First and foremost, we must make people employable. To participate in the labour market, individuals need at-least one or more of education, skills and/or experience. Education must be uniform, scaled, meet national standards and produce literate and numerate individuals. Clearly, this is a longer-term solution that requires a more strengthened Government, which discussion is beyond the scope of this proposal.

Skills and experience however, are within the capable clasps of industry. Business should consider investing in the development of tradable skills for unemployed individuals. International best practice in OECD countries recommends that individuals receive institution-based instruction and then a work-based apprenticeship to put their knowledge into practice. This way, individuals can quickly acquire skills and experience to make them more employable.

One way of doing this in South Africa is to facilitate the linkage of such unemployed individuals to Township based informal artisan businesses. Such as, motor mechanics, panel-beating, welding, plumbing, electrical, carpentry businesses etcetera. The informal businesses can be incentivised to formalise and provide experiential learning to such unemployed people.

On a 12-month program, 100 000 such businesses, in say 10 different disciplines, can each employ at-least 10 structurally unemployed people in return for an incentive. This immediately creates 1 million jobs. As for the incentive; the businesses can be granted a one-off 2 500 formalisation incentive for each employee enrolled (this will cover costs of business registration, tax registration, opening bank accounts, etc). These businesses will then be assisted with applying for normal Public Sector incentives such as the Employment Tax Incentive.

Undoubtedly, when fully implemented this intervention would have achieved two key goals. Firstly, knowledge capital will be raised dramatically as a million individuals will possess the tradable skills necessarily for labour force participation. Secondly, 1 million skilled or semi-skilled workers can cause between 1.3% - 1.5% GDP growth. This way, we can achieve job-led economic growth, which would be a welcome departure to the flavour of the last 10 years.

In the long-run, small business is the engine that drives job creation and economic growth. There is much academic literature and evidence to support this. Conversely, the short-run requires that big business, leverage its wherewithal to stimulate job creation and economic growth. In their empirical study on different entrepreneurial activities and their impact on both GDP and Employment (Harmina, Dumicic, & Cingula, 2014) found that GDP per capita is mostly positively moved by corporate entrepreneurship activity and much less by nascent activities.

Their statistical findings are plausible and immensely important because they are consistent with most research that found that in low to middle income countries, nascent activities are dominated by necessity entrepreneurs, who possess low levels of education and experience, and thus fail to make a significant contribution to GDP per capita or job creation.

It is easy to see how a large and established supermarket chain can simply use the combination of strong capital, experienced management and existing relationships to quickly set up a new branch and with it create a hundred (100) jobs. For this reason, we must encourage big business to unlock its stockpiles of cash and pursue expansion opportunities that will lead to increase demand for labour and more GDP growth.

Whereas there is much said about the role of small business in the economy, most of which is positive and sensible.

We must err on the side of caution as we seek to encourage people to become more entrepreneurial. Business is not an end in itself, it is merely a conduit to deliver value to the market and create jobs. This is to say; our venturing undertakings must be directed towards job intensive and/or growth driving activities.

The narrative that small and medium enterprises (SMEs) will drive job growth in South Africa is missing an inalienable component. That is, a condition, that such SMEs must survive the short-term and grow in the long-run.

That we expect people who don’t possess the aptitudes needed to cope with labour market demands to turnaround and run SMEs in such a complex and competitive environment is ironic.

The go around for such vested challenges is to provide intensive support to SMEs. An example of such support is what we call purposeful enterprise creation; a posture towards the support of small businesses, which seeks to drive impact at its core.

One way to do this is through value chain localisation. In other words, businesses must pursue a localisation strategy that advances import replacement, domestic production and export led growth.

Unless we rigorously grow the economic share of labour-intensive industries, we stand no hope of stemming the tide of unemployment.

Mining, manufacturing, agri-processing, engineering and other value-adding basic industries need to become the centrepiece of any SME development and/or support strategy.

Small business support must not be anchored around funding but rather, it must be predicated on market access and value chain transformation.

Employment growth is important because, contrary to what most economic textbooks would suggest, it causes economic growth.

Put differently, output is simply a function of productivity driven primarily by labour input.

