Skills Supply And Demand In South Africa

Table 7.1:Number and share of unemployed individuals with HE qualifications by study field,Q2 2013 and Q2 2019145Number and share of unemployed individuals with TVET qualifications by study field,Q2 2013 and Q2 2019146Share of employed with HE qualifications by study field and main industry,Q2 2013 and Q2 2019151Share of employed with TVET qualifications by study field and main industry,Q2 2013 and Q2 2019154Share of employed with HE qualifications by study field and main occupation(one-digit), Q2 2013 and Q2 2019157Share of employed with TVET qualifications by study field and main occupation(one-digit), Q2 2013 and Q2 2019160Table A.1:Employment by industry and occupation, Q2 2009176Table A.2:Employment by industry and occupation, Q2 2019177Table A.3:Classification of higher education and TVET fields of study using QLFS data178Table A.4:Employed population with higher education qualifications by field of studyand main industry, Q2 2013 and Q2 2019180Employed population with TVET qualifications by field of study and main industry,Q2 2013 and Q2 2019181Employed population with higher education qualifications by field of studyand main occupation (one-digit), Q2 2013 and Q2 2019182Employed population with TVET qualifications by field of study and main occupation(one-digit), Q2 2013 and Q2 2019183Table 7.2:Table 7.3:Table 7.4:Table 7.5:Table 7.6:Table A.5:Table A.6:Table A.7:List of tables9

Acronyms and abbreviations4IRFourth Industrial RevolutionAIArtificial intelligenceARAugmented realityASGISA Accelerated Shared Growth Initiative of South AfricaATRAnnual Training ReportBACI Base pour l’Analyse du Commerce InternationalCESM Classification of Educational Subject MatterCETCommunity education and trainingCHECouncil on Higher EducationCSP Community, social, and personal servicesCTLFClothing, textiles, leather, and footwearDAFF Department of Agriculture, Forestry, and FisheriesDBEDepartment of Basic EducationDHET Department of Higher Education and TrainingDTIDepartment of Trade and IndustryFTENFirst-time enteringGDPGross domestic productGERGross enrolment ratioGEAR Growth, Employment, and Redistribution StrategyGETC: ABET General Education and Training Certificate: Adult Basic Education and TrainingGFCIGross fixed capital investmentGVAGross value addedHEHigher educationHEIHigher education institutionHEMIS Higher Education Management Information SystemHPHodrick-PrescottHRD-SA Human Resource Development Strategy for South AfricaHSRCHuman Sciences Research CouncilIFRInstitute for Futures ResearchILOInternational Labour OrganisationILOSTAT International Labour Organisation DatabaseINSETA Insurance Sector Education and Training Authority10IoTInternet of thingsIPAPIndustrial Policy Action PlanSKILLS SUPPLY AND DEMAND IN SOUTH AFRICA

ISCED International Standard Classification of EducationLFPRLabour force participation rateLFSLabour Force SurveyLMIPLabour Market Intelligence PartnershipNC(V)National Certificate (Vocational)NDPNational Development PlanNEDLAC National Economic Development and Labour CouncilNEET Not in employment, education, or trainingNEETs Individuals who are not in employment, education, or trainingNIPFNational Industrial Policy FrameworkNPPSET National Plan for Post-School Education and TrainingNQFNational Qualifications FrameworkNSCNational Senior CertificateNSDPNational Skills Development PlanNSDSNational Skill Development StrategyO*NETOccupational Information NetworkOECD Organisation for Economic Co-Operation and DevelopmentOFOOrganising Framework of OccupationsPIVOTAL Professional, vocational, technical, and academic learningPSETPost-school education and trainingPSPPriority Skills PlanQLFSQuarterly Labour Force SurveyRDP Reconstruction and Development ProgrammeSARBSouth African Reserve BankSETScience, engineering, and technologySETASector Education and Training AuthoritySONAState of the Nation AddressStats SAStatistics South AfricaSTEM Science, technology, engineering, and mathematicsTETA Transport Education and Training AuthorityTIMMS Trends in Mathematics and Science StudyTVET Technical and vocational education and trainingUKCES United Kingdom Commission for Employment and SkillsUNISAUniversity of South AfricaWEFWorld Economic ForumWPPSET White Paper for Post-School Education and TrainingWSPWorkplace skills planningAcronyms and abbreviations11

