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Unemployment in SA is at a 14-year high with youth unemployment (15-34 years) reaching 38.6% in the first quarter of this year. Most concerning is that unemployment among the youth is disproportionately high even among those with tertiary education.
Coupled with this South Africa is one of the few countries in the world in a technical recession. In addition we are seeing a skills shortage in critical areas of the economy, particularly for those positions which support new growth areas of the economy, such as technology and innovation.
South Africa currently spends a higher proportion of its budget on education than the US, Germany or the UK, yet we now have 9.3 million people who wanted to work but who in the first quarter of this year were unemployed. Furthermore South Africa’s higher education system was rated 134 the out of 138 countries in the World Economic Forum’s (WEF) 2016/17 Global Competitiveness Report.
‘Companies have already experienced major digital disruption, but next assault will be on individuals within firms’
Future skills changing
Our reality check with regards to this bleak unemployment situation and skills mismatch is that the type of skills which business and industry will need in the near future is changing completely.
We are witnessing a dramatic change in the drivers of business evolution where it is predicted every company will become a technology company in the future and legacy competitive advantages are likely to disappear completely.
Renowned angel investor Naval Ravikant says competing without software is “like competing without electricity”. Only companies steeped in technology are likely to survive the exponential digital disruption likely to take place over the coming years.
Rob Thomas in his book The End of Tech Companies says connected devices and the data explosion will change the nature of customer, supplier, stakeholder engagement, rendering many traditional forms of distribution and communication economically unviable.
The price of computing has plummeted, enabling the fragmentation of industries on the basis of data and analytics while the price of collecting and analysing data has also plummeted. He adds that we are about to witness The Great Reskilling.
Coming of data scientists
Companies have already experienced major digital disruption, but the next assault will be on individuals within companies.
Even traditional IT skills are under threat. Says Thomas: “A company that used to have an army of IT specialists to run systems now needs an army of data scientists. A company that prided itself in merchandising now needs algorithms.”
Thomas also predicts that the expertise of an organisation must advance faster than the rate of change that the organisation desires. Each company’s human capital will need to be totally transformed.
It is already well documented that robotics, artificial intelligence and machine learning will be rapidly replacing repetitive and mechanical jobs throughout the labour value chain. Those at the bottom are most under threat from robotics but the effect will be felt throughout the labour market.
A report in January by Mckinsey Global Institute concludes that 30% of activities in about 60% of all occupations can be automated. Almost every occupation has partial automation potential.
The retail industry, cashiers and store clerks are likely to be among the early most endangered species. However the threat to this staple of the local labour force runs well beyond robotic automation and replacement.
Erik Brynjolfsson, director of the MIT Initiative on the Digital Economy, says the more profound way that technology affects jobs is by completely reinventing the business model.
“Amazon didn’t go put a robot into the bookstores and help you check out books faster. It completely reinvented bookstores. The idea of a cashier won’t be so much automated as just made irrelevant — you’ll just tell your Echo what you need, or perhaps it will anticipate what you need, and stuff will get delivered to you.”
We have already seen this in the travel industry, the taxi industry, to some extent in banking. Self-driving vehicles are likely to revolutionise delivery and long-haul trucking. Entire job categories will begin to disappear as this new technology enabled business model emerges throughout all industry.
The 10 most sought-after skills in South Africa based on a LinkedIn survey are all technology related. The top five in order of importance are: statistical analysis and data mining, java development, middleware and integration software, mobile development and network and information security.
Our own experience at The Cape Innovation & Technology Initiative (CiTi) and by way of a survey of our own clients and member companies revealed that the top five entry level skills where demand exceeds supply are (in this order): software development, web development, business and systems analysis, agile and lean methodology application and understanding, CCNA and Cisco networking.
But importantly tech skills alone are not enough to ensure success. It is almost impossible for companies to successfully integrate new “tech” employees if they do not have strong communication skills and an ability to work in a team. Our local South Africa research is borne out by the WEF report The Future of Jobs 2016 which highlights social skills and teamwork.
Gone are the days of the introverted “propeller head boffin” being sought after. Team players are now essential.
A further challenge is the rapid pace of tech innovation. Key findings from that WEF report reveal that it has taken decades to build the training systems and labour market institutions to develop major new skill sets on a large scale. Given the pace of, and scale of, disruption brought about by Industry 4.0 this is simply not an option.
An unprecedented rate of change in the core curriculum content means that nearly 50% of subject knowledge acquired during the first year of a technical degree will be outdated by the time a student graduates. In all 65% of children entering primary school today will work in completely new job types that don’t yet exist.
The report concludes that we therefore need to rethink education systems. Industry 4.0 requires cross functional roles. We will need both technical and social skills, however we have two legacy constraints namely — the dichotomy between Humanities and Sciences (and applied and pure training) and secondly the prestige premium attached to tertiary-certified forms of education, rather than the actual content of learning.
Already the gap between what business needs and what is being produced by the formal education system is startling, this is borne out both by our own daily experience and also by the unemployment statistics. Parts of the old education model, including that of universities is likely to become extinct unless they are able to become agile.
The shortage of appropriately skilled employees is likely to become the single biggest growth constraint on our future economy. Our view at CiTi is that relevant skills and job readiness will become much more important than accredited education.
Demand is already shifting towards vocational skills and the ability of the new employee to arrive with a specific practical skills set and be fully “job ready”
This requires us to re-imagine what training and education look like. As much as business and industry is being disrupted by exponential and rapid innovation so too will the model applied to education and skills development need to change and adapt.
Agile, adaptable and bespoke curriculum will need to become the prevalent methodology for training. Apprenticeships are an essential component of this model. We believe this will need to be coupled to a philosophy of ongoing retraining and reskilling and that we will all need to be accepting of that, irrespective of our current job level.
Business not prepared
My own interactions within the ecosystem, especially with traditional enterprises, reveal many a senior executive and board member of leading SA businesses who have failed to grasp the impact of technology disruption on their business or the impact of the tech savvy new consumer on their legacy product sets.
I believe that the solution requires a harmonised multi-stakeholder approach. Business needs to open itself up to embrace internships and also to see skills development as an investment rather than a cost.
Education establishments need to shed their legacy model, revisit accreditation, adopt agile curriculum and focus on skills and vocational training. Government needs to support the change of school curriculum to reflect this new world and the demand side and to equip schools and teachers accordingly.
Technology can also serve to enable and facilitate this change. CiTi is launching an Open Innovation Education Technology Cluster.
We believe that CiTi’s EdTech Cluster can serve as a catalyst for the region and for the country to unlock the unique ability of technology and connectivity to enhance education and skills development.
Public-private partnerships such as our CapaCiTi Job Readiness programme can be scaled with the use of blended learning models where high touch mentorship is not sacrificed but the technical skills can be learnt online and therefore away from the classroom.
We are extremely fortunate in South Africa to have some of the brightest minds and most successful entrepreneurs in digital and online education evidenced by the recent acquisition of Cape Town based Get Smarter for over R1-billion by Nasdaq-listed 2U.
We need to tap this entrepreneurial spirit and give it the freedom to experiment and to completely re-imagine our education system. Let’s all work together to solve our unique education problems and lead the way on the continent, through creative and agile solutions.
Ian Merrington is CEO of The Cape Innovation and Technology Initiative (CiTi) and The Bandwidth Barn, a not for profit which develops technology skills and job readiness programmes.