Issued by Ismail Joosub on behalf of the FW de Klerk Foundation on 30/05/2025

The Minister of Finance delivered his third attempt at a budget speech on 21 May 2025, retreating from the politically explosive VAT hike proposed in March and striking a more measured tone. On the surface, this version of the budget offers continuity, stability and a few minor course corrections. Yet beneath its carefully chosen words lies a far more concerning reality. South Africa remains adrift from a credible growth strategy and for the country’s youth, this budget is not a blueprint for progress, but a symbol of inertia. It skirts around our most urgent long-term challenge: The economic and social exclusion of young people.

Official figures show that 46% of South Africans between the ages of 15 and 34 are unemployed. For those aged 15 to 24, the rate exceeds 62%. These numbers are not marginal. They are the central threat to South Africa’s social cohesion and economic future. The 2025 budget acknowledges the need for inclusive growth, yet fails to fund or even describe a serious strategy to bring unemployed youth into the economy. The continuation of the Presidential Youth Employment Initiative and general allocations to job creation are simply not commensurate with the scale of the crisis. In a country where nearly five million young people are out of work, the response is administrative, not transformative.

The education budget follows a similar logic. The provincial education sector is allocated R1,04 trillion over the medium term, with an additional R9,5 billion to keep teachers in classrooms and hire more staff. Yet in real terms, per learner expenditure is projected to decline after inflation. Class sizes will remain large, infrastructure will remain poor in many areas and learning outcomes will continue to lag. Over 80% of Grade 4 learners still cannot read for meaning. Of 100 learners who start school, fewer than 15 will make it into university. South Africa is spending vast sums on a system that leaks talent at every stage. Without performance-linked funding, better provincial oversight and a shift in priorities toward practical skills and vocational training, no amount of money will improve youth outcomes.

Support for entrepreneurship, a natural engine of youth-driven growth, remains largely rhetorical. While government reviews the Active Labour Market Programmes and explores a job-seeker allowance, there are no significant new allocations to expand entrepreneurial access or lower regulatory hurdles. The National Youth Development Agency, though well-intentioned, still operates with limited reach and resourcing. There are no broad-based reforms to reduce barriers or simplify tax compliance for young startups.

While India, Brazil and Germany have built ecosystems