Grown-ups are not do­ing a good job of cre­at­ing jobs

The Mercury - - BUSINESS REPORT - Karabo Mashugane Karabo Mashugane is the chief ex­ec­u­tive of 20/20 In­sight – Spe­cial­ists in B-BBEE Ad­vi­sory, Sup­plier De­vel­op­ment and SME fi­nanc­ing.

AP­PAR­ENTLY, Ge­orge Bernard Shaw, when asked what he con­sid­ered most beau­ti­ful, replied: “Youth is the most beau­ti­ful thing in the world… what a pity that it has to be wasted on chil­dren!” It gave rise to the say­ing “Youth is wasted on the young”, which was pretty much taken to ac­cu­rately de­scribe South Africa’s cur­rent gen­er­a­tion of youth un­til re­cently. Be­fore the #FeesMustFall! cam­paign, they seemed to pale in com­par­i­son to the 1976 gen­er­a­tion.

The crit­i­cisms of the youth by the older gen­er­a­tion al­ways seem strange, be­cause surely the gen­eral char­ac­ter of the youths re­flects the qual­ity of par­ent­ing by the grown-ups?

Every na­tion is duty-bound to nur­ture and in­vest in its youth, but South Africa is not do­ing a good job of this.

De­spite an an­nual na­tional Bud­get of R351 bil­lion for ed­u­ca­tion and skills, Sta­tis­tics SA re­ports that 3.3 mil­lion young South Africans aged be­tween 15 and 24 years are “not in em­ploy­ment, ed­u­ca­tion or train­ing”. It fur­ther places the over­all youth un­em­ploy­ment (those aged 15 to 34), at 38.2 per­cent in quar­ter one of 2018.

The youth make up 63.5 per­cent of the un­em­ployed, pri­mar­ily be­cause the high over­all un­em­ploy­ment rate in the coun­try (26.7 per­cent) gives em­ploy­ers am­ple choice of qual­i­fied and ex­pe­ri­enced labour sup­ply – qual­i­ties that the youth gen­er­ally lack.

The Youth Em­ploy­ment Ser­vice (YES!) is a wel­come in­ter­ven­tion. Nev­er­the­less, good in­ten­tions not­with­stand­ing, the job place­ments un­der YES! will not re­duce un­em­ploy­ment sus­tain­ably, un­less our econ­omy ex­pands in a man­ner that in­creases de­mand for jobs.

An­other com­mon so­lu­tion of­fered to deal with youth un­em­ploy­ment has been to fo­cus on youth-owned busi­nesses. There are even Black Eco­nomic Em­pow­er­ment (BEE) bonus points of­fered to com­pa­nies that sup­port youth-owned busi­nesses.

The ra­tio­nale is a bit puz­zling and seems in­formed by a du­bi­ous “sci­ence”, which finds ex­pres­sion in the fol­low­ing equa­tion:

Youth un­em­ploy­ment is un­ac­cept­ably high + Small and medium-sized en­ter­prises (SMEs) are the key to job cre­ation = Let the youth start and man­age SMEs to solve un­em­ploy­ment in their ranks.

This ef­fec­tively shifts the bur­den of job cre­ation to the youth.

If youth-owned busi­nesses were able to create jobs at a higher rate than those owned by older peo­ple, then it would make sense. But this is doubt­ful, de­spite the mam­moth suc­cesses achieved at early ages by the likes of Bill Gates, Steve Jobs, Mark Zucker­berg, Mark Shut­tle­worth and Elon Musk, for ex­am­ple.

The ex­cep­tions must not be treated as the defin­ing norms for pol­icy pur­poses.

Out­side of sports and en­ter­tain­ment, the ma­jor­ity of peo­ple who have suc­cess­ful ca­reers fol­low a phased and pre­dictable ma­tu­rity cy­cle. They spend their youth study­ing, find­ing their feet and de­vel­op­ing skills that will only be har­vested in their for­ties and fifties.

It is no co­in­ci­dence that man­age­rial and ex­ec­u­tive po­si­tions in cor­po­rate com­pa­nies are gen­er­ally re­served for highly qual­i­fied and ex­pe­ri­enced peo­ple.

If the in­ten­tion is to solve the un­em­ploy­ment prob­lem through SME de­vel­op­ment, then the pol­icy should fo­cus where the chances of suc­cess and job cre­ation are great­est. Of­ten times, it doesn’t.

