Sunday, 22 March 2015

Exciting times - harvesting our youthful demographic dividend

Completely dormant South African assets

Legislation and other Government interventions may assist in transforming our society into one in which the limitations on each individual’s success are only self-imposed. 

A more important element to a nation’s success is however that those who have gained experience and expertise take proactive steps in using those assets to invest in society’s future – our young people. 

This article gives an in depth view of the opportunities which this represents.

Provocative thoughts and questions

Senior South African economist, Cees Bruggemans poses provocative thoughts and questions in his recent article “SA Radical Prospects: Limitations & Opportunities”:

“It can be said, in all earnestness, that the modern South African economy has never been given a fair chance to show what it is truly capable of, in both the productive and the distributive sense. Could we make it our first priority to use the proceeds of resource windfalls to beneficiate our human capital stock? Should we in the future make our own luck through foreign trade by participating more aggressively in global value chains? Can we break our previous development ‘mould’ (relying mainly on resource windfalls as development push factors) by making our human capital stock the centrepiece of our development efforts? Should we in the future be focusing mainly on ‘beneficiating’ our human capital and through it seek richer and more widespread human development? The central theme of South Africa’s development would then become the harvesting of our youthful demographic dividend, so far left completely dormant.”

Sticks, carrots and international recognition

The answers to these questions bring exciting opportunities to business. Since South Africa’s logistics costs hover at around 12 - 13% of its GDP, these issues are of significant importance to any logistics and transport organisation. Add to this the fact that, of the of the 21 million young people (under 35 years) in South Africa, 18.3 million of them are without jobs*.

Both the sticks and the carrots exist to reduce the high proportion of logistics costs and youth unemployment, given that these result from the same cause – lack of skills.

As of 1 May 2015, companies need to DOUBLE their spend on training from 3 to 6% of payroll in order to meet the required 8 out of 118 points on the revised B-BBEE scorecard. This can be most cost effectively achieved by uplifting the skills of those same unemployed youth and, by spending the same Rands on the right people in the right programmes, 25 B-BBEE scorecard points can be achieved.
There have never been more learnerships in the field of logistics and transport than those which have been registered to date: it is the sponsorship of young AICs (Africans, Indians and Coloureds - especially women and handicapped individuals) on learnerships which earn the highest B-BBBEE scorecard points.

It is also learnerships which attract the highest levels of both SETA funding and tax incentives. In effect they are cost neutral, thus releasing funding to upskill existing staff who may not necessarily be AICs.

A further key development is that the international Procurement and Transport and Logistics professional bodies, the Chartered Institute of Purchasing and Supply (CIPS) and the  Chartered Institute of Logistics and Transport (CILT), are aligning their programmes to learnerships registered within a degree qualification. These means that graduating leaners receive a local degree and may also qualify for international professional status.

Business sustainability

 “It’s all very well implementing learnerships by bringing in unemployed youth” you say, “but how does this benefit my business?”

From the 2014 Barloworld Logistics supplychainforesight report, “Respondents ranked the lack of relevant skills and talent as their number one strategic business constraint.” This is emphasised throughout this and similar reports. Other studies have proved that 85% of learnerships graduates are retained in the businesses. Conclusion? Learnerships provide businesses with the scarce and critical skills needed for sustainability.

Are you gearing up your training and development programmes to make your company more competitive?

What effect does your B-BBEE Scorecard rating have on your ability to attract and retain clients?
How will South Africa’s youth unemployment rate affect your business? Business as usual? Seek opportunities elsewhere? Capitalise on the opportunity?

Exciting times ahead!

* “Youth in a state of emergency” Andile Lungisa, former ANC Youth League deputy president, Sunday Independent June 15 2014