Abstracts

47 world, at a score of 0.634 (World Bank, 2019). With the advance of technology, those with access to new tools will benefit greatly, whereas people with limited access will be left behind. Thus, upcoming changes in skill requirements potentially will worsen inequality in South Africa. South Africa is at risk due to its chronic unemployment rate, a high concentration of low-skill jobs that are susceptible to displacement, and a medium-skills shortage problem. Additionally, the country has a low capacity to adapt due to its inefficient STEM education and training systems. South Africa’s Exposure to the Challenges Chronic Unemployment South Africa is notorious for having one of the highest, most chronic unemployment rates in the world, hovering above 25% over the past two decades. The unemployment problem is a deeply rooted consequence of the apartheid era. Under apartheid, the labor force was governed by the “two labor code,” an informal name for a series of racial discrimination laws that developed gradually over the years. According to Hepple (1971), the first code––the more favorable one––granted workers numerous rights, such as “access to employment, the freedom to organize, etc.,” while the second code for blacks “pegs them to servitude” (p. 1). Apartheid not only limited the black workforce from having economic benefits (e.g., insurance and fair wages) but also hindered them from acquiring skills to move up in the labor force. The Apprenticeship Act of 1944, governed by the Ministry of Labor, dictated the major conditions for training workers, for example pay rates, work hours, and career outcomes. The Act was a manifestation of collaboration between government and industry on upskilling workers. Industry leaders often consulted with the Ministry on ways to organize apprenticeship contracts and discuss actions to cope with the changing needs of industry. The Act did not explicitly exclude blacks from accessing training, but unwritten rules governing implementation disqualified the majority of South Africans from entering. In practice, blacks accounted for less than 20% of the registered apprenticeship contracts, and that 20% came mainly from industries requiring lower skills (Hepple, 1971). About half the industries did not grant any contracts at all to blacks, leading to a high concentration of skilled certificates in the white population. The disparity in skill level forced the black population to work in labor-intensive industries such as mining and manufacturing. The unemployment problem in South Africa also suffers from a structural change in the workforce: an increase in size. According to the Brookings Institution, the growth has been driven by increasing participation rates, specifically among nonwhite women (Bhorat et al., 2015). From 1995 to 2017, the South African labor force added 11.9 million entrants, while only 6.7 million new jobs were created. This deficit reflects slow economic growth and a resulting inability to absorb the increased labor force, a combination that has exacerbated the unemployment problem. The problem is neither cyclical in nature nor an aftermath of a specific financial crisis; rather, high unemployment is chronic and embedded in the socioeconomic structure of the country. The apartheid system tore down nonwhites’ economic and political rights, forcing them into low-skill jobs while benefiting whites who moved away from semiskilled work to skilled work (Mariotti, 2012). This shift created an oversupply of low- paid labor for the mining and manufacturing sector, which was booming in the twentieth century. Moreover, those industries have made workers vulnerable during this new economic transition, as employers are likely to require new skill sets. Since the early 2000s, there also has been a change in the South African economy, driven mainly by changes in the mining and financial services sectors. A skills report from the Department of Higher Education and Training [DHET] (Reddy et al., 2019) points out that the economy is becoming less dependent onmining and agriculture, with combined employment shares of those industries dropping from 15% in 2001 to 7% in 2012. In this same period, the real economic opportunities moved to financial services. South Africa prides itself