Geographies in Depth

South Africa has a skills shortage. How do we fix it?

Second-year civil engineering student and first-time voter Nkululeko Simelane poses for a picture at Wits University in Johannesburg, April 22, 2014.

Can Africa turn its young population into a dividend rather than a burden? Image: REUTERS/Siphiwe Sibeko

Nicolaas Kruger
Group CEO, MMI Holdings Limited
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South Africa

This article is part of: World Economic Forum on Africa

While South Africa, the second-largest economy in Africa, has made significant progress in the last decades, its society is still one of the most unequal globally. The richest 20% of the population account for over 61% of consumption while the bottom 20% account for less than 4.5%.

Progress has been made in eradicating extreme hunger and poverty, with the number of multi-dimensionally poor households falling from 17.9% to 8% between 2001 and 2011, however, South Africa remains a country of contradictions, 21 years after it became a democracy.

Perpetuating the cycle of poverty, South Africa’s unemployment rate currently stands at 25%, with even higher rates for youth, at more than 50%. As in the rest of Africa, where 60% of the workforce is under 30 years old, it is critical that South Africa turns its fast-growing young population into a dividend rather than a burden. Education and training for future skills is a critical part of realizing this potential.

The root of unemployment is not only a lack of jobs; a key underlying issue is also the inadequately educated workforce. And this challenge is likely to be amplified in the coming years due to the Fourth Industrial Revolution, characterized by fast-paced technological progress combined with other socio-economic and demographic changes, which will further transform labour markets.

According to the World Economic Forum’s Future of Jobs study, the result could be a net loss of over 5 million jobs in 15 major developed and emerging economies – including South Africa. These patterns may even be more aggravated in other African economies, unless we act today. The study highlights that skill demands will change significantly over the next five years, pointing at the importance of aligning education with skills needed in the labour force.

Building the right talent for Africa’s jobs of today and tomorrow is therefore critical.

Many students currently enrolled in South Africa’s tertiary institutions are studying subjects that do not support the need in business for science, technology, engineering and maths (STEM) as well as future-oriented skills. Many organizations face the challenge of finding appropriately trained graduates with complex problem-solving skills, critical thinking, good judgement and decision-making, as well as cognitive flexibility.

Like many of our peers, MMI Holdings (MMI) has invested in nurturing students with maths and science aptitude and partnering with organizations such as the Actuarial Society of South Africa to raise the quality of education in our schools. The MMI College has also been set up to admit previously unemployed youth from disadvantaged backgrounds to give them insurance-related accredited courses.

Skills development has been recognized as a key component of South Africa’s transformation and economic growth. Organizations are encouraged to spend about 1.5% of their payroll on training their workforce, depending on the industry. There are good private-sector initiatives underway to ensure the spend is used effectively, but to achieve the scale and sustainability required to address the Africa-wide skills shortage, a more collaborative and concerted effort is required. Partnering with organizations such as the World Economic Forum will help us steer spending in the right direction.

The Forum’s Africa Skills Initiative seeks to understand and develop solutions to the underlying causes of unemployment and the skills gap. It does this by anticipating future trends in the labour market and convening stakeholders from business and government as well as the education and training sector.

The opportunity to engage and learn from others – not only in South Africa but across the continent – is invaluable. Working together is key: longer-term reform by the public sector must be complemented by collaboration with the private sector. Building on the efforts already undertaken by participating organizations (individually or collaboratively with other stakeholders), we can tackle unemployment and build talent for today’s, as well as tomorrow’s, jobs.

This article is part of our Africa series. You can read more here.

The World Economic Forum on Africa is taking place in Kigali, Rwanda from 11 to 13 May

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The views expressed in this article are those of the author alone and not the World Economic Forum.

Related topics:
Geographies in DepthJobs and the Future of Work
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