Education fallacies

The unemployment rate for South Africans between 15 and 24 is over 60% for blacks and under 8% for whites. Does this validate the popular belief that poor education outcomes explain our unemployment crisis or does that belief reflect a confirmation bias?

If you grew up in a home which emphasised education and you achieved considerable scholastic success, your associating employability with education outcomes is likely to be deeply rooted. However, if you have long followed international economic news, you will know that job creation fluctuates sharply with business cycles and growth trends. 

If you leave school in a year when the economy is booming, your chances of getting a job with good growth prospects are much better than if you leave when the economy has stagnated for over a decade. Irrespective of economic conditions, your chances of getting a good job are better if you have a desirable qualification and are highly literate and numerate. Yet as many academic overachievers have learned in other countries, scholastic success in no way guarantees meaningful employment during a harsh recession. Our job-creation shortfalls continue to be far worse than those ever experienced by most countries, even during the Great Depression.

We live in a very isolated country and various key metrics depict our economy as an extreme global outlier. For instance, our academic high achievers are a small subset of the many hundreds of thousands of South Africans who leave school each year. 

Stewards

As our dismal education outcomes are roughly proportionate to our obscene youth unemployment statistics, it seems that the former causes the latter. Rather, both share a common cause. The ANC’s policymaking is shaped by Marxists and rent-seekers who are horrific stewards of both our education system and our economy. 

Perceptions about the causes of our jobs crisis are also extremely distorted by having the world’s highest youth unemployment alongside shortages of both well-educated and skilled job-seekers. This odd situation also traces to ANC policies.

We must see through the twisted logic which suggests our extreme youth unemployment is caused by education failures. This misconception shields the ANC’s patronage-inspired electoral strategy of creating dependencies by falsely suggesting that its consequences are a fait accompli.

For the decade prior to the COVID-19 pandemic, per capita global growth averaged 2,7% and for emerging market countries it averaged 4,7%. For South Africa it was below, and often well below, 1%, a level we can again aspire toward with Eskom and Transnet being less troubled and our coalition-styled government inspiring good vibes. 

South Africa’s meagre workforce participation traces directly to our economy being far smaller than it would have been if we had just maintained the global average per capita rate since 2010, let alone the emerging market average. If our economy were a third larger, we would have about a third more jobs. If the ANC had embraced commercially-sensible, pro-growth policies over the past fifteen years, our economy would now be at least a third larger.

Dependents

Our young workforce should be fueling vastly faster growth but the ANC has successfully branded our bulging surplus of young workers as dependents. We endorse such unhelpful thinking when we attribute our ultra-elevated youth unemployment to poor education outcomes. As the economy is a huge complex grid which makes performance demands on all participants, despite the vast majority being poorly educated, most of our young adults who are formally employed develop valued skills and knowledge.

The world’s high growth countries integrate workers and companies into giant grids, termed supply chains, to accelerate the global economy by carving out niches which advance ever greater efficiencies. Conversely, the ANC sees grids as a series of nodes from which rents can be extracted. This is common among both authoritarian governments and commodity dependent nations. During the ‘Zuma years’ rent extraction was recklessly indulged, and while such influences have been ratcheted downward, they remain sufficiently ubiquitous to preclude much needed policy shifts.

The ANC categorically rejects today’s high volume upliftment model, competing to carve out niches in global supply chains. Devising regulatory distortions to create union jobs at auto manufacturers is not about the pursuit of efficiency gains. It is another grid which supports patronage. The union workers become dependent on government and they are therefore expected to vote ANC. Obviously, with state owned enterprises there is additional scope for rent-seeking. 

Patronage instincts

Making a majority of young adults unemployed and dependent on grants is a reckless extension of such patronage politics. Seeing this as an inevitable consequence of education shortfalls further encourages the ANC’s patronage instincts. 

As ANC policies are fundamentally counterproductive, they ensure a low long-term growth trajectory and this then ensures that a majority of our twentysomething black jobseekers will be perpetually sidelined. Attributing our ultra-elevated youth unemployment to education failures implies that solutions are a very long way off and beyond the influence of policymakers. This would be rubbish - if we weren’t willing to believe it.

Our unemployment crisis is predominantly explained by the ANC’s unsustainable devotion to woefully overindulged patronage and the web of ill-conceived policies designed to support it, most notably localisation and BEE, among many others. Our new-look government should be freshly assessing our growth blockages and prospective remedies with contributions flowing from outside the political arena. But by presuming our jobs crisis is baked into the cake by schools underperforming, we encourage ANC narratives around dependencies.

Another mall

We have also bought into the ANC’s investment-led growth narrative. While supporting investment-led growth is perfectly reasonable, there is no way that investment-led growth can overcome our unemployment crisis unless the investments support growth through value-added exporting. But ANC policies undermine our ability to compete as a value-added exporter. Meanwhile, our domestic growth capacity is extremely modest and therefore it makes little sense for investors to invest. Building another mall will just compete with other retail spaces.

The ANC’s difficulties at encouraging Starlink to add South Africa to its 100-nation network of satellite-based internet service is telling. The company finds our investment criteria prohibitive to serve South African customers. Of course, companies won’t set up in South Africa to serve customers in other countries.

But as our enormous glut of labour reflects our long-stunted economic growth, the only path to large scale job creation is through value-added exporting. Yet it is not true that job creation always requires capital mobilisation.

There are people living in South Africa earning a good living online for companies that don’t have a presence in South Africa. This path makes fundamental sense as, while our domestic economy’s capacity to reward capital is overburdened and our regulatory environment discourages foreign direct investments, we have a glut of young would-be workers. 

We don’t need a company like Starlink so much as we need globally-focused entrepreneurs that can link our young would-be stars with global opportunities.