SMME’s Essential to Job Creation

With the national youth unemployment rate at more than 50%, South Africans can no longer rely solely on big businesses and government to create jobs.

According to the National Development Plan, 90 percent of all new jobs will come from Small, Medium and Micro-Sized Enterprises (SMMEs) by 2030. According to the 2017/18 Global Entrepreneurship Monitor report (2015 figures), SMMEs in South Africa contributed to 36 percent of the country’s gross domestic product.

SMME growth in South Africa is slower than expected because they face several challenges including maintaining profitability, unpredictable cash flow and securing financing for the business expansion, which includes hiring staff.

Jake Willis CEO of Lulaway says this is where internships can play a significant role in alleviating some of the burden for SMMEs. “Internships are recognised as one of the best mechanisms available to stimulate job creation and are an effective means to promote the inclusion of unemployed, inexperienced youth into the formal economy, further bolstering social development.”

Willis points out that many SMMEs are not aware that they can access funding to host interns through organisations such as Lulaway as a cost-effective way to increase their staffing complement and support job creation. “Interns or experiential learners are employed in private businesses on a fixed term basis under the sponsorship of a government body such as a Sector Education Training Authority (SETA) e.g. Services SETA or the National Youth Development Agency (NYDA).

“These bodies provide funding in the form of a monthly stipend, usually ranging from R1,500 to R3,000 per month, depending on the programme) to allow participants to gain practical workplace experience. The host company can choose to top up the stipend amount,” adds Willis.

Notably, President Cyril Ramaphosa, as promised in his State of the Nation address, has launched the Youth Employment Service (YES) programme in partnership with big business and organised labour. The initiative is aimed at providing one million interns with the opportunity to gain work experience over the next three years, making them more employable. This initiative will ensure that more businesses – big and small – offer internships, thus radically decreasing the levels of unemployment in the country.

Hosting internships is a win-win for all parties.

Willis says it makes financial sense to host interns, particularly if your business needs staff, but lacks the capital to hire.
Hiring staff to perform operational functions enables particularly micro and small enterprises to adequately service their clients and generate revenue and grow the business. For more established businesses, the cost-saving allows them to more easily invest in their expansion, Willis explains.
“For many SMMEs, the inability to hire and expand operations is one of the most debilitating hinderances to growth. Internship programmes allow businesses to hire much-needed resources at a below-market cost with no long-term commitment.”

Internships allow businesses to increase staff quality. They also improve long-term career prospects for participants, arming them with on-the-job experience. “Businesses can grow their talent pool by enlisting top-performing interns onto the company’s team once the internship period has ended. These interns have already undergone training and will add value as soon as they commence work as permanent employees. Similarly, interns who feel that they are not suited to the company or role have a seamless exit on the conclusion of the contract,” explains Willis.

On a macro-economic level, the growth of SMMEs has a net positive impact on the economy. The Global Entrepreneurship Monitor report for 2017/18 indicated that SMMEs in South Africa contribute 36% to gross domestic product. Your company will hopefully increase revenue, increase profitability and be able to employ more people going forward.

Businesses can be a valuable part of the unemployment solution in South Africa. By offering real life work experience to young people, they are actively participating in job creation. A country with increased levels of employment fairs better on all fronts – increased spending power means a thriving economy and a more optimistic life for all citizens.

Willis says for some interns, such experiential learning opportunities are required to complete a vocational qualification, while others use internship opportunities as a way to gain some practical work experience.

“Businesses who host interns can increase their operational capacity and profitability, thereby increasing the likelihood of creating even more jobs in the long-term. At Lulaway, we offer an end-to-end solution for the management of all stipend-related administration. If you are a small company that would like to take advantage of internship opportunities, but do not have the resources to manage the administrative requirements, we can help. Business owners can also check out our free guide,” concludes Willis.

 

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