Scoping new model for youth job creation in South Africa

South Africa’s youth unemployment rate persists and remains difficult to combat. Simultaneously, there is a shortage of adequately skilled individuals to fill the roles that contribute to inclusive growth and the effective functioning of the economy. 

This skills shortage is a reason for weak economic growth and hampers other developmental outcomes. In response to this unemployment crisis, the Presidential Youth Employment Intervention (PYEI) is exploring innovative financing mechanisms, such as pay-for-performance (PfP) models, to place young people in sustainable employment.

Genesis Analytics was contracted by GIZ’s Skills Development for a Green Economy (SD4GE) project team to conduct a scoping exercise regarding the potential of using PfP models to create jobs in specific growth sectors in South Africa. This also means creating sustainable jobs that exist to support the green economy, such as jobs in plumbing for smarter water management.

The growth sectors identified included the automotive sector, the agricultural and agro-processing sector, the installation, maintenance and repair (IRM) sector, and the social services sector. These sectors have been identified as possessing high potential to provide employment for the youth by the PYEI and the Department of Higher Education and Training’s Economic Reconstruction and Recovery Plan (ERRP). In addition, Genesis was also contracted to provide a design for a PfP model in the IRM sector specifically.

Through the scoping study, Genesis established that of all the growth sectors, the IRM sector remained the most suitable for the establishment of a PfP mechanism. The team also designed a PfP mechanism to be implemented in the IRM sector, which included specific performance-based contracting boundaries, costing within the model a payment structure, payment milestones, as well as payment triggers.