Even capital is ultimately a function of its previous labour input.

So, it makes sense then how we ended up with a decade of jobless growth and how this exacerbated and entrenched problems of inequality and poverty.

We desperately need job growth to reduce both poverty and inequality. Job creation is the most rational objective to pursue.

Since you are likely to be poor if you are uneducated and unskilled and are likewise likely to be unemployed, it makes sense that we should fight first for the unemployable.

In South Africa, 55% live in poverty (Stats SA, 2017), a state complexed in low skills and poor education.

This situation creates an unhealthy dependence of the Government’s social net. It makes many citizens supplicants.

With this disposition often comes tyranny, where the government of the day uses such social welfare to leverage continuous power.

From there on, you are well on your way to a corrupt if not failed state.

The solution, at-least in part. Is to drive investment into an area that is mostly likely to yield the highest returns.

In this case, that would be the acute situation of structural unemployment. The best way in which to do this is by facilitating apprenticeships in local areas where unemployable individuals are mostly concentrated.

In any event, an investment by business on such programs yields other favourable commercial outcomes such as higher B-BBEE scores on the Skills Development scorecard, an area notoriously difficult to perform well in.

In conclusion, economic growth and job creation require a substantive increase in the nation’s knowledge capital as well as an increase in investment.

The strategy of using export led growth through import replacement and localisation as a means of boosting economic development has historically been employed, successfully, by nations such as Singapore (1960), Germany (1952), China (1997), United Kingdom (1840) and the United State of America (1914).

The issue of job creation is far more complex than we’ve proved willing to contemplate. Not least because it is difficult to create jobs but also because we have misdiagnosed the jobs problem completely. Take for example the following;

Unemployment is a prevailing economic inefficiency characterised by labour market oversupply.

This is not a conventional textbook definition, precisely because we don’t believe that everyone in the labour force who is not working is automatically unemployed.

It is somewhat disingenuous to call unemployable people, unemployed. It is a bit like saying blind people cannot see! Instead of stating the obvious, one should perhaps make employability possible before considering someone unemployed.

There is an obvious discord between the number of unfilled vacancies (829 800) (Adcorp, 2015) and the sheer volume of the unemployed (9.3 Million) (Stats SA, 2017). This means, therefore, most of the so-called unemployed are unable to fill the existing vacancies. As such, even if more jobs were created, we are likely to end up with more of the same.

Furthermore, unemployment among professionals and artisans is at an all-time low, even when adjusted for lack of experience. Unemployment for graduates is rising rapidly (7.4%), indicating a more pervasive problem in the underlying demand for labour. Then, unemployment for uneducated youth who are also inexperienced and unskilled is accelerating at a rapid and irreversible rate (64.69%). Structural unemployment now makes up 77.42% of the unemployed.

Concisely, there is no single homogenous group called the unemployed. This is an unhelpful generalisation. Rather, we should state more specifically who is unemployed and prescribe more precisely what solutions could work for (a) their employability and ultimately (b) their employment.

It is tempting to seek a silver bullet solution to what we’ve collectively encoded; Unemployment. However, experience teaches us that there are many different types of unemployment and many different groups of the unemployed. Accordingly, many different solutions to the problems of unemployment and the more nuanced, underemployment.

In the words of the reverend Katrina Mayer; “Integrity is making sure that the things you say and the things you do are in alignment”. This too can be said of great leadership. This is to say that the first, perhaps key, tenet of leadership is integrity. As with any other fundamental principle, this applies notwithstanding any given context.

It is with great excitement then that we receive the contract and pledge by big business to, inter alia, fight corruption, grow the economy, create jobs and support small businesses (BLSA, 2017).

All critical components necessary to enable economic development, alleviate poverty and reduce inequality. If this commitment by big business were to be realised, South Africa’s economy would be set on the virtuous path to make manifest its full potential.

With nearly eighteen (18) years’ experience in developing small businesses and providing thought leadership on job creation, we believe we can add value to advance this agenda by big business.

Our experience in navigating the shallow waters in which small businesses operate could provide a critical understanding of the challenges facing small businesses and how these might be overcome.