Rees A. (1966) Information networks in labour markets. The American economic review 1(2): 559-566.

Rodriguez-Planas, N. 2008. Understanding Why Public Employment Services and Small-Business Assistance Programs Work at Getting the Unemployed Back to Work: Evidence from Romania. Working Paper. Universitat Autonoma de Barcelona.

Schöer, V., & Leibbrandt, M. (2006). Determinants of Job Search Strategies: Evidence from the Khayelitsha/Mitchell's Plain Survey. South African Journal of Economics, 74(4), 702-724.

Seekings, J. (2012a) How young people look for work (ed) in Coping with unemployment. Centre for Development and Enterprise, November 2012.

Seekings, J. (2012b). Entry into the labour market. Chapter 1. Draft report used for presentation at Carnegie Conference. University of Cape Town.

Singizi/DPRU (March 2010), Developing an appropriate Public Employment Service model for South Africa, Research undertaken for the Department of Labour and commissioned by GIZ

Solidarity (2012) The South African labour market and matriculants’ prospects.

Smith, J.M. (2011) Connecting Young South Africans to Opportunity: Literature review and strategy. Cape Town: DG Murray Trust. Accessed at http://www.dgmt.co.za/files/2011/05/Literature-Review-Strategy.pdf

Statistics South Africa (2012) Quarterly Labour Force Survey. Third Quarter

TIPS (Trade and Industrial Policy Strategies), 2010. Community Work ProgrammeAnnual Report 2009/10. TIPS, Pretoria

69

Van Reenen, J. (2003). Active Labor Market Policies and the British New Deal for the Young Unemployed in Context. Working Paper 9576, National Bureau of Economic Research.

White, H. (2012) What shapes young people’s job preferences? A view from rural KwaZulu Natal (ed) in Coping with unemployment. Centre for Development and Enterprise, November 2012.

Wurmli, A. (2010) Active labor market programs for youth in Africa. A framework for engagement. December 5, 2010.

Yu, D. (2012) Youths in the South African Labour market since the transition: A study of changes between 1995 and 2011. Stellenbosch Economic Working Papers: 18/12. October 2012

1

70

Annexure A: learning for future design of youth employment programmes

This section provides a summary of the key learnings that are emerging and these are presented below to guide discussion and deliberations. The first section of this conclusion talks to what we have learnt about effective programme design. The second section highlights the more macro issues that emerge from this report, it is anticipated these will form the basis for future engagement amongst role players.

SECTION ONE: LEARNING ABOUT PROGRAMME DESIGN AND IMPLEMENTATIONTIMING The point at which programmes are implemented is critical. The learning

from the school level interventions show that the point (Grade) at which particular programmes are introduced is a key success factor (and the Grade will depend on the type of programme i.e. those which depend on learners having made a choice about career should be introduced later, while those that address foundational skills and depend on high levels of trust and commitment need to be introduced earlier).In relation to post-school interventions, and this is particularly seen in the international review, there is an imperative to catch youth before they have been unemployed for an extended period of time.

TARGETING The ‘youth’ are an extremely diverse group: Programmes should be targeted at specific groups of young people: that is, there must be diverse programmes that meet these varied needs. Programmes should then ensure that the target group is aware of these programmes and that the programmes enable this target group to effectively access and participate in the process. This includes considering the balance of sanctions and incentives that are required to retain youth in the programmes.

SELECTION The effective selection of candidates for programmes is continually raised as a key success factor: this links to the point highlighted above – different programmes will be effective for different young people. There is therefore a need for careful selection of young people prior to entering programmes: and young people should either be accepted directly into the programme (where they meet the requisite criteria) or should be supported to develop these competencies prior to beginning the programme, or be directed to an institution that can support the young person to acquire these competencies.

INFORMATION Information and guidance should be offered to young people about what the programme will provide and what opportunities may exist beyond the programme: this should ensure that the young people that are recruited are interested in and motivated to take part in the programme. It should also ensure that young people understand what the expectations are of them, and what the conditions of the programme may be, so that they are able to determine whether they wish to make a commitment. It is then critical that changes that take place are communicated to the young people – and there are an increasing number of ways to do this such that young people are kept abreast of developments.

DURATION Programmes, which have a longer duration, and therefore a sustained or sustainable funding source, are more likely to succeed. This needs to take into account the reality that there is a long lead-time to get to the point of directly observable success.

