Banks are leading the way in hiring South African students

There's only one thing worse than unemployment in South Africa, and that's joblessness among the young. The youth unemployment rate is a massive 35%, and that's according to conservative official figures.

"One in four adults is unemployed and almost half of our young people have not found work," says Pravin Gordhan, finance minister. "The case for intervening in the youth labour market is strong. The transformational challenge is clear."

Gordhan's idea is a two-year plan for the State to subsidise youth employment at private companies, lowering the cost of hiring young people. Tax-compliant private businesses will receive a cash reimbursement through the SA Revenue Service payroll tax platform. The Finance department estimates that 800,000 school-leavers and young people will qualify initially and a further 500,000 by 2013.

To ensure more young workers are taken on by private businesses, Gordhan is planning other measures beyond direct state subsidies, like learnership allowances and minimum wage reform, possibly following Argentina's example of a lower minimum wage for young workers to better align productivity and salary.

Gross job creation has nearly halved in 2009, according to a Treasury report, as most companies have cut back on hiring in the recession. The notable exception as been the financial services sector which has continued to create jobs. "Finance, insurance and business services have been responsible for 30% of South Africa's growth since 1994 and account for 21% of GDP," says the report.

The financial services sector is also leading the way in giving opportunities to the young. Local and foreign banks all have some kind of graduate trainee scheme. Deutsche Bank has just gone one step further and launched the "Talent Pool Initiative", a two-year scheme which offers paid traineeships to promising graduates.

"We have gained approval to hire some additional graduates to various parts of our South African business in an attempt to provide opportunities to young developing graduates," says Colin Brown, director of corporate affairs at Deutsche Bank South Africa. "Deutsche Bank will try to appoint them on a full time basis at the end of the two years depending on staffing requirements."

Brown has one warning, though: "We are looking at seven people. We will be taking a selective recruitment approach rather than a mass one."