SMMES critical to alleviating youth unemployment
AS YOUTH unemployment continues to accelerate in South Africa, it has become clear that the issue is no longer limited to unqualified youth, but many of the qualified graduates in South Africa too.
The growing problem is not unique to the country and is generating huge tension worldwide. According to Nazeem Martin, managing director of Business Partners Limited, this growing problem is magnified by the ongoing youth wage subsidy debate.
He says that as the formal job market continues to tighten, SME’s are becoming an important source of economic growth and job creation for the country’s youth. He believes that this growing sector can play a major role in tackling youth unemployment in South Africa.
He points to data from a recent Labour Force Survey indicating that the youth unemployment problem may be spinning out of control, especially as 28.5 percent of the population is younger than 14.
“The youth unemployment rate has increased by 9.9 percent since the last quarter of 2011, and has risen to a colossal 1.393 million.”
“It has become apparent that the problem is no longer limited to the unqualified youth and has become a serious predicament to all young South Africans, which includes graduates. Statistics from the Labour Force Survey indicate that unemployment among individuals with a tertiary education has also grown 16.2 per- cent since last year.”
He says that the most recent PPS Graduate Professional Confidence Index validates this worrying trend.
“The findings of the index revealed a 6 percent decrease in the number of graduate professionals who were confident of remaining in South Africa in the foreseeable future, as well as a 4 percent decrease in confidence that unemployment will improve in the next five years.”
Martin explains that young South African graduates need to focus on other forms of employment as the formal job market continues to contract. “Entry level jobs at large corporations, usually available to young graduates, are becoming increasingly scarce as large corporations battle through the tough economic conditions.
“SME’s play a crucial role in the local economy and have been estimated to contribute between 52 to 57 percent to GDP and provide about 61 percent to employment.”
He believes that SME’s can therefore play a vital role in absorbing the enormous excess of graduates and should be promoted as a primary choice for young graduates due to the significant growth opportunities that exist within these companies. “In comparison to large corporations, SME’s may provide a better opportunity for employees to grow within a company, especially as the business itself begins to grow. By hiring and training talented graduates, SME’s can benefit greatly from the unutilised resource that exists in the market.
“SME’s represent the engine of growth of an economy and are critical to the reduction of unemployment in South Africa. Promoting graduates to pursue job opportunities in this sector will therefore play an important role in fuelling economic growth and facilitating job creation in our country,” says Martin.
He reports that the inaugural quarterly Business Partners Limited SME Index (BPLSI), which aims to measure attitudes and confidence levels amongst the Small and Medium Enterprises industry in South Africa on various issues, revealed that business owners are surprisingly bullish around the growth prospects for their businesses over the next 12 months.
The 2012 Quarter 2 BPLSI revealed that the more than 350 business owners surveyed displayed a 72 percent average confidence level that their business will grow over the next year.