Further, examples provided in this report – such as Go for Gold illustrate

71

the value of working with young people over a sustained period. The importance of programmes of a lengthier duration is further illustrated by the examples of the entrepreneurial development programmes provided in this report such as Clothing Bank, which highlights the need for sustained support to be provided to young entrepreneurs. As the Ikusasa programme notes, the process of shifting young people in South Africa from a “dependent paradigm to a responsible, mature and independent paradigm” is a long, hard process.

Further, examples in this report, such as Harambee, point to the need to create credible and effective relations with employers such that it is possible to explore ways in which the work environment and/or work processes can be modified to effectively and successfully accommodate young people.

RELEVANCE This is linked to context and to selection, but a strong learning that has emerged from the evaluations conducted, is the need to explore ways to ensure that learning programmes are more relevant: the examples, such as Harambee and Mr Price, where they have achieved high placement rates are those where (i) work readiness is a strong feature of the programme relating to both the work context into which the young people will be entered and is able to instil the discipline and attitudes required in the workplace, and (ii) where employers are involved in different aspects of the programme such as selection, curriculum, assessment and of course placement.

This involvement ensures that the programme is relevant for the workplace - however, there is equally a need to ensure that programmes provide a basis for further learning and this has implications for the nature of the programme.

Further, the programmes that are most effective are those when young people can see the relevance of the programme for their own lives, for example both City Year and LoveLife report that young people find the programme useful when it provides them the possibility of changing their status in their communities. Further, Promaths highlights the finding that when young people could see maths as something that opens up opportunities they commit to the programme and are willing to do the extra tutorials – even on the weekends, because they can see that it helps them.

CONFIDENCE Critically, programmes needs to focus on building the esteem and confidence of the young person. This is illustrated by programmes such City Year, LoveLife and increasingly CWP, which has shown the importance of young people receiving affirmation for the work that they are doing in the community, and creating spaces for young people to develop their leadership skills is critical.

This philosophy needs to be built into the structure and design of the programme: Further, some of the learnership/FET college interventions show that successful programmes are often built on intensive one-to-one relationships between a young person and a mentor of some description.

In addition, to develop this confidence, programmes need to have markers of success – whether it is receiving an award in the workplace, achieving a matric pass, completing a qualification, successfully starting a small business or getting a job: these need to be effectively communicated as part of the programme, using language and methods which are accessible and attractive to young people.

INTEGRATION The evaluation shows that for successful interventions, there is a need for multiple levels of integration. This includes integrating theory and practice, as well as services to support the employability of young people.

72

This will include integrating work readiness as well as creating opportunities for on-the-job application of skills as well as services to support the placement of young people in sustainable jobs and opportunities. Learning from these evaluations point to the need to enhance the efficacy of the support provided to young people to enable them to access formal employment and/or enterprises: suggesting the need for programmes which have strong assessment, matching, and placement components.

Further, there is a need to integrate other forms of learning support within the programmes: this may include bridging support within a programme, or could include linkages with other providers that may be enabling young people to complete their matric through an adult education centre.

INSTITUTIONAL CREDIBILITY

The programmes described in this report demonstrate strongly that there is a need to work with institutions that have credibility, in terms of what the programme can deliver, as well as, it’s relative ‘attractiveness’ in terms of social norms: essentially, programmes which are to attract large numbers of young people have to have ‘street cred’ – people should know that they work. In addition, the institutions need to have credibility with employers – there is a need to ensure that employers trust the institution that the young people that they will recruit have the requisite competencies as well as attitude.

There is much greater strength in institutions that have developed relationships with partner organisations to enable them to refer young people to relevant services, and, where pertinent, to bring these partners in to support a particular element of their programme.

Further, It is noted that a prior research programme undertaken as part of this UNDP/ILO/DoL//NYDA process recommended that there is a need to consider ways to improve the current databases that are in place to support job seeking. The paper suggests that a number of technical details can be improved relating to how data is stored. The analysis also suggests further ways in which the databases and the way they are maintained could be changed with the aim of providing improved services to work-seekers, as well as a better understanding of what the services are achieving.