To cover this short­com­ing, SME de­vel­op­ment sup­port is of­ten mashed with train­ing and skills de­vel­op­ment… a prod­uct of an­other strange equa­tion:

A short­age of skills + High un­em­ploy­ment + Small busi­nesses are the key to job cre­ation = Bun­dle in­ten­sive train­ing with SME de­vel­op­ment pro­grammes to skill en­trepreneurs and create jobs.

The con­se­quence is that there are end­less train­ing cour­ses in busi­ness in­cu­ba­tors that teach “fi­nance for non-fi­nan­cial man­agers”, “mar­ket­ing”, “HR man­age­ment”, etc.

It is oddly ex­pected that after a few days in a class-room, SME own­ers will mas­ter­fully ex­e­cute func­tions that oth­er­wise re­quire pro­fes­sion­als more than seven years of study and fur­ther work ex­pe­ri­ence to gain com­pe­tency.

These “tick box” train­ing pro­grammes are of­ten re­ported as suc­cess­ful SME de­vel­op­ment in­ter­ven­tions.

South Africa needs a few re­al­ity checks if we are to solve the un­em­ploy­ment prob­lem and create proper ca­reer op­por­tu­ni­ties for our youth.

Train­ing is per­sonal de­vel­op­ment, not SME de­vel­op­ment.

En­trepreneurs are too of­ten kept in class rooms dur­ing work­ing hours and away from their real job of driv­ing growth in their or­gan­i­sa­tions.

If en­trepreneurs need train­ing and qual­i­fi­ca­tions, they should regis­ter in part-time cour­ses with ex­ist­ing ter­tiary in­sti­tu­tions. If needs be, they can study and at­tend classes at night and on week­ends.

I must con­fess that I am as guilty as any­one of hav­ing run these SME train­ing pro­grammes. But Al­co­holics Anony­mous has shown that ad­mit­ting to folly hon­estly is the first and cru­cial step to re­ha­bil­i­ta­tion.

Sim­i­larly, we, as a coun­try, must ad­mit forth­with that we have erred and take cor­rec­tive steps.

SMEs are the key to job cre­ation, but if we con­tinue to al­low the SME de­vel­op­ment “box” to be ticked and pat our­selves on our backs sim­ply for com­plet­ing train­ing pro­grammes, we should not be sur­prised when job­less­ness per­sist.

Cor­po­rate South Africa and the govern­ment are co-en­ablers of this “ad­dic­tion”. They pay bil­lions an­nu­ally to SME de­vel­op­ment pro­grammes and in­cu­ba­tors to carry on this train­ing. They should close the tap. The De­part­ment of Trade and In­dus­try is cur­rently con­sid­er­ing public com­ments on the lat­est gazetted amend­ments to the Broad-Based Black Eco­nomic Em­pow­er­ment (B-BBEE) Codes of Good Prac­tice. I would urge them to ex­clude train­ing from qual­i­fy­ing as an SME de­vel­op­ment in­ter­ven­tion.

If cor­po­rates want to fund bur­saries for en­trepreneurs, they should do this from their Skills De­vel­op­ment bud­gets. SME de­vel­op­ment must fo­cus on mar­ket ac­cess and as­sist­ing busi­nesses to de­liver on op­por­tu­ni­ties given.

A more ef­fec­tive govern­ment pol­icy would be to en­cour­age ex­pe­ri­enced pro­fes­sion­als and cor­po­rate ex­ec­u­tives to leave the com­fort of their jobs and start new busi­nesses. They should be pro­vided with “safety nets”, in­cen­tives and start-up fund­ing com­bined with private eq­uity.

These pro­fes­sion­als al­ready pos­sess man­age­ment skills which will in­crease their prob­a­bil­ity of suc­cess. It would re­duce the cost and waste in SME de­vel­op­ment. Most im­por­tantly, it would create job op­por­tu­ni­ties and help ab­sorb ex­cess youth ca­pac­ity in the coun­try.

Jobs would re­sult not only from the busi­nesses they create, but also from the cor­po­rate po­si­tions they leave be­hind.

South Africa needs a few re­al­ity checks if we are to solve the un­em­ploy­ment prob­lem and create proper ca­reer op­por­tu­ni­ties for our youth.

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