Finding ways to tackle youth unemployment in South Africa
Context
Unemployment, and youth unemployment in particular, is one of the most pressing socio-economic issues globally. In South Africa, it has assumed crisis proportions, as youth find it extremely difficult to find jobs and account for 63.5 per cent of the unemployed. In 2010, the Ministry of Economic Development announced the New Growth Plan, which aimed to create 5 million new jobs by 2020. The plan proposed to create many of these jobs through investment in infrastructure and other government-led initiatives. The former president, Jacob Zuma, endorsed the plan in 2011 and indicated that job creation would be at the top of his Cabinet’s agenda. These developments indicated that reducing unemployment was an urgent priority for the South African government.
The youth wage subsidy experiment aimed to provide evidence to inform policy discussions around active labour market policies and the potential role of a wage subsidy in alleviating youth unemployment.
It was a collaborative effort involving the National Treasury, the Department of Labour and the African Microeconomic Research Unit at the University of the Witwatersrand.
In 2010, 3ie supported an impact evaluation of the wage subsidy experiment to assess whether reducing the initial cost of hiring and training unemployed youth by giving them a voucher (to be redeemed by employers) would improve employment and longer-term employability.
The evaluation ensured legitimacy by involving stakeholders and trade union actors who opposed the policy and therefore did not agree with the experiment. Although the National Treasury supported the youth wage subsidy and funded the evaluation, the research team operated independently. The evaluation team was transparent at each stage of the evaluation, communicating the objectives of the evaluation and the transparency of the research to all concerned stakeholders. The team also adapted the evaluation questions in response to criticism and the concern that the subsidies for younger workers would displace older workers.
Evidence
Findings showed that one year into the experiment, young people with the voucher were 7 percentage points more likely to be in wage employment than those without the voucher. This impact persisted even after the vouchers lapsed. Despite low voucher uptake by youth and low redemption rates by employers, most of the young people who entered wage employment as a result of the voucher programme were able to remain in employment.
The evaluation highlighted the potential positive effects of policies that got young people into jobs earlier. Employers appeared to prefer an approach that did not require them to redeem vouchers.
Evidence impacts
Type of impact: Inform the design of other programmes
Where findings from the evaluation or review inform the design of a programme(s) other than the one(s) evaluated.
This is one of 3ie’s seven types of evidence use. Impact types are based on what we find in the monitoring data for an evaluation or review. Due to the nature of evidence-informed decision-making and action, 3ie looks for verifiable contributions that our evidence makes, not attribution.
Read our complete evidence impact typology and verification approach here.
Close windowThe evaluation informed the design of the government’s 2013–2014 employment tax incentive scheme, discussions for which had started in 2011. Results from this evaluation were featured in the National Treasury’s 2013 Budget Review and in the press, and were discussed in Parliament. The evaluation recommended targeting employers, rather than youth, and incentivising through tax relief, rather than through a voucher system. Another key recommendation that was ultimately not accepted was that the tax incentive should target smaller firms.
Type of impact: Improve the culture of evidence use
When decision makers or implementers demonstrate positive attitudinal changes towards evidence use or towards information the research team provides. Examples include strengthening monitoring and evaluation systems, increasing understanding of evidence and openness to using it, integrating these systems more firmly into programming or commissioning another evaluation or review.
This is one of 3ie’s seven types of evidence use. Impact types are based on what we find in the monitoring data for an evaluation or review. Due to the nature of evidence-informed decision-making and action, 3ie looks for verifiable contributions that our evidence makes, not attribution.
Read our complete evidence impact typology and verification approach here.
Close windowThe 3ie-supported evaluation methodology informed a follow-up assessment of the employment tax incentive scheme. This assessment looked at the impact of the tax incentive at the firm level, at youth employment rates and at the cost-effectiveness of the policy.
Suggested citation
International Initiative for Impact Evaluation (3ie), 2019. Finding ways to tackle youth unemployment in South Africa (online summary), Evidence Impact Summaries. New Delhi:3ie.
Evidence impact summaries aim to demonstrate and encourage the use of evidence to inform programming and policymaking. These reflect the information available to 3ie at the time of posting. Since several factors influence policymaking, the summaries highlight contributions of evidence rather than endorsing a policy or decision or claiming that it can be attributed solely to evidence. If you have any suggestions or updates to improve this summary, please write to influence@3ieimpact.org
Last updated on 30th October 2019