Foreword by the Director-GeneralIt is generally well known that South Africa is experiencing significantimbalances between the supply of and demand for skills. Previousresearch has shown that there is growing demand for people withhigh-level skills, while the majority of the population possess lowlevel skills. In addition, many people in South Africa are eitheroverqualified or underqualified for their current jobs. The researchreveals notable mismatches between the field in which workersare employed and the field of study in which they are qualified. Insome instances, workers’ level of education is not aligned with theeducational qualification required by their job.The Department of Higher Education and Training has initiated afive-year research programme on labour market intelligence (theLabour Market Intelligence Programme). This is the second phaseof the programme, implemented in partnership with the Universityof Cape Town. Through the programme, the Department monitorsthe imbalances between the demand for and the supply of skills,with a view to being as responsive to the needs of the labourmarket as possible.To this end, it is my pleasure to present to you the third edition ofthe Skills Supply and Demand in South Africa report. The report isaimed at supporting skills planning by providing insights into thelabour market. Within the Department, the evidence emanatingfrom the report is being used to strengthen enrolment planning atour post-school education and training institutions via improvedcareer information services. It is also being used to guide resourceallocation (as in the case of the National Skills Fund), to guideuptake of international scholarships, and to guide the prioritisationof qualifications development (as in the case of the Quality Councilfor Trades and Occupations).It is hoped that our stakeholders will use this report as a referenceon matters pertaining to skills planning and the provision ofeducation and training. Your feedback, including suggestions forimprovement, can be emailed to Khuluvhe.M@dhet.gov.za.MR G. F. QONDEDirector-General, Department of Higher Education and TrainingPretoria, South Africa12SKILLS SUPPLY AND DEMAND IN SOUTH AFRICA

Executive summaryThis report provides a holistic overview of the supply of and demand for skills in South Africa, withthe aim of informing future skills policy and supporting an inclusive economic growth path. Throughcareful analysis, the report attempts to understand the complexities and intricacies surrounding howsupply and demand interact and the corresponding implications for reform.The report largely uses data for the Q2 2009–Q2 2019 period from the Statistics South Africa (Stats SA)Quarterly Labour Force Surveys and data for the 2011–2017 period from the Department of HigherEducation and Training (DHET). It also makes use of other sources, where appropriate, to supplement itsanalysis. Investigating both the demand for and supply of skills involved an exploration of the state ofthe economy, the characteristics of the employed and unemployed individuals who make up the labourforce, trends in the sectoral and occupational distributions of employment, and trends in the post-schooleducation and training (PSET) system. The interaction between supply and demand provides the basisfor identifying signals regarding the nature and extent of the skills imbalances facing South Africa. Byunderstanding these imbalances, it is possible to steer supply, guiding future investment and interventionsand, ultimately, ensuring that the PSET system supports an inclusive skills development path.Key trends in skills supply and demand in South Africa Economic growth has been poor in South Africa over the past decade. This has led to poor employmentgrowth, which has been inadequate to absorb an increased labour force. In order to have absorbed alllabour market entrants between Q2 2009 and Q2 2019, employment should have increased by 30percent over the period. The employment absorption rate for the period was, however, 46 percent,with employment only growing by 13.6 percent. The result has been an increased unemployment rate.There is an overarching structural imbalance between labour demand and labour supply. Economicgrowth has favoured medium- and high-skilled workers, despite the fact that the majority of thelabour force have low skill levels.The South African labour force was made up of 16.3 million employed and 6.7 million unemployedpeople in Q2 2019. The number of unemployed people rises to 10.2 million when the nonsearching unemployed are considered as well. 75.1 percent of the employed and 89.4 percent ofthe unemployed are from the black African population group. Women account for 43.7 percent ofthe employed and 48.8 percent of the unemployed. The highest rate of unemployment is observedamong South African youth (those aged between 15 and 34), at 41.1 percent. This rate has risen asmore young people have joined the labour force.In Q2 2019, there were 8.2 million South African youth not in employment, education, or training(NEET), an increase from 7.5 million in Q2 2013. Relative to other BRICS countries, South Africa hasthe highest rate of individuals between the ages of 15 and 24 who are NEET, at 32.6 percent. The NEETrate for those aged between 25 and 34 was even higher, at 48.5 percent. The NEET rate was highest forindividuals with primary or lower education (55.3 percent) and for those with incomplete secondaryschooling (43.2 percent). These individuals are of particular concern: they remain disconnected fromthe country’s formal economy, given that they are low-skilled, not engaged in employment, and notdeveloping their skills to improve their employment prospects.The education levels of the labour force increased on average between Q2 2009 and Q2 2019.However, the average level of educational attainment remains low. Among the employed, 9.1 percentExecutive summary13

