Skills mismatch fuels unemployment crisis – BE

Business Eswatini (BE), the leading private sector organisation, says the country’s unemployment crisis is being driven by a dangerous combination of slow economic growth, outdated qualifications and a culture that still trains young people to seek jobs rather than create them.

BE CEO E. Nathi Dlamini said this following the release of the country’s 2023 Integrated Labour Force Survey, which revealed that about 68 000 employed people earn below E2 000 per month despite being counted as formally employed.

The survey reported that the kingdom’s unemployment rate stood at 35.4%, while youth unemployment among economically active people aged between 15 and 24 has climbed to 56%.

Dlamini said the labour market crisis could not be understood through unemployment figures alone because deeper structural problems were feeding into one another.

“When it comes to the situation of joblessness in the country, there is interplay between three main factors,” Dlamini said.

He added that the first problem was that while the economy has recently posted growth rates above 4%, the expansion remains far too weak to absorb the growing number of young people entering the labour market every year.

“This essentially means that we have to grow the economy by double digits to absorb all the jobseekers, which is a near-impossible feat to achieve,” he explained.

His comments come at a time when the latest labour force survey paints a bleak picture of the country’s labour market.

The report found that out of 402 909 economically active people, 142 553 were unemployed. It also found that only 32.8% of the working-age population was actually employed.

In practical terms, only about one in every three working-age citizens had jobs. Even among those employed, many continue surviving on very low wages.

The labour survey classified 26% of employed people as low-paid workers, meaning they earn below two-thirds of the national median monthly wage. With the country’s median monthly earning standing at E3 000, this places roughly 68 000 workers below the E2 000 threshold.

Dlamini said the second major challenge lies in the speed at which modern businesses are transforming.

He argued that industries are rapidly shifting away from labour-intensive systems towards highly automated and technology-driven production methods, while academic institutions continue producing graduates with qualifications that no longer match market realities.

“The academic institutions we have in the country have been slow to adapt to this harsh reality, thereby producing qualifications that are not viable for a private sector that has transformed into an unrecognisable beast,” he said.

“The private sector has been forced to transform out of the inescapable necessity to survive and in order to remain competitive against brutal competitive market forces taking place regionally and worldwide,” he added.

According to him, the result is a widening mismatch between skills produced by tertiary institutions and those demanded by industry.

“To this end, they need skills that are fit for this purpose and unfortunately, none are available in the marketplace,” said the CEO.

His comments closely mirror concerns recently raised by the Eswatini Higher Education Council (ESHEC), which warned that the country’s economy remains heavily reliant on government employment while private sector growth and industrial expansion continue lagging behind.

The higher education regulator also raised concerns that many graduates continue leaving institutions with theoretical qualifications but without practical workplace skills.

Dlamini said both BE and ESHEC have repeatedly warned about the growing disconnect between education and industry.

“ESHEC has been at the forefront in raising the alarm to the pervasive and urgent issue of skills not matching industry needs. We too, as BE, have been talking about the same issue almost ad nauseam in our bid to point to its dangers and adverse consequences,” he stated.

He warned that unless the country urgently reforms technical and vocational training systems, the labour market situation is likely to deteriorate further.

Still, Dlamini said there were emerging interventions that offered some hope. He pointed to ongoing European Union-backed programmes supporting technical and vocational skills development through partnerships involving government and civil society organisations.

“One is happy that we now have a dependable partner in the EU who have decided to commit significant resources into the problem of technical and vocational skills,” he said.

However, he argued that government must go further by incentivising businesses themselves to train young people.

“To augment these initiatives, the private sector needs to be incentivised by way of training tax breaks to provide on-the-job training for tertiary school leavers,” he suggested.

But perhaps Dlamini’s strongest criticism was directed at what he described as a national mindset problem around employment itself.

He argued that the country’s education system continues conditioning young people to search for jobs rather than create businesses and opportunities themselves.

“The third factor and probably the most important is the lack of entrepreneurship training in schools,” he said.

According to him, this mindset has become deeply embedded socially and culturally.

“We need to help our young people change their minds about the whole issue of employability by pointing to the attractive prospects of entrepreneurship, especially in a new ICT-based economic landscape,” he said.

Dlamini shared that even within his own family he has witnessed the growing frustration among educated but unemployed young people.

“As I write this, I am keenly aware of my highly educated young relatives who are walking the streets unemployed; they are highly educated but dejected and hopeless not least because the degrees they hold are commercially unviable. This needs to change. But first, we must change,” he stated.

He warned that unemployment now stretches far beyond economics alone and is increasingly feeding broader social pressures.

“The interplay between these three primary factors parasitically feed on each other in a vicious cycle to create far more problems and social issues that go beyond the complex issues of being unemployed,” he added.