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28 September 2016

Media Statement by the Department of Higher Education and Human Sciences Research Council on the release of the first official report on Skills Supply and Demand in South Africa

Human Sciences Research Council (HSRC)
Press Release

The Human Sciences Research Council (HSRC) was commissioned by Department of Higher Education and Training (DHET) to study the dynamics of skills supply and demand in order to inform skills policy in South Africa.

The South African labour force is made up of 15 million employed and 7.5 million unemployed people. Three quarters of the employed and 90% of the unemployed are from the African population group. Unemployment is also particularly high amongst youth (15 to 34 years) and this is increasing as more young people join the labour force. The education level and skill base of the labour force is lower than that of many other productive economies.  Of the employed population, 20% has a tertiary qualification, 32% has completed secondary education, and close to half of the workforce do not have a grade 12 certificate. Sixty percent of the unemployed has less than a grade 12 certificate. This translates to 11.75 million of the labour force with less than a grade 12 certificate.

The three main findings from the research are:

Firstly, on the economy and the demand for skills: 

The South African economy has been characterised by low economic growth rates, leading to poor employment growth. This employment growth has not been sufficient to absorb the large numbers of youth coming onto the labour market for the first time. The end result is an escalating unemployment rates. 

The sectors in which people work and the types of jobs available are changing. There is an absence of low-wage jobs in the manufacturing sector that could absorb the vast majority of unemployed who are looking for work. There has been a structural shift towards a service economy and a high dependence on high-skilled financial services. The financial services sector contributes towards growing the country’s GDP, but offers negligible opportunities for employment growth. The only sector experiencing significant employment growth is the state sector and this is not sustainable.

There is a structural mismatch between labour demand and supply, in that the economy and labour market shows a demand for high skilled workers, but there is a surplus of low-skilled workers. The economy must respond to the twin challenge of participating in a globally competitive environment which requires a high skills base and a local context that creates low-wage jobs to absorb the large numbers who are unemployed or in vulnerable jobs. The economy should create more labour-intensive forms of growth in order to absorb the growing levels of people, particularly young people, as first time labour market entrants.

Secondly, on education and supply of skills:

A critical constraint for the post school education and training system and the labour market is the quality of basic education. Success in the school subjects of Languages, Mathematics and Science forms the basis for participation and success in technical subjects in post-school education and training institutions, and in the workplace. Even an economy based on a low skill trajectory will require a workforce that has completed their school leaving certificate and gained basic numeracy and literacy skills.

Presently, each year around 140 000 grade 12 students complete the matriculation examination with a bachelor’s pass, and of these only around 50 000 students pass Mathematics with a score higher than 50%. The pool of students who can potentially access university and Science based TVET programmes is very small, in comparison to the skill demands in the country.
The university and TVET college sub-systems are the largest components of the post-school education and training system. In 2014, there were around 1.1 million students in the university sector and 0.8 million students in the TVET sector. Since 2010 the TVET sector has been expanding at an average rate of 23% per annum and the university sector has been expanding at an average rate of 2.1% per annum.

Completion rates at both universities and TVET colleges are less than desirable in that in 2014 there were 185 000 completers from the university sector, 21 000 NCV4 and 57 000 NATED 6 programme completers from the TVET sector.

Access to school, universities and TVET colleges has improved. However quality remains elusive leading to low progression through institutions as well as low completion rates from schools, TVET colleges, and universities.
The skills development focus should not only be on a small number of skilled people in the workplace, but also on the unemployed, the youth, low-skilled people, the marginalised, and those in vulnerable forms of employment, including the self-employed.

Thirdly, on the link between the tertiary education and the labour market destination

The data revealed that nearly half of the Higher Education graduates are employed in the community, social and personal services sector, which is dominated by the public sector. A high proportion of the Science and Engineering graduates, from both higher and technical and vocational education sectors, prefer to work in the financial services sector, as opposed to the manufacturing sector.  SET qualifications are versatile and graduates will move into different fields of work.  The implication for skills planning is that we need a high number of SET graduates than needed by the SET occupations.

These positions offer graduates a good salary and conditions of service. Unfortunately this is distorting the labour market and not attracting graduates to the private sector. The private sector must review its human resource strategies to attract more graduates to the sector.

In conclusion

The dilemma facing policy makers is how to respond to these diverse sets of development and occupational pathways, and decide how resources should be targeted for inclusive skills development. These imperatives may seem paradoxical, but all are essential to achieve a more inclusive growth and development trajectory.

  • For information about the Labour Market Intelligence Partnership (LMIP) project click here

Compiled by Dr Vijay Reddy, Prof Haroon Bhorat, Dr Marcus Powell, Ms Mariette Visser and  Mr Fabian Arends

For media enquiries contact:
Adziliwi Nematandani,
Busiswa Gqangeni

Jointly issued by the Human Sciences Research Council (HSRC) and the Department of Higher Education and Training