President Cyril Ramaphosa this week published a letter from his office addressing the state of unemployment in South Africa.
In the communication, Ramaphosa announced that the government has started with the second phase of the Presidential Employment Stimulus, which aims to create massive employment opportunities in the country in a short space of time.
The programme is the president’s attempt to start rectifying South Africa’s record-high unemployment rate, which hit 34.4% in the last quarter (2Q21), or 44.4% when considering the expanded definition that includes those who have given up seeking jobs.
While Ramaphosa’s programme is a step in the right direction to address unemployment, Xpatweb director Marisa Jacobs warns that the president’s plan does not address the exodus of skills and professionals from South Africa.
“There is no way to stop the valuable skill sets and qualified professionals currently leaving South Africa in droves,” she said.
“National employment drives and initiatives generally serve to create new opportunities for a younger workforce. While that prepares the next generation of skilled workers, it doesn’t address the present need for certain skills. No amount of novice job creation can fill skills gaps,” she said.
Instead, Jacobs said that there needs to be a much larger focus on encouraging Foreign Direct Investment (FDI) which would broadly boost the economy and help retain skills at the upper end.
She cited the example of Nigeria, which saw its official unemployment rate climb significantly in 2019, just before the pandemic hit.
In response, Nigeria called on foreign investors to consider Nigeria as a prime investment location, stating at the time that the only way to reduce its high unemployment rate was to create an enabling environment for foreigners to come in and produce locally.
The nation said that FDI would help develop the agricultural value chain, and this would lead to industrialisation – which is another step towards improving unemployment.
“Numerous studies have been conducted about the effects of FDI on unemployment figures in countries like the USA, Macedonia, Saudi Arabia and Malaysia.
“They all concluded that FDI could stimulate job creation, boost economic growth, provide global resource allocation, and improve the host-country’s Gross Domestic Product while enhancing their finance ability. The only drawback is that it was a long-run relationship that had to be maintained,” said Jacobs.
A local example of FDI boosting job opportunities is the South African contact centre industry, she said.
“At first, there was an uproar from locals because the call centres had to employ foreign agents to facilitate customer service calls in foreign languages.
“What everyone failed to recognise was how it led to the subsequent three-fold employment of South Africans across each company’s internal departments, such as finance, marketing, software development, human resources, IT infrastructure, business intelligence, and many more.”
Hindering the process
Jacobs said that the government – particularly the Department of Home Affairs (DHA) and the Department of Labour (DoL) – need to enable FDI and make it easier for the country to draw the necessary skills. However, it appears that the opposite is happening.
“Going forward, it appears the DHA will process General Work Visa applications but would need the requirements to have been met through the DoL first. This could intensify the disconnect that already exists between the two departments,” she said.
“Not only is the DoL notoriously slow with the aforementioned application process, but they have been mandated to protect and create South African jobs, whereas the DHA has been mandated to enable business to attract and bring in foreign talent to fill skills gaps. This puts the two Departments at odds when it comes to combatting unemployment.”
The benefits to securing international talent with the necessary skills can be plentiful when considering how it can influence the local workforce through skills development and concession planning initiatives, Jacobs said.
“Hindering or delaying the foreign skills on offer can directly impact the rate at which the local workforce can engage with those skills. It is therefore essential that work permits or visas for skilled migrants be simplified for employers so that the employment stimulus could enjoy the fruits of skill-sharing.”