Graduate Underemployment: the South African Case

By Keamo Segwagwe

Since the introduction of the Quarterly Labour Force Survey (QLFS) in 2008, two new variables were derived by Statistics South Africa (Stats SA). One of them being the underemployment variable, which really broadens the investigation into the nature of employment in South Africa. For the purposes of this article, I will closely examine the unemployment figures in South Africa in relation to what underemployment is and how that fares as an economic metric, the causes and implications of underemployment in the South African context with emphasis on graduate underemployment. 

The rate of unemployment in South Africa rose to 27.6% at the end of the first quarter (Q1) of the year. It’s the worst figure since Q3/2017 with about 237 000 fewer jobs in Q1/2019 compared to Q4/2018. This takes the number to about 6.2 million South Africans who are actively looking for a job but can’t find one.

It is important to note that according to the Stats SA report titled: ‘Youth graduate unemployment rate increases in Q1: 2019’, the burden of unemployment is concentrated amongst the youth as they account for 63,4% of the total number of unemployed persons. Almost 4 in every 10 young people in the labour force did not have a job, with the unemployment rate within this group at 39,6% in the 1st quarter of 2019. Just under 30% of the youth have jobs and about half of them (48,8%) participate in the labour market. The unemployment rate among adults (aged 35–64 years) was 18,0% during this period, while the employment-to-population ratio and labour force participation rate was 57,4% and 70,0%, respectively, for this group.

The report further states that; “the youth aged 15–24 years are the most vulnerable in the South African labour market as the unemployment rate among this age group was 55,2% in the 1st quarter of 2019. Among graduates in this age group, the unemployment rate was 31,0% during this period compared to 19,5% in the 4th quarter of 2018 – an increase of 11,4 percentage points quarter-on-quarter. However, the graduate unemployment rate is still lower than the rate among those with other educational levels, meaning that education is still the key to these young people’s prospects improving in the South African labour market”

The above figures on unemployment seek not only to magnify how easy it is to quantify and measure unemployment but also serve the purpose of highlighting the scary picture of youth unemployment in our country. The above also serves the purpose of showing how difficult the task below of measuring underemployment as an economic phenomenon is.

In layman’s terms underemployment can be defined as a situation that occurs when employees’ jobs don't fully utilise all their skills, education, or availability to work. The term underemployment can be analysed using two different approaches, according to the Organization for Economic Cooperation and Development known as (a) time-based approach and (b) the inadequate employment situations approach. The time-based approach refers to employees who are working fewer hours than is typical in their field, or typical working hours per week (typical being defined as actually working fewer than 35 hours during a week), they are employees who are willing and available to work additional hours but cannot get full-time employment sometimes working part-time jobs in order to make up for the hours not worked.  The inadequate employment approach refers to employees whose years of education is at least one standard deviation above the mean of the employed in the relevant occupation category, essentially meaning that these employees are employed on a full-time basis but don’t utilise all their skills in their current jobs.

We can define underemployed workers according to three categories. These being; skilled workers in low-paying jobs, skilled workers in low-skill jobs and part-time workers preferring full-time hours.

There is a complex and intertwined relationship which exists between unemployment and underemployment which is what informs the reason for my focus here. The general public discourse tends to be fixated on the narrative that suggests that South Africa suffers from a shortage of skilled labour and over-supply of semi-skilled and unskilled labour, while true, this tends to negate some of the other most pertinent issues such as underemployment as an economic phenomenon. 

This fixation subsequently tends to direct economic policy in such a manner that seeks to only address unemployment and isolates underemployment, particularly the inadequate employment situation approach to underemployment. Further, the difficulty is to get an accurate measurement of underemployment since some underemployed workers are visible, which means their underemployment status is easily identifiable, and other workers are considered invisible because their underemployment status is not easily identifiable. For example, those in the part-time worker category may be considered visible, while those workers whose skills or education are under-utilized are invisible, my interest for the purpose of this article are those that are considered invisible. 

I think what is worth noting is that underemployment is a social problem that affects job growth, business growth, poverty levels, career growth and the emotional health of underemployed workers. In some instances, underemployed workers who are employed on a part-time basis might have less disposable income, which subsequently means that they spend less which affects business growth. In addition, underemployment can also produce health-related issues in so far as stress, anxiety and depression are concerned. This is in a sense that those who generally know or think that they are capable of more, and that they “deserve” to earn more money, but are doing something that isn’t challenging, nor career aligned or economically rewarding might end up highly dissatisfied, leading to feelings of inadequacy which might spiral on  to stress, anxiety and depression related health issues.


Based on this I want to present a very methodological and sequential analysis of underemployment as a phenomenon focusing on graduates specifically. What we need to look at here and analyse is the labour market and what the labour market wants in terms of employment or employability. 

