Entrepreneurship could cure SA’s growing youth unemployment crisis

Youth unemployment in South Africa has reached boiling point and has spurred on heated political debates and mass protests ending in violence. Governments around the world have tried to react to the mass youth protests and the swelling problem by implementing labour market policies, such as subsidised wages, tax incentives and encouraging school-work transition through apprenticeships and training programs. However, the unemployment figures have continued to soar and have not shown signs of slowing down.

According to Nimo Naidoo of the Sanlam/Business Partners Entrepreneur of the Year® competition, the rising levels of youth unemployment can be effectively curbed through the promotion of entrepreneurship as a viable career choice for South Africa’s youth. However, it requires a committed change in South Africa’s public perception and culture.

She says that the UN estimated last year that 74.8 million young people, between the ages 15 and 24, remained unemployed worldwide, while 6.4 million youths dropped out of the labour force globally. According to an International Labour Organisation (ILO) report, the youth of today are three times more likely be unemployed in comparison to adults, while 1 in 5 young working people live on R8/day.

Naidoo says that recent statistics, released by the latest Labour Force Survey, paints a dire picture for South Africa’s youth. “Youth unemployment has increased by 9.9% since last quarter and is now standing at a staggering 42%. Government has tried to absorb the high unemployment numbers through various state programs and have been actively promoting entrepreneurship in the hopes of reaching their goal of 5 million jobs created by 2020. However, according to Adcorp, a large discrepancy exists in the formal employment market. 800 000 vacancies are available in the private sector, yet 600 000 university graduates remain unemployed.”

“The 2011 South African GEM report, released last week, has also revealed a significant decline in entrepreneurial levels among South Africa’s youth. Entrepreneurship levels of people aged between 18 and 34 have declined significantly by 16% between 2010 and 2011. Evidence, from the recent released GEM report, shows that young entrepreneurs in South Africa chose self-employment out of necessity rather than being motivated by attractive opportunities.”

Naidoo says that these statistics are very worrying and show signs of an unhealthy entrepreneurial culture in South Africa. “The manner in which a country supports and recognises their entrepreneurs determines the culture of entrepreneurship and ultimately moulds the future of the economy. A positive entrepreneurial culture is not something that can be simply put in place. It begins at the roots of society and needs to be carefully nurtured.

Naidoo believes that the roots to South Africa’s entrepreneurial problem can be linked to South Africa’s educational structures. “Both South Africa’s formal and informal educational structures do not prepare the youth to become skilled entrepreneurs. Not only has the structure ill-equipped the youth to become entrepreneurs, but it has created a culture where young South African’s dream of becoming employee’s rather than employers.”

He says that not all individuals posses the qualities to become an entrepreneur and therefore these qualities and talents need to be developed accordingly. “Youth should be exposed to entrepreneurship via the South African education system, as well as leaders and managers of businesses where they work.”

As the business world continues to rapidly evolve an increasing amount of young entrepreneurs, such as Facebook’s Marc Zuckerberg, are emerging as successful entrepreneurs and outright market leaders in their respective industries. Sanlam and Business Partners, the competition’s co-sponsors, would like to recognise the ability and deserved success of South Africa’s young entrepreneurs by encouraging them to enter the 2012 Sanlam/Business Partners Entrepreneur of the Year® competition, which boasts an array of advantages for both finalists and winners.