OCTAVIUS PHUKUBYE | SA’s jobs crisis is bigger than a skills problem

South Africa’s youth unemployment crisis is no longer a question of diagnosis.

Despite years of investment in education, training and employment programmes, millions of young people remain excluded from meaningful economic participation because the economy is not creating jobs at the scale required to absorb them.

According to the Labour Force Survey for the fourth quarter of 2025, 57% of people aged between 15 and 24 are unemployed. Once discouraged work-seekers are included, the picture becomes even more severe.

While skills mismatches remain important, South Africa’s unemployment challenge is fundamentally structural. The economy is not generating enough demand for labour, particularly for first-time entrants into the workforce. Many young people are willing to work and are participating in informal or survivalist economic activity, yet remain excluded from formal employment due to barriers that include:

• limited work experience;
• spatial inequality;
• transport costs; and
• weak alignment between training systems and employer demand.

In contrast, employers continue to report difficulty finding candidates with workplace-ready skills, exposing a persistent disconnect between education outcomes and labour market needs.

Training more people without expanding pathways into work will not solve the crisis. South Africa needs a workforce strategy that directly aligns education, skills development and enterprise growth with labour market demand

This challenge is compounded by:

• weak economic growth;
• constrained infrastructure investment;
• policy uncertainty; and
• declining labour absorption across the public and private sectors.

The country’s skills development ecosystem also remains fragmented. Despite significant investment in TVET colleges and sector training programmes, employers report gaps between qualifications and practical workplace readiness, with young people often completing programmes that are not aligned with hiring demand.

This is why unemployment cannot be addressed through supply-side interventions alone. Training more people without expanding pathways into work will not solve the crisis. South Africa needs a workforce strategy that directly aligns education, skills development and enterprise growth with labour market demand.

Several countries in the Global South have demonstrated the value of this approach:

• Vietnam, for example, has aligned workforce development closely with its export-led industrial strategy through major TVET and labour market reforms designed to strengthen employer participation and better connect skills development to industrial growth. The International Labour Organization has highlighted how the country’s workforce reforms have supported the transition to higher-value industries and a more skills-intensive economy by emphasising employer-linked training and workforce modernisation.
• Rwanda has similarly aligned workforce planning with national development priorities in sectors such as ICT, tourism and agriculture through co-ordinated partnerships between government, business and training institutions.

South Africa has examples of what demand-led workforce development can look like in practice.

Employment and entrepreneurship should also not be treated as separate policy conversations. While some young people will enter formal employment, others will create businesses that strengthen local economies and generate livelihoods.

A demand-led reform agenda must prioritise capital investment and market creation that anchors professional and entrepreneurial minds over the long term.

Data from the Global Entrepreneurship Monitor highlights record-high interest in entrepreneurship globally, proving young people are no longer waiting passively for corporate doors to open.

Nevertheless, macroeconomic context matters. In environments such as South Africa, where formal job creation remains structurally constrained, this surge in startup activity is often met with what the GEM Consortium defines as a widening “survival gap”, the brutal cliff at which early-stage startups choke before reaching long-term stability due to a lack of institutional infrastructure.

Despite this, young founders across the continent are actively defying the odds in technology, retail, agriculture and manufacturing. They are proving when formal avenues collapse, entrepreneurship is not only an alternative career path, it is an economic engine.

Disrupt Africa’s 2025 African Tech Startups Funding Report indicates there are more than 6,500 tech startups across the continent, of which 40% to 60% are estimated to have been youth-founded. This demonstrates young people are not waiting passively for opportunity. They are building solutions and participating in economic activity, especially where enabling ecosystems exist.

The challenge for South Africa is therefore not a lack of talent or entrepreneurial potential, it is the shortage of economic opportunities capable of absorbing that talent at scale.

Fixating on supply-side skills is purely bureaucratic alignment and a small piece of the puzzle. Instead, a demand-led reform agenda must prioritise capital investment and market creation that anchors professional and entrepreneurial minds over the long term.

South Africa has no shortage of policy ideas or strategic frameworks. What is required is co-ordinated implementation anchored in the realities of where jobs and opportunities are being created.

• Phukubye is executive director at Mr Price Foundation