Graduates vs. Growth

Posted by Flux on 

21 August 2012

What’s trending now?

Graduates vs. Growth.

Graduates are discouraged from entrepreneurship and job creation suffers because of it.

Why it’s important?

Entrepreneurs are the drivers of small business, and this is the vital cog South Africa relies on to stimulate employment growth in the country.  It not only provided jobs to sixty-eight percent of the workforce but used to give hope and an additional option to graduates who may otherwise have been disinclined to pursue either academia or some sort of corporate career.

But sadly today’s graduates are discouraged from becoming entrepreneurs in the following two ways.  Firstly, due to the state of South Africa’s economy and its policies:

Over the last ten years, active entrepreneurial endeavours have decreased by seventy-eight percent.  In fact, between the global meltdown, the new CPA and the strict labour laws which do a great deal in deterring job creation, there is belief that the only reason large corporates have been able to employ over the last few years is because of their liberal use of labour broking and outsourcing.

But entrepreneurs don’t have the resources to go through brokers.  So already the barriers to entry are high. Of course BBBEE requirements, ‘tenderpreneurship’ and corruption don’t exactly fill a prospective business-owner with confidence either.

Secondly, grads are discouraged from becoming entrepreneurs due to the mindset impressed upon them by tertiary institutions.  What I mean by this is that students are channelled into a false dichotomy of thinking over a three or four year degree: there are only two streams worth pursuing; the academic or corporate world.  SAGRA , which is the largest graduate recruitment organisation in the country, does not even have ties with small businesses for internship opportunities and a chance to learn what a start-up venture should look like.

What’s the butterfly effect?

Without further research, one would have assumed that because of the lack of encouragement to pursue one’s own ventures, there is a plentiful graduate pool which gets hired into the corporate world each year.  And yet – astoundingly – despite over half a million graduates sitting unemployed, there are severe job vacancies and a general skills shortage in SA. Here then is butterfly effect number one: Students are trained and taught to become entitled employees, and not employers.

This is evidenced by the well-documented refusal of these unemployed graduates to do anything about up-skilling themselves, or beginning something new or with transformed and innovative vigour.   Professor Jansen been especially critical of this of late.

The second butterfly effect has been a loss of momentum in the motivation for millenials to run their own businesses. Entrepreneurial activity is simply not seen as attractive enough to entice those who are talented enough to be scooped up into corporate.  This is due in no small part to the role that investors have played in setting up opportunities in management structures in new ventures.

The Pioneers

The pioneers then of this trend of graduates abandoning entrepreneurship for a chance in the corporate world, are tertiary institutions, short-sighted policy makers and investors.

To elaborate on the role that investors play in influencing a talented young student’s path, it comes down the fact that in the world of private equity and funding for start-up firms, it appears that funders fundamentally favour academically proven and experienced corporate executives over young, innovative talent when deciding on who stays on board to manage a successful growing businesses.  (Despite a lack of evidence that this is a better course of action).

The realisation that despite developing the entire business, you may lose control over it, is understandably a large deterrent to starting one yourself.  And the flip-side is also true of course; of you want to run a business, work your way into a position where investors ask you to take over someone else’s venture.

It seems prudent to expound this further: the bottom line is that there is a gradual shift in thinking – that accepting a corporate position may actually be an excellent step to achieving one’s goal of running a business and making a social impact someday.

The global hotspots

This is very much a South African issue, primarily because of our labour Unions’ strength, and also due to the culture of entitlement still prevalent.

South Africa can however prevent itself from becoming the global hotspot of this unfortunate graduate trend.  To do this, universities should pay more attention to budding entrepreneurs they are able to support, broaden their career advice to current students, and give those who do stay to become academics a free reign to criticize and offer alternatives to government policies.  The private sector ought to take a careful look at what message they’re sending out to young business owners, who may think twice about who to get funding from as they try to guard their right to manage.

By: Benjamin Shaw

About Benjamin

Benjamin is a broad-thinker, fast learner and passionate trend spotter.
He particularly loves reading about the integration of technology into society, and the role that entrepreneurs have to play in new South Africa.

Image credit: Gallo Images/ Getty Images

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