The research also suggests that it would be particularly useful to improve the recording of what happens to the work-seekers after they are registered on the database, and of whether and when the work-seekers are placed in jobs or other opportunities. It is further recommended that it would also be good to have details of the placements, such as the industry, occupation, starting salary and location, as well as whether the placement was secured through the job placement agency (ESSA, SAGDA or NYDA) or through other means. The research suggests that ideally one would also want further information on whether the person stays in the job, though it is noted that this is complex.

SECTION TWO: LEARNING: KEY SUCCESS FACTORS CRITICAL TO MAKING CHOICES

This paper has highlighted the complexity of the issues facing young people – the large numbers that have not completed their matric, the alarming statistics about the NEETs, and the numbers of factors that effect both how people seek work and the possibilities of securing economic and learning opportunities. For example, location, gender, race and education levels are all factors that affect how one seeks work, and the likelihood of securing an economic opportunity.

This paper also highlights the policy environment in which choices are being made – and points to the debates that are taking place with respect to which policy and programmatic options to strengthen and to introduce.

73

It considers then, what is required to make different choices work – and reflect on the factors that enable programmes to succeed based on South African and global experience. This learning has been distilled in the previous section of this conclusion.

The report takes as its starting point the type of interventions that have been discussed in this report, which are:

Those that focus on improving the ability of secondary school learners to make a transition into further learning and the workplace

Those that enhance the work readiness of young people and support the placement of young people

Those that support the development of occupational competence Those that enable entrepreneurial development Those that create public employment opportunities.

The report suggests that where these are offered well – in line with the programme design principles suggested above – all of these programmes have value for young people. Flowing from this, the report suggests a scenario, which emphasises the need for a sufficient diversity of quality programmes that are targeted effectively and meet the varied needs of both young people and the labour market. The report therefore argues that role players considering how to engage with these recommendations when deciding on programmes and interventions to support and implement should consider some critical factors. These include:

That the programme can be offered at scale That the programme can be sustained That there is a credible institution(s) that can deliver the programme That the programme is simple enough to implement That the programme will have sufficient impact That the programme works innovatively with the range of challenges that young people face in

accessing economic opportunities

When reviewing these factors, there are some importance nuances that should be considered when determining the objectives for programmes:

SIGNALS This paper has alluded to the concern that large numbers of young people with a matric are not managing to access economic opportunities. Research suggests that this raises the question for other young people as to why complete matric. Data in this document already highlights concerns about the decrease in participation rates after Grade 9: this suggests the need to consider programmes that encourage young people to stay in school – and international examples highlight the value of incentives to encourage young people to do this.

It also highlights the value of programmes that require a matric as these programmes create a signal that it’s important to achieve the matric.

BUILDING NETWORKS

The importance of networks, in enabling young people to access economic opportunities, has been strongly illustrated in this paper. The paper shows the extent to which those young people that are outside of these networks – where no-one in the household is working, where their home is located far from transport and/or workplaces, struggle to access opportunities. The paper also highlights the extent to which the nature of the network is likely to even

74

determine the size of enterprise in which the young person secures work. There is a need to support interventions that build these networks: for

example some of the placement programmes profiled (Harambee, Mr Price) deliberately build networks and consciously enable young people who might not traditionally have access to those networks (the ‘outsiders’) to get into them – the extent to which these networks are created, and support a wider circle of young people to access opportunities will be traced as part of the Harambee evaluation process. The LoveLife example also shows how, even if the network is not deliberately focused on providing access to job opportunities, simply being part of a network, doing work which is seen as valuable, enhances young people’s self esteem dramatically and considerably increases their chances of getting formal, full time employment.

In a slightly different example, DGMT is actively working with young people that have been through these programmes to encourage an active network of young leaders: it is suggested that these young leaders can in turn create new networks – and (taking into account what has been argued in this report) perhaps in the process create new ‘insiders.’

WORK EXPERIENCE

The report has illustrated the value of young people accessing work experience. It has shown a range of models that can be supported to achieve this: workplace exposure during a programme, internships or less structured workplace experience after graduation, or as is the case with Go for Gold after matric and before beginning the programme, as well as placement into work experience, and the wage subsidy. Further, the public employment programmes offer valuable insights as to ways in which young people can develop a positive identity and the requisite skills for the workplace: the examples provided in this report offer examples such as CWP, where young people can have access to guaranteed work for 2 days a week allowing them time to also pursue other options. Youth service programmes have provided workplace experience, in many cases considerable skills development and have focused on developing values and when well run a sense of pride and the confidence to pursue a range of options.

