By Gaby Ndongo (5 mins read)
During a presentation on 30th April to the parliament’s standing committee on finance, the National Treasury indicated that the economic distress of the novel coronavirus (COVID-19) may result in the country’s “worst recession since the Great Depression” of 1929.
A recession occurs when there are at least two consecutive quarters of decline in economic growth and evident in the form of the gross domestic product of these respective periods. Young people are usually the most affected by economic recessions.
“Entering the labour market in a recession can lead to significant and persistent earnings losses for young people that can last their entire career. Ignoring the particular problems of young workers risks wasting talent, education and training, meaning that the legacy of the coronavirus outbreak could last for decades,” write Kee Kim and Susana Puerto of the International Labour Organization (ILO).
Kim is a macro-economic and employment policies specialist, while Puerto occupies the post of a research and technical specialist at the organisation.
The effects of a recession on young people were particularly noticeable during the 2007-2009 global economic and financial crisis, which led to global youth unemployment rising from 73 to 81 million, according to an ILO’s global workforce report.
Puerto and Kim explain that young people encounter numerous challenges when transitioning into decent employment even during economic upswings. The challenges include “jobs that do not match their education, outdated skills that do not address the labour demand, and a lack of knowledge on where and how to look for jobs”.
Another reason is the cost of job seeking. With the restriction of movement and the closure of some workplaces, online job search and filling of the required documents are the only means for some to obtain employment. These methods come at a cost.
The same parliamentarian presentation outlined that there could be an overall of 3-7 million job losses in South Africa. Stats SA’s 2019 fourth quarterly labour force survey shows that 29,1% (6,7 million) of the population is unemployed and 70.9% (16,4 million) are employed. Of the approximately 20.4 million people aged between 15 to 34, a total of 8.2 million are not in employment, education or training.
Consequently, the estimated job losses would have a great impact on employment, especially youth employment. A number of reasons make this group of people extremely vulnerable to the current job losses seen in most sectors. ILO’s Kim and Puerto have spelt out five reasons.
Reasons why young people are vulnerable to unemployment
Firstly, young workers are affected more than their older, more experienced colleagues by recessions. This is because young workers are the first to be laid off, as seen during the 2007-2009 financial crisis. “The lack of networks and experience can make it more difficult for them (young people) to find other, decent employment and they can be pushed into work with less social and legal protection.
“Young entrepreneurs and youth cooperatives are likely to find it harder to obtain resources and financing, and they lack the know-how to cope with difficult business and supply chain conditions.
“Movement restrictions and the substantive reduction in business activities will make it hard for young workers, entrepreneurs and jobseekers to find or sustain their employment.”
Secondly, three in four young people work in the informal economy, particularly in low- and middle-income countries, for example, in agriculture or in small cafés and restaurants. A waiter at a small café/restaurant cannot work from home and will likely have little to no savings; thus, s/he needs to continue working to earn funds that will cover their expenses.
Thirdly, many young workers are in ‘non-standard forms of employment’, such as part-time, temporary or ‘gig’ work, involving short and unreliable contracts. One often receives low paid, irregular hours, poor job security, little/no social protection (like paid leave, pensions, sick leave, etc.), and inadequate/no medical insurance coverage.
Fourth, young people commonly work in sectors and industries that are particularly vulnerable to the COVID-19 pandemic. These include wholesale, retail, accommodation and food sectors. They occupy positions such as those of shop assistants, cashiers and waiters. Both the food and accommodation services have been hit hard by the social distancing measures, which emphasise on home confinement, closing of restaurants, hotels and non-essential retail shops.
Lastly, young people are more at risk than any other age group from automation. With the need to implement social distancing measures, employers are likely to automate certain functions that can be automated in order to avoid human interactions. A number of the functions performed by young workers tend to be automatable and entry-level jobs.
Therefore, “when world leaders draw up support and stimulus packages, they need to include special measures to help young people, and ensure they are included in support schemes – whether they are employees, entrepreneurs or job seekers,” said Kim and Puerto.
They further suggest income support schemes and emergency relief grants. For the businesses of young entrepreneurs, Kim and Puerto have proposed for the terms of their loans to be more flexible. The measures are necessary when considering that unemployment affects individuals and society at large.
“Because we live in a capitalist system, one’s value is measured by their ability to be productive, which is linked to our ability to generate income. Unemployment is catastrophic for those who are unable to participate in the economy because of those values,” said economist Busi Sibeko from the Institute for Economic Justice, as quoted by New Frame. TOJ
Reporting by Gaby Ndongo. Editing by Kupakwashe Kambasha. Feature image by Etienne Girardet on Unsplash.