It conceded that South Africa makes extensive use of active labor market programs, but there is much room for systemic improvement.
A review of more than 100 active labor market programs (including entrepreneurial development, public works programs, training, work readiness, placement, and labor intermediation services) offered at the national level (with a combined budget of R100 billion) found that the constellation of programs may not be the right ones to address the employment challenges facing the country.
Although most unemployed people are vulnerable youth, programs are largely designed for better-off entrepreneurs or young people with more skills.
Few explicitly include vulnerable young people; instead, the initial eligibility conditions effectively crowd them out. This is due in part to the decentralized approach — the 20 departments in the review offer programs to meet their departmental mandates rather than working together to help resolve the national unemployment challenge.

Although most unemployed people are vulnerable youth, programs are largely designed for better-off entrepreneurs or young people with more skills.
Few explicitly include vulnerable young people; instead, the initial eligibility conditions effectively crowd them out. This is due in part to the decentralized approach — the 20 departments in the review offer programs to meet their departmental mandates rather than working together to help resolve the national unemployment challenge.

Lifting legislative and regulatory bottlenecks

The lack of coordination of active labor market programs and the absence of a strong private sector voice contribute to significant inefficiencies.
Many active labor market programs place the public sector at the center of employment creation, which is costly and unsustainable, rather than working with the private sector to identify how to leverage labor and product markets. As a result, there are significant overlaps, gaps, and general inefficiencies in serving unemployed people.
Lifting legislative and regulatory bottlenecks to self-employment would have a marginal fiscal cost, with benefits to be reaped in the short to medium term. The intended beneficiary population of these measures would be the more than 10 million unemployed or discouraged people of working age.
The number of adults who decide to engage in self-employment would depend on several other considerations but based on the experiences of other upper-middle-income countries, could be as many as 3 million individuals.

The revamping of active labor market programs could bring benefits in the medium to long term; their fiscal cost does not necessarily have to be high relative to the resources already allocated to such programs in South Africa.