According to the Department of Labour’s latest job opportunities and employment report released in November 2018, there is a clear demand for graduates in the workplace. The report was based on a combination of online and newspaper advertisements, with data disaggregated by occupation, industry and province. Overall, 38.6% of the total job vacancies advertised in 2017/18 required people with a degree or diploma educational achievements. This Department of Labour “clearly indicates that there is a shift to a more educated labour force leading to an increasing share of high-skilled jobs in the economy”. Which is brilliant because an educated citizenry in my view is a responsible citizenry.

As illuminated by some of the statistical data mentioned, it is no secret that South African young people face extreme difficulties engaging with the labour market due to various factors. These factors are not limited too but include; the lack of work experience, skills vs jobs available mismatch, meaning that some young people are not in possession of any formal qualifications or are not in possession of qualifications which are relevant to the current job market in South Africa. 

One of the other reasons that contribute to the difficulty young people face in the labour market that I would like to focus on here can be attributed to a large disconnect in what and how universities teach and the experience of actually working in the job market, this is because university courses tend to be theoretically heavy, with very little practical experience and/or teachings provided. Further to this is the very structure of exams and testing throughout the education system which in itself focuses more on a person’s ability to memorise  coursework than one’s ability to take the information and apply it to different situations, this mind you, has been shown to be one of the least effective methods of learning as it breeds unoriginal thinking, negates critical thinking and the thought to application processes which are essential critical skills in the labour market.

The reason why I am including the aforementioned paragraph is to put into perspective the idea that a university degree is often seen or said to be a means of lifting the population out of unemployment, however, if ever this statement is going to be one that is tangible and holds weight than there a few adjustments that we need to make to how we do things as a nation.

For example, let's analyse here the entry requirements needed to get into employment, the typical case involves a relevant or equivalent degree alongside a set number of years of experience, the exception being graduate employment opportunities. My argument here is quite simple it cannot be that a 22-year-old fresh graduate is expected to have a degree and the relevant 5 years work experience at the age of 22. 

Our education system needs to be designed in such a way that a grade 12 high school graduate or matriculant doing accounting, for example, needs to have been taught accounting since grade 10 in such a way that it prepares them for even the most basic role where they can use their studies as a junior bookkeeper for small firm for example. This is to say that accounting as taught in high school needs to be highly practical in order to enable employment from a very young age of 18, this then enables those who either do not want to go into tertiary education because they can’t afford it or for whatever reason to spend the next 4 years of their lives getting the relevant work experience and are afforded the ability to do so while earning an income. 

On the other hand, those who want to go pursue tertiary studies straight after completing their matric need to be walking into a tertiary system that is structured in such a way that promotes effective learning which makes room for active participation and allows for the application of new concepts and skills through real-time labour market-based scenarios. 

The above is my two education-based policy solutions that speak directly to the fact that work experience and degrees do not share a mutually inclusive relationship, meaning that one cannot have full five years working experience and a degree by the age of 22.

This means that either we change the requirements on some jobs to exempt experience and thus heavily rely on the fact that our tertiary education is or ought to be well-designed in terms of curriculum content and course material which then prepares one for work readiness, or alternatively go with work experience for industries that permit for students to solely rely on their accumulated work experience in the absence of a formal tertiary qualification. 

My third education-based policy solution looks at the National Student Financial Aid Scheme (NFSAS). While we are conscious of the fact that we need a more educated citizenry we need to do this with great guidance being given to individuals when choosing fields of study so that we can meet the requirements of the economy first. What I mean here is that there are some degrees which are not national critical skills degrees, this is not to say that these degrees are not important, however they are just not currently climatized for the South African labour market, as such it is rather not prudent to fund certain degrees granted their usefulness to our current labour market. The relation of this point to underemployment is that some of the reasons why we see underemployment exist highly amongst graduates is that some of the degrees that students and prospective labour market entrees have do not have a ‘formal’ sectors within our labour market, this combusted with the fact that some degrees offer access into sectors which are really ‘bloated’ in terms of available vacancies and such entrance into the respective career paths is excessively bloated making new entry very difficult, to say the least.

My fourth and final parting shot relating to education-based policy solutions is that we need to start looking extensively as a nation at the idea of entrepreneurship as a school taught subject supported extensively through real-time initiatives directed at driving and inculcating a strong spirit of entrepreneurship amongst the youth of our country. This is because the reality of unemployment and underemployment is because of the lack of adequate growth in the job market, simply put, there are not enough jobs to accommodate everyone in society. Even if there is an increase in job opportunities, it will always be overshadowed by the number of job seekers. As such we need to look at solving our problems of underemployment and unemployment through the creation of new industries.

Moving away from education-based policy solutions, we also need economic labour market policies which are conscious of the seriousness of underemployment as a phenomenon and as such looks beyond the number of jobs created per year and rather focus on the quality of jobs being created. In other words, we need to create jobs based on what the economy really needs.

In closing, it is evident that the youth of our country is facing extreme difficulties in the labour market due to various contributing factors, and we need a collective response at tackling some of these issues as young people and as a nation at large.  “Many individuals are doing what they can. But real success can only come if there is a change in our societies and in our economics and in our politics” David Attenborough


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