CREATING COMPLIMENTARY PATHWAYS

The evaluations that are highlighted in this paper, suggest not only that there must be a range of programmes to address varied needs and cohorts: but also that in some cases – either as part of the institutional offering or through partnership arrangements, the young people should have access to what is described here as a continuum of programmes.

To take the proposed wage subsidy as an example: if the policy is introduced, placement programmes involving powerful networks need to be in place to enable young people to benefit from the policy, or else the ‘outsiders’ will just continue their ineffective job search strategies, going ‘place-to-place’ to find work from employers. These employers may be – and initial research suggests that they will be - more willing to take these young people on, due to the subsidy, however this will be isolated from a strategy of changing employer culture with respect to new entrants, or of ensuring that the young people that are placed have been matched so that the chances of them sustaining their opportunity is likely to be higher. Programmes that have strong linkages with employers as well as effective assessment, matching and bridging capacities will be critical in this respect.

Further, the DoL’s employment centres, which have a strong national footprint, are ideally placed to ensure that ‘outsiders’ could become ‘insiders’ – the extent to which they source and assess young people and then place them

75

in programmes which have direct access to employers is seen as critical. In addition, within programmes there also needs to be more of a

continuum: the Go for Gold programme is instructive here, where learners are recruited in Grade 11, taken through work experience, into further education and finally into employment. This model highlights the extent to which success is possible where young people received sustained support and access to the multiplicity of interventions required.

Critically this involves role players determining what their respective contribution should be, and determining what capacity and linkages are required to enable this.

BALANCING SCALE AND INNOVATION

Flowing from the above, it is recognised that in many of the programmes, there is an on-going tension in the system relating to the need for scale whilst searching for innovation. This debate recognises that for government there will be a real need to focus on scale, though it will be important that space is created for innovation.

There are a number of innovative programmes highlighted in this paper – and the temptation is to simply determine a plan to ensure that the successful programmes go to scale. However, there may be some programmes which – to succeed – will need to be contained. Such a programme could test out innovations – with respect to the nature of the programme, the institutional arrangements, the opportunities that are being supported: attention would then need to be paid as to how such a programme could be replicated or how elements of these programmes could be integrated into a larger programme.

Other programmes, which have simpler designs and are easier to implement may be able to be offered to scale – for example one of the most attractive factors of the wage subsidy is its simplicity to implement. The proposals for a placement voucher have also been suggested because of their potential simplicity: though these need to be tested to establish how to ensure that the system remains simple, whilst ensuring there is sufficient levels of monitoring to ensure the quality and credibility of the service - that is, that it leads to sustainable employment. Similarly, with regards to the transport subsidy, it is noted that while it is very simple in developed countries where there is an integrated transport system, there is still a need to understand how this would work in SA: the Presidency is currently testing such an approach and whether this can be simply applied relative to the impact that it has will then need to be considered.

Some institutions and initiatives may lend themselves to scale, though to enhance their level of success they may need to determine whether there are institutional and programmatic innovations that can be introduced to achieve this. For example, the PES has a well-established national footprint, and is able to work at scale. However, there are target groups that may require more labour intensive assistance than can be reasonably provided with the PES limited resources, and there are also services, interventions or target group clients, which require expertise that goes beyond the normal mandate of the PES. There is a need for the PES to explore partnerships that can enable them to work more effectively and maximise what they can achieve with the available resources.

76

Similarly NYDA is ideally positioned – as it has direct access to government as well as NGOs - to test certain innovations, and then determine whether these should be taken to scale (as indicated, some projects may need to remain focused on smaller numbers), and where it is agreed that the programme (or elements of it) should be taken to scale there would be a need to then determine what is required to make this step-up change.

This requires of funders that they are willing to fund both scale and innovation (and some funders may select innovation while another leans to scale).

LEARNING, MONITORING & EVALUATION

It was found that some of the more successful international and local programmes have ‘evolved’ over time, with changes being made to the programme or spin-offs being introduced, in response to effective evaluations of the various programmes.

However, there are serious gaps in the data related to the effectiveness (or otherwise) of the various programmes initiated in this area. There is a strong need to improve on this and to create a platform for sharing learning in an ongoing way, so as to encourage greater levels of collaboration and to support the continual development of programmes.

77