Why it costs up to R365,000 to create a job in South Africa
Employment and Labour Minister Nomakhosazana Meth has outlined the costs involved with creating jobs in South Africa under the Unemployment Insurance Fund’s (UIF) Labour Activation Programme (LAP).
The LAP was officially launched under the sixth administration in April 2024 as a training and entrepreneurship programme to create hundreds of thousands of jobs across the country.
The programme has been rolling out across the country’s nine provinces, with the ultimate goal to train workers, provide job opportunities, and then eventually recover costs through contributions and revenue generated from investments.
While the LAP is being implemented through partnerships with private businesses, SETAs, and NGOs to create thousands of job opportunities, the government is responsible for the up-front costs.
Responding to a recent parliamentary Q&A on these costs, Meth noted that the department’s investment portfolio is paying for all of the UIF’s administrative and staff costs, therefore indirectly paying for the LAP initiatives.
The full programme has a budget of R24 billion and aims to create more than 700,000 employment opportunities throughout the country, which averages about R34,000 per person.
However, based on the average costs of training over the last three years, the department is actually spending between R53,000 and R365,000 per candidate, depending on the type of programme they are part of.
Based on the rates applicable to programmes implemented by the UIF under LAP, the average cost per beneficiary for the past three years’ job creation initiatives was as follows:
- Short Skills Programmes: R53,213
- Learnership Programmes: R100,513
- Apprenticeship Programmes: R364,963
The minister provided a breakdown of the costs, and how each amount was reached.
Short Skills Programmes
- Stipend per beneficiary per month = R2,000 (R12,000 over 6 months)
- Training per beneficiary for the whole period (6 months maximum) = R30,000
- Personal Protective Clothing R2 ,500 per beneficiary
- Tools of trade R5,000 per beneficiary
- Project Management Fee of 7.5%
- Therefore, at a maximum of R49,500 per beneficiary
- 7.5% project management on R49,500 is R3,712.50.
The average cost per beneficiary is R53,213 for the short skills programme
Learnership Programmes
- Stipend per beneficiary per month = R3,000 (R36,000 over 12 months)
- Training per beneficiary for the whole period (12 months maximum) = R50,000
- Personal Protective Clothing R2,500 per beneficiary
- Tools of trade R5,000 per beneficiary
- Project Management Fee of 7.5%
- Therefore, the average is R93,500 per beneficiary
- 7.5% project management on R93,500 is R7,012.50
The average cost per beneficiary is R100,513 for learnership programmes
Apprenticeship Programmes
- Stipend per beneficiary per month = R3,500 (R126,000 over 36 months)
- Training per beneficiary for the whole period (36 months maximum) = R206 000
- Personal Protective Clothing R2,500 per beneficiary
- Tools of trade R5,000 per beneficiary
- Project Management Fee of 7.5%
- Therefore, the average is R339,500 per beneficiary over three years
- 7.5% project management on R93,500 is R25,462.50
The average cost per beneficiary is R364,963 for apprenticeship programmes
The minister said that the sustainability of jobs is linked to the sustainability of projects, which are subject to various factors, including the growth of the economy.
Partners of the programme also have to commit to actually employing the beneficiaries.
“The Department of Employment and Labour has introduced a mandatory requirement since the 6th Administration in terms of which each partner must provide a commitment to employ the beneficiaries post the UIF funding,” she said.
“While the minimum duration of such employment is 24 months, the preference is an infinite (permanent) contract. “
The UIF retains 10% of the project fees until proof of employment is provided, and it no longer supports ‘training for the sake of training’.
“The partners whose exit strategy is enterprise development—the partner must demonstrate how they plan to support the enterprises beyond just registering them,” she said.
The government desperately needs the programme to work as the country continues to struggle with one of the highest unemployment rates in the world and 8.4 million people without a job—mostly youth.
According to Stats SA’s latest Quarterly Labour Force Survey (Q2 2024), the official unemployment rate increased by 0.6 percentage points from 32.9% to 33.5%.
Stats SA reported a 92,000 decrease in the number of employed persons to 16.7 million in Q2 2024.
However, there was an increase of 158,000 in the number of unemployed to 8.4 million compared to Q1:2024.
High levels of unemployment in South Africa are a perennial risk, with simmering tensions over job opportunities already flaring up in various violent attacks against foreign nationals, as well as threatening wider social unrest.
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