Business has backed a plan to place 1m young people in paid one-year internships over the next three years in a move that is expected to raise private sector employment by around 3% and generate at least R2bn more in Vat for treasury.

The programme, which was signed off by President Jacob Zuma last week, has been developed by the CEO Initiative — a group of top businessmen who have rallied to finance minister Pravin Gordhan’s call to put the economy on a firmer footing.

Youth unemployment is among the biggest structural shortcomings of the economy, with almost 55% of people between 15 and 24 years old — roughly 1.5m people — in the labour force not working.

“This programme, which seeks to place 1m young people aged 18-29 in internships, will have a significant effect on employment,” says Colin Coleman, MD and partner of Goldman Sachs.

Coleman and Investec CEO Stephen Koseff chair the joint business-government working group that has been developing the concept since May.

The initiative has been announced on the eve of a visit to SA by Moody’s Investors Service. The New-York based credit rating agency has said it is likely to downgrade SA in the absence of growth recovery and structural reforms, including to state-owned enterprises (SOEs). It regards youth unemployment as one of SA’s key credit challenges. …more