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Millennials rate inequality top challenge

Oct 25 2015 14:16

Cape Town - Millennials see social and economic inequality as the greatest challenge both in their home cities and the world at large, according to the World Economic Forum's Global Shapers Annual Survey results released on Sunday.

The survey captured responses from over 1 000 young people aged between 20 and 30 in 125 countries and 285 cities, making it one of the most geographically diverse surveys of millennials.

The respondents are all members of the WEF’s Global Shapers community, a network of over 450 city-based hubs of young, civically engaged leaders.

Beyond inequality, the survey finds that youth unemployment and government transparency are the second and third most important issues that need to be addressed in cities. At the global level, climate change and education are the second and third priorities.

In South Africa, unemployment is the single most important factor contributing to income inequality, according to the latest UN Development Programme report.

Levels of unemployment have remained above 20% for the last 25 years. According to Statistics SA's recent data South Africa's unemployment rate declined to 25% in the second quarter of 2015, from a ten-year high of 26.40% in the first quarter of 2015.

Although the government has expressed its commitment in dealing with the challenge of unemployment, Finance Minister Nhlanhla Nene revised South Africa's expected economic growth rate for this year downward to 1.5% from the 2.0% mentioned in the main budget in February.

The SA economy is expected to grow by 1.7% in 2016 and 2.6% in 2017.

Reallocate spending

Economists said there can hardly be job creation in a slow growth economic environment and suggested National Treasury reallocate spending to solve employment and growth issues.

Nomura emerging markets economist Peter Attard Montalto, who believes increased spending on education could help solve future employment and growth issues and boost potential growth said the National Treasury finds itself in a difficult spot, with the fiscal space so tight.

Referring to the student #feesmustfall protests that rocked the country last week, Montalto said arguably a much larger proportion of Department of Higher Education and Training budget could go to universities.

"But the department it is also responsible for trying to increase much needed vocational training and apprenticeships, which arguably are needed by a large segment of the population, the unemployed and potentially future unemployed youth.

"This is, however, a classic example of where current expenditure (including wages) within the public (government) sector needs to be constrained with greater urgency in order to make room for important expenditure on education," he said.

Montalto cited transfers to universities are set to be R83.5bn over the current and coming two fiscal years, which
compares with R63.9bn additional expenditure needed for the increased public sector wage bill in Nene's medium term budget.

"The Treasury could have dug deep with savings (as it has) in order to increase the transfers to universities by 50% instead of having to do it to fund public sector wage growth well above inflation and productivity increases and spend the rest on maintaining consolidation."

Channeling frustrations

Political analyst Daniel Silke told Fin24 on Sunday South African millennials increasing are frustrated with a lack of political leadership from establishment political parties like the ANC. And last week's student protests against fee increases proved that.

"Given high unemployment (and critical levels among youth unemployment), this group is increasingly critical of government. However, their populist protests will need to be channeled back into the formal political arena especially with a view to local government elections next year.

"That's the challenge for all parties - especially the Opposition - to harness their frustrations electorally. The danger in this country is that younger people withdraw from formal politics due to their frustrations and lack of confidence in existing parties or leadership.

"Already, we see worrying signs of a decline in voter participation and last weeks' actions don't help as students seek out alternative parliamentary options for their frustrations."

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