Skills grow, but racial rift persists

SA must come to terms with the fact that better schooling is the surest way to overcome inequality

Growing the skilled labour force is vital for reducing inequality and reach South Africa’s economic growth aspirations. Since 1994, the skilled workforce has grown by two million from 1.8-million to 3.8-milllion.

Although black Africans have experienced the largest growth (95%) in labour force participation during this period, their rate of skills acquisition is lower than that of other population groups.

According to Statistics South Africa, over the past 20 years lowskilled labour grew by 49% to reach 4.3-million, semiskilled labour grew by 66% to reach seven million, and skilled labour grew by 108% to reach 3.8-million.

Stats SA describes those in the low-skilled category as having “elementary” skills such as domestic workers; the semiskilled category includes clerks, craftsmen, machine operators and the like; and skilled labour is defined as managers, professionals and technicians.

According to the findings of Stats SA, in 1994 the white population had the highest proportion of skilled employment — 42%, compared to 15% in the black African population. “Between 1994 and 2014, there was a general increase in the proportion of skilled employment for all population groups, although the extent of the increase was vastly different,” the agency said.

The data shows that the lowest increase in skilled employment took place within the black African population, from 15.1% to 17.9%. There were increases of 10.9 percentage points in the coloured population and 19.3 percentage points in white employees. The highest increase occurred in the Indian and Asian population, with growth of 25.5 percentage points.

This is despite the fact that black African worker participation in the economy grew by 95% during the same period. Meanwhile, Indian and Asian participation grew by 47%, coloured worker participation by 45% and white worker participation by 9%.

This anomaly has arisen despite the i ntroduction of t he Skills Development Act and the Skills Development Levies Act, of 1998 and 1999 respectively, to develop and fund skills development.

The importance of investing in skills and education has been noted by many an economist, including the author of Capital in the 21st Century, T h o ma s P i k e t t y , w h o w r o t e : “Knowledge and skill diffusion is the key to overall productivity growth as well as the reduction of inequality both within and between countries.”

Speaking during his tour of the country earlier this month, Piketty again stressed that investing in skills and education is vital for reducing inequality in South Africa and elsewhere.

The country’s growth blueprint, the National Development Plan (NDP), also emphasises that education, training and innovation are critical to attaining its goals of eradicating poverty, reducing inequality, attaining vibrant economic growth of an average 5.4% a year and slashing the unemployment rate to 6%, all by 2030.

In particular, according to the NDP, it is vital to ensure that the skilled, technical, professional and managerial posts better reflect the country’s racial, gender and disability make-up.

According to research published in 2009 by the Southern Africa Labour and Development Research Unit, pupils with tertiary education are twice as likely to be employed formally or informally, and also enjoy a larger increase in earnings.

According to the unit’s 2012 working paper on education and inequality, there is strong evidence that in South Africa, as elsewhere, developments in the labour market have a direct effect on broader inequality.

Earnings inequality increased in the late 1990s but remained fairly stable thereafter, according to the paper, but earnings inequality is highest in the African population and has increased the most over time.

“There are very high returns to post-secondary schooling in terms of both earnings and employment. The lack of improvement in post-secondary schooling among Africans is thus important in understanding the lack of progress in closing the racial gap in earnings,” the paper said.

“A crucial connection between education and inequality in South Africa is the role of education in determining who is employed. With a large pool of potential workers, education may influence employers’ decisions about job allocations.”

A 2004 World Bank paper on returns on investment in education found that, overall, the average rate of return per year of schooling is 10%. Recorded returns to education are highest for low-income and middle-income countries, particularly in Latin America, the Caribbean and sub-Saharan Africa.

Although 15% of government expenditure goes on basic education (R203-billion) and a further 4.6% (R62-billion) goes on post-school education and training, the system is flawed. As the NDP points out, the quality of education for most black children is poor and, by the end of grade 12, only half of every cohort entering the schooling system has completed their schooling.

Furthermore, the NDP says the post-school system is not wellenough designed to meet South Africa’s skills development needs.

Further education and training is ineffective and has had poor results, and the sectoral education and training authorities (Setas) face their own problems, particularly because they have no links with the postschool sector.

As such, the NDP noted, improving the quality of education throughout the system should be one of the priorities over the next 18 years, and beyond.

The NDP recommends accountability throughout the education system, with clear lines of responsibility from state to classroom.

According to a 2014 OECD review of South Africa’s skills after schooli n g , a b o u t 3 . 4 - mi l l i o n p e o p l e between the ages of 15 and 24 are not formally employed or in education or training. Two million of these have not finished grade 12.

The review said an effective transition from school to work is critical in both developed and emerging economies and, in South Africa, the challenge is “particularly severe”.

“The failure to integrate so many people into the labour market threatens social cohesion and, in the context of the post-apartheid transition, this is a particular concern because of the over-representation of black South Africans in the NEET [not formally employed or in education or training] population,” the review said.