14have a higher education (HE) qualification, 12.4 percent have a technical and vocational educationand training (TVET) qualification, and 32.8 percent have completed secondary schooling. Over twofifths of the employed (44.4 percent) have not completed secondary schooling. This amounts to 7.2million individuals, as of Q2 2019.A concerning trend is the rising unemployment rates among even those with HE and TVETqualifications. Unemployment among individuals with HE qualifications increased at an annualaverage rate of 14.4 percent per year between Q2 2013 and Q2 2019, while unemployment amongindividuals with TVET qualifications grew at an average rate of 10 percent per year over the sameperiod. These increases are troubling and suggest that, on the whole, there is insufficient demandfor individuals with HE and TVET qualifications in the economy. They indicate that the specificqualifications attained by individuals are not in demand, or else that the skills obtained throughthese qualifications are not aligned with the skills needs of employers.By rate of increase, growth in unemployment among individuals with HE qualifications has beenhighest for those with health, education, other humanities, and engineering qualifications. Forindividuals with TVET qualifications, those with business and engineering qualifications have seenthe greatest increase in unemployment.There has been a structural shift towards a service economy, with community, social, and personal(CSP) services and financial and business services dominating and experiencing the highest ratesof growth. These industries are more intensive in medium- and high-skilled labour than in lowskilled labour.Between Q2 2009 and Q2 2019, there were considerable increases in employment for the followingoccupations: service and sales workers (an increase in employment of 769 000 jobs, with close to allof this increase accounted for by increased demand in the tertiary sector), elementary workers (anincrease of 644 400 jobs, with this increased employment coming from different sectors), managers(an increase of 422 100 jobs, driven mainly by the tertiary sector), clerks (an increase of 170 900jobs, driven by increased employment in the tertiary sector), and skilled professionals (an increaseof 129 700 jobs, driven by increased employment in the tertiary sector, particularly in CSP services).In terms of highest level of educational attainment, there has been an increase in the number ofindividuals employed with incomplete secondary schooling, completed secondary schooling,certificates or diplomas, and degrees. The rate of increase has, however, been highest for individualswith degrees. Overall, it is clear that, across the secondary and tertiary sectors, there has beensignificant increased demand for individuals with degrees and a decline in the relative share ofemployment for individuals with incomplete schooling. In the primary sector, conversely, the shareof individuals employed with degrees has declined slightly, while employment of individuals withincomplete schooling still accounts for close to three-quarters of all employment in this sector. It isalso the case that the increased demand for individuals with degrees has not been sufficient to absorbthe growing number of job seekers graduating from universities, resulting in rising unemploymentfor degree holders.Within the tertiary sector, there was a clear increase in the absorption of individuals with HEqualifications across all fields of study (except arts) between Q2 2009 and Q2 2019. For individualswith TVET qualifications, however, this trend was not observed. The tertiary sector, while dominantand expanding, seems to offer muted demand for TVET qualifications, except those in the businessand health fields.The inadequate quality of basic education remains a critical constraint on the education and trainingsystem and the labour market. Of all the learners who start school, only about 60 percent writetheir matric examinations 12 years later. For the 2008 matric cohort, the pass rate was 63 percent.However, taking into account that only approximately 60 percent of the learners who started schoolSKILLS SUPPLY AND DEMAND IN SOUTH AFRICA

12 years earlier wrote the matric examination, the proportion of learners who passed matric in 2008was only 38 percent. Thus, only 12 percent of the original 2008 matric cohort who started school 12years prior would go on to access HE, only 2 percent would go on to complete an undergraduatediploma, and only 4 percent would go on to complete an undergraduate degree within six years ofmatriculating.In 2017, there were 1.2 million students enrolled at higher education institutions (HEIs). Undergraduatedegree enrolments made up 53.6 percent of the total enrolments at public universities in 2017.Between 2011 and 2017, undergraduate enrolments grew at an average rate of 2.6 percent per year.Enrolments in postgraduate degrees below master’s level increased at an average rate of 2.8 percenteach year, and enrolments in master’s degrees grew at 3.2 percent per year, on average. The growthin PhD enrolments over this period was 9.9 percent per year.Enrolments at TVET and private colleges increased significantly between 2011 and 2017. TVETenrolments increased, on average, by 9.4 percent per year, from 400 273 to 688 082, over the 2011–2017 period, with this growth driven by enrolments in Report 191 (N1–6) programmes (certificatesand diplomas).While access to schools, HEIs, and TVET colleges has improved, concerns remain about the qualityof education. There are low progression rates through programmes across all types of educationalinstitutions, as well as low completion rates for individuals enrolled at schools, HEIs, and TVET colleges.While throughput rates appear to be rising in HEIs, it remains worrying that large numbers of studentsstill take much longer than the specified three years to complete their undergraduate degrees. Forexample, only 55.8 percent of the cohort that entered public universities in 2010 had completedtheir undergraduate degrees after six years – twice the expected duration of a three-year degree.The number of public university students graduating with undergraduate degrees increased from64 551 in 2011 to 96 120 in 2017, constituting an average annual growth rate of 6.9 percent. Thenumber of students graduating with postgraduate degrees below master’s level grew at an averagerate of 5.3 percent over the same period, and the number of students graduating with master’sdegrees grew by 5.0 percent per year. The number of students graduating with doctoral degreesgrew the fastest, at an average rate of 11.7 percent per year, although this is off a relatively low base.The number of black African students graduating from public universities has increased. However,there are significant racial differences in graduation rates. While graduation rates among allpopulation groups increased between 2011 and 2017, the graduation rate of white studentsremained higher than that of other population groups. The graduation rate of Indian students grewthe fastest over this period, at an average annual rate of 4.8 percent.The Organisation for Economic Co-operation and Development (OECD) has noted that there areconsiderable occupational shortages in South Africa, with higher-skilled occupations marked by ahigher proportion of shortages. The share of occupational shortages across occupational groupsranges from 17 percent for elementary occupations to over 80 percent for managers. For thoseoccupations marked by shortages, the lack of individual skills competencies was shown to beparticularly acute for reading comprehension, active listening, speaking, and writing. Monitoring,learning strategy, critical thinking, and active learning skills were also found to be in short supply.With respect to the employment mismatch of qualified individuals, there is a considerable share ofindividuals with HE qualifications employed in occupations that are not appropriate for individualswho are high-skilled. Conversely, only 4.7 percent of the TVET-qualified employed were in lowskilled occupations in Q2 2019, suggesting that most were employed in appropriate occupations.The extent of employment mismatch varies across different fields, however. A large number ofindividuals with business qualifications from TVET colleges (around one in four) are employed inoccupations that are not explicitly business-related.Executive summary15

Key recommendations from the analysis of skills supply and

CET colleges 127 6.3.5. Workplace-based learning 128 6.4. Migration and the supply of skills 131 . Figure 3.11: Regional annual growth of GDP per capita, 1994–2018 45 . Number of students who wrote and passed matric