South Africa has spent billions in 4 years to create jobs for young people: how their wages affect the broader economy
By December 2023 it had directly created 1.8 million jobs and livelihood opportunities.
- By December 2023 it had directly created 1.8 million jobs and livelihood opportunities.
- These have been mostly temporary jobs in public employment programmes such as school education assistants.
- South Africa has an exceptionally high unemployment rate (32% or 41%, depending on the definition), particularly concentrated among the youth.
- We found that the programme likely does support broader economic activity, and these effects partly persist after the end of the programme.
The study
- Participants are employed in full-time positions and are paid the monthly national minimum wage, which is approximately R4,000 (US$209).
- Since it was launched in December 2020 it has employed over 850,000 young people, becoming the largest youth employment programme in South Africa’s history.
- In our study, we focused on phases 2 and 3 of the programme, from November 2021 to August 2022.
- This was unsurprising as these necessities already took up a large part of participants’ budget before the programme.
- Another reason the 15% increase is probably an underestimate is because we can only see each individual’s shopping, and not the rest of their household.
Income effects
- What can we then say about who receives income from this increased expenditure?
- With these caveats in mind, the implied direct effect of the programme on the retailer’s sales is about R8 million (US$417,500) per month.
- Directly, this likely increased the wage bill for workers at the retailer by about R1 million (US$52,188) per month.
What next
- But the money does not get “thrown away” – one person’s spending is another person’s income.
- When evaluating the costs and benefits of the programme, and similar programmes such as social grants, these “extra” economic benefits need to be part of the calculation.
- This independent academic research was commissioned by the South African Presidency.
- He has previously done academic research and policy advisory work for the South African Presidency and National Treasury.