South Africa is experiencing a decline in fertility rates, resulting in a lower ratio of working age population to consumers. South Africa will now be in a position to take advantage of the first demographic dividend, in which the working population will constitute a higher share of the overall population. However, for the demographic dividend to really pay off, the working-age population needs to have strong employment and income prospects.
This is where South Africa runs into trouble. Unemployment among 15-34 year-olds is 46%, compared to 21% for the 35-65 year old population. Additionally, the young population in South Africa earns less than the comparable young in South America and Southeast Asia. Such poor earning and employment prospects are problematic because it limits the positive effects of a demographic dividend–even if the working population is high, savings, capital accumulation, and growth will not happen as rapidly. Or put another way, it reduces the amount of time that income outpaces consumption. This is especially true in South Africa because the young constitute such a high portion of the populace.
South Africa’s youth employment problem also has implications for the second demographic dividend. While workers should save more due to a relatively long period of retirement in the future, this is not the case. Thus, as the wealth of South African individuals decreases, so do the resources for the future. These resources could have been devoted to areas like education and health, leading to improvements for the future generation.
This is a serious problem. This generation must correct its employment issues if it desires a sustained and sustainable economy for the future. Hence, what are some approaches the country could take?
To expand this discussion, what have you all found on the development of the demographic dividends in your chosen country?