Africans aged between 15 and 24 currently comprise 60% of the continent’s unemployed, with 22-million of those 40-million unemployed youths having abandoned the search for a job, the latest ‘African Economic Outlook’ warns.

The 2012 report, which contains country notes on 53 countries, urges African governments to pursue programmes and incentives that will help facilitate job creation and the acquisition of new skills among young Africans, whose numbers are set to double to around 400-million by 2045, from 200-million currently.

Cowritten by the African Development Bank (AfDB), the OECD Development Centre, the United Nations Economic Commission for Africa (UNECA) and the UN Development Programme (UNDP), the 293–page study has ‘Promoting Youth Unemployment’ as its main theme.

Its release comes amid strong disagreement between South Africa’s official opposition, the Democratic Alliance, and the Congress of South African Trade Unions (Cosatu), over a National Treasury proposal to implement a youth wage subsidy to incentivise employers to take on young workers. The report notes that South Africa had a youth unemployment rate of 48% in 2009, compared to 19% for adults.

Nearly two years ago, the South African government proposed a youth wage subsidy for workers under the age of 30 whose salaries are below the personal income tax threshold. It will be paid for a maximum of two years and have a maximum value of R12 000.

However, the subsidy has not been implemented, with Cosatu warning that it could create a dual labour market, which would undermine worker prospects and rights.

President Jacob Zuma has said government still intends implementing the scheme, but that its final design is still being negotiated.

Business Unity South African argues that the scheme “offers more advantages for youth employment than many other short-term job creation initiatives and could create over 400 000 jobs”. It has also pointed to the success of similar schemes used in other countries in improving youth access to the labour market.

SIGNIFICANT THREAT

The African Economic Outlook 2012 document asserts that youth unemployment figures will increase unless Africa moves swiftly to make youth employment a priority. It notes, too, that youths can present a significant threat to social cohesion and political stability if they do not secure decent living conditions.

“The continent is experiencing jobless growth”, AfDB chief economist Mthuli Ncube says. “That is an unacceptable reality on a continent with such an impressive pool of youth, talent and creativity”.

Creating productive employment for Africa’s rapidly growing young population is an immense challenge but also the key to future prosperity, the authors say.

The report notes that, between 2000 and 2008, Africa created only 16-million jobs for young people aged between 15 and 24, “despite world-topping economic growth rates, and a better-educated youth” – six of the world’s ten fastest-growing economies were in sub-Saharan Africa from 2001 to 2010.

Youth employment, the authors assert, is largely a problem of quality in low-income countries and one of quantity in middle-income countries.

“In low-income countries, most young people work but are poor nevertheless. In African middle-income countries, on the other hand, such as South Africa or the Northern African countries, despite better education, more youth are inactive than working”, OECD Development Centre director Mario Pezzini explains.

With the right policies in place, the continent could capitalise on its recent economic growth to achieve a development breakthrough. “Youth employment is an investment in the future. It contributes to reducing poverty, wealth creation, well-being and social cohesion,” UNDP’s regional Bureau for Africa chief economist Pedro Conceição argues.

EMPLOYER ATTITUDES

The biggest obstacle is insufficient demand for their labour, while the lack of skills and of knowledge about where to find jobs, attitudes by employers and labour regulations also present hurdles.

A survey shows employer hesitations about hiring young job seekers to be a serious obstacle for the youth in many African countries. Employers prefer candidates with experience and waiting for those young people who already have some experience allows employers to benefit from the training that job seekers might have received elsewhere.

“Employers, therefore, need incentives to give young job seekers a chance. But these must be designed carefully to avoid negative side effects and displacement of existing workers, the authors assert.

Employers should be compensated for taking on apprentices and interns. But it also cautions of unintended side-effects of wage, or training subsidies, such as paying a subsidy for an unemployed person who would have been hired regardless, the substitution effects of creating jobs for a target group by replacing jobs for other groups, or the displacement effects of reducin jobs elsewhere in the market. Subsidies can also impose a stigma on participants.

“Young people need labour market regulations that ensure, as far as possible, that work is decent but at the same time do not inhibit labour market turnover and do not create dual labour markets with a well-protected segment of older incumbents and a less protected segment of youth who would have to bear the full brunt of any adjustments,” the reports states.

The authors conclude that government action to promote youth employment needs better coordination, while efforts to improve availability and quality of employment data in Africa are crucial. They also argue that programmes to promote youth employment in the private sector can be most effective when addressing all important constraints, not just one.

Increased policy focus on youth employment should also be coupled with measures to boost investments in social and economic infrastructure and diversify the continent’s economy.

“Export diversification beyond raw material and private sector development are important to mitigate the continent’s susceptibility to external shocks,” UNECA director of economic development Emmanuel Nnadozie concludes.