South Africa’s youth unemployment remains a concerning issue, and the rising level of unqualified youth only increases the number of those looking for meaningful employment.
The recent Youth National and Provincial Labour Market report released by Stats SA last week revealed that for those between the ages of 24 and 34 years, 21.9% held skilled jobs in 2014, compared to 21.2% held in 1994.
Christo Botes, spokesperson for the 2014 Sanlam / Business Partners Entrepreneur of Year® competition, explains that the youth currently graduating from tertiary institutions are joining a select group of individuals. “There are 5.4 million young people between, and including, the ages of 20 and 24, and of those, only 17.5% are working towards obtaining a tertiary qualification. Statistics show that 60% of these students will drop out and eventually, after many years, only 8.75% will obtain a qualification.
“While many can testify that having a qualification opens doors, it is ultimately up to the individual to perform, work hard, possess a strong work ethic and rise above the rest when competing for a job opportunity. Ambition and commitment from an individual are crucial in order to successfully carve out a better future,” says Botes.
He adds that it is the same ambition and commitment that are driving characteristics of a successful entrepreneur. “The only way to counteract our country’s alarming youth unemployment numbers is to promote entrepreneurship as a desirable career choice among the youth, which, when compared to other emerging economies, remains at a low level in South Africa.”
He points to the recently released Global Entrepreneurship Monitor (GEM) 2013 South African report, which revealed that only a quarter of South Africa’s youth are potential entrepreneurs, in that they believe they possess the skills and knowledge to start a business, and that they believe there are opportunities to exploit, while only 13% possess an intention to start a business in the next three years.
He says it is crucial that South Africa bridges the gap between the youth’s entrepreneurial aspirations and reality of establishing a business. “Intentional entrepreneurs are an important stage in the entrepreneurial pipeline as a strong association exists between entrepreneurial intentions and actual entrepreneurial behaviour, and highlights why it is necessary to equip the youth with the right tools and knowledge to embark on an entrepreneurial venture.”
Botes says that there are a few key areas for young intentional entrepreneurs to contemplate in the next three years before starting a business. “Deciding on the type of business is key, followed by determining the capital required to start the business and the experience needed to build the business.
“University, for example, is an opportune time to explore these aspects as during this period, individuals can begin to save the necessary capital and build experience, whether through knowledge or physical experience in the form of a part-time job in the type of business, or industry, they wish to enter.
“It is also important that the youth have a realistic understanding of the amount of work required to start a business. This will not only prepare young entrepreneurs for their future business, but also lessen the chance of failure.”
Botes adds that it is important for young entrepreneurs to be motivated to think beyond the retail industry, and instead consider industries such as manufacturing. “50% of youth businesses are in the retail, hotels and restaurant sector as it offers low barriers to entry with respect to start-up capital and the level of business skills. The industry is overtraded as a result and can encounter low growth possibilities due to competitors continually entering the sector. While barriers to entry may be higher in manufacturing, if the business is planned correctly during the three intentional years, these barriers to entry will be easier to achieve.”
The report also revealed that 65% of youth-started businesses offered employment to more than one employee, and 7% offered jobs to 6 - 19 employees. “This illustrates the substance of young individuals starting their businesses. If we can change the perception ofentrepreneurship among the youth, as well as provide adequate knowledge and guidance, the number of young entrepreneurs will increase and in turn, we will begin to curb the high levels of youth unemployment, as well as overall unemployment figures,” concludes Botes.