OPINION | Youth excluded from economic participation: Tshepo Moloi

By Tshepo Moloi

South Africa’s democratic transition promised not only political freedom, but also the prospect of economic inclusion and shared prosperity. More than three decades later, however, the country continues to grapple with one of the world’s highest youth unemployment rates.

Youth unemployment among individuals aged 15 to 34 increased to 45.8% in the first quarter of 2026, while unemployment among those aged 15 to 24 remained above 60%.

Even more concerning is that, even when the economy grows, millions of youth remain excluded from meaningful economic participation.

GRAPHIC | Real GDP Growth vs the number of youth and non-youth employed

Data Source: Stats SAThis raises an important and uncomfortable question: why is economic growth not translating into jobs for young people?

The answer lies in the structure of the country’s economy. While the economy has recorded periods of positive growth, this growth has often been concentrated in capital-intensive, highly concentrated sectors that are less labour-absorbing. As a result, economic expansion has not generated sufficient employment opportunities, particularly for young people entering the labour market for the first time.

South Africa’s growth trajectory has become increasingly disconnected from job creation. This phenomenon is often referred to as “jobless growth”, in which economic output expands without a corresponding increase in employment. In practical terms, it means that the economy may grow on paper while unemployment, poverty and inequality continue to worsen in communities across the country.

One of the major reasons for this challenge is the structure of the dominant sectors within the economy. Sectors such as mining, finance, telecommunications, energy and parts of manufacturing contribute significantly to gross domestic product (GDP), but many of them are highly mechanised and rely more on technology, capital and productivity improvements than on large-scale labour absorption.

Historically, sectors such as agriculture, manufacturing and mining absorbed large numbers of low- and semi-skilled workers. However, technological advancement, automation and global competition have significantly reduced labour intensity in many of these industries. While productivity may improve, employment opportunities do not necessarily increase alongside it.

At the same time, the sectors with the greatest potential to absorb young workers, such as small business development, township economies, informal trade, tourism, creative industries, social services and labour-intensive manufacturing, often remain underdeveloped and under-supported.

South Africa also faces the persistent challenge of high levels of market concentration. A relatively small number of large firms continue to dominate key sectors of the economy, limiting competition and reducing opportunities for emerging enterprises and new entrants. This concentration undermines entrepreneurship, innovation and the growth of small businesses, which are globally recognised as major drivers of youth employment.

The Competition Commission’s 2026 Concentration Tracker Report recently highlighted that large firms continue to account for the overwhelming majority of market turnover in the economy, while micro, small and medium enterprises (MSMEs) contribute a much smaller share despite making up most registered firms. This imbalance matters because MSMEs are generally more labour-intensive and play a critical role in employment creation.

Young people are disproportionately affected by these structural weaknesses. Many young South Africans face significant barriers to entering the economy. These include limited work experience, poor access to networks and finance, inadequate transport systems, digital exclusion, spatial inequality and education-to-work transitions that remain weak and fragmented.

For many graduates, qualifications alone no longer guarantee employment. Increasingly, employers demand prior experience for entry-level positions, creating a vicious cycle in which young people cannot obtain employment because they lack experience, and cannot gain experience because they are unemployed.

This challenge is even more severe for young people in rural areas, townships and informal settlements, where economic opportunities are limited and public infrastructure remains inadequate. Spatial inequality, inherited from apartheid planning, continues to shape labour market outcomes. Many young people remain physically disconnected from centres of economic activity and spend a disproportionate share of their income on transport costs when seeking work.

Weak economic growth over the past decade has further worsened the situation. South Africa’s economy has struggled to achieve sustained and inclusive growth because of a mix of structural and cyclical constraints. These include electricity supply disruptions, logistics bottlenecks, declining public infrastructure investment, low business confidence, weak state capacity, rising debt levels and global economic uncertainty.

However, even where growth occurs, the quality and inclusiveness of that growth matter. Economic growth alone is insufficient if it does not generate broad-based employment opportunities. Growth that benefits only a narrow segment of society while excluding young people will deepen inequality and social frustration.

South Africa, therefore, requires a different development approach which places employment creation, industrialisation and inclusion at the centre of economic policy. This requires stronger support for labour-intensive sectors, targeted industrial policy, localisation, infrastructure investment and expanded support for MSMEs, cooperatives and informal businesses. It also requires deliberate interventions aimed specifically at improving youth labour market outcomes.

Importantly, the country must begin to view young people not merely as beneficiaries of development, but as active drivers of economic growth and innovation. Youth entrepreneurship, digital innovation, the green economy, cultural industries and social enterprises all present important opportunities for future employment creation if adequately supported.

Government institutions such as the National Youth Development Agency (NYDA) continue to play an important role in advancing youth economic inclusion. The NYDA has expanded efforts to support youth entrepreneurship, business development, skills development and labour market access programmes across the country.

Through grant funding, business mentorship, market linkage support, and enterprise development initiatives, the NYDA assists young entrepreneurs in establishing and growing sustainable enterprises. The Agency has also strengthened partnerships with both public- and private-sector stakeholders to expand opportunities for youth-owned enterprises within procurement systems and value chains.

In addition, the NYDA continues to advocate for stronger youth-focused procurement measures, including increased set-asides for youth-owned businesses in public procurement. These interventions aim to address systemic barriers that prevent young entrepreneurs from accessing economic opportunities.

The Agency is also actively involved in supporting the implementation of the National Youth Service (NYS) Programme, which seeks to provide young people with work experience, skills development and pathways into employment while contributing to community development and social cohesion. Thousands of young people continue to participate in various service opportunities across sectors such as education support, environmental management, health services, agriculture and community development.

Beyond programme implementation, the NYDA continues to conduct research and policy advocacy to improve youth development outcomes. Through initiatives such as the Quarterly Youth Economic Brief (QYEB), the Agency monitors labour market trends, youth unemployment dynamics and broader economic developments affecting young people. This research contributes to evidence-based policymaking and strengthens the national conversation around youth economic inclusion.

However, addressing youth unemployment requires a whole-of-society approach. The government alone cannot resolve the crisis. The private sector, labour, educational institutions, development finance institutions and civil society all have an important role to play in creating pathways for young people into economic participation.

The private sector, in particular, must play a greater role in expanding entry-level opportunities, internships, apprenticeships and youth enterprise development initiatives. Public procurement systems must also become more developmental and inclusive by supporting small and youth-owned businesses.

Equally important is the need to strengthen alignment between education and skills and the evolving needs of the economy. South Africa’s education system must produce graduates with relevant technical, digital and entrepreneurial capabilities that match future labour market demands.

The country must also confront the broader issue of inequality. South Africa remains among the most unequal societies in the world, and this inequality continues to perpetuate exclusion across generations. Youth unemployment is therefore not merely a labour market issue; it is also a matter of developmental, social and economic justice.

The social consequences of persistent youth unemployment are severe. Long-term unemployment contributes to poverty, social instability, mental health pressures, rising household dependency and declining social mobility. It also undermines confidence in democratic institutions and economic systems.

This is why the commemoration of the 1976 Youth Uprising remains deeply important today. The youth of 1976 confronted a system that denied them dignity, opportunity and freedom. Their struggle was fundamentally about securing the right to a better future.

Fifty years later, South Africa’s democratic challenge is no longer political exclusion alone but increasingly economic exclusion. The commemoration of the 1976 Youth Uprising should therefore serve not only as a reflection on our past, but also as a call to action for the future. It reminds us that investing in young people is not optional, but essential for achieving inclusive growth, social stability and sustainable development.

The challenge before us is to ensure that the democratic freedoms fought for by the youth of 1976 are matched by expanding economic opportunities and improved living conditions for today’s generation of young South Africans.

South Africa cannot achieve meaningful and sustainable development while millions of young people remain excluded from the economy. Youth unemployment is not inevitable. With the right policy choices, institutional coordination and investment priorities, the country can build a more inclusive and labour-absorbing economy.

The future of South Africa will ultimately depend on whether its young people are empowered to participate meaningfully in economic life. Economic growth that excludes the youth is neither sustainable nor truly developmental. Inclusive growth, by contrast, offers the possibility of shared prosperity, social cohesion and a more equitable future for all.

Tshepo Moloi is the National Youth Development Agency’s (NYDA) Head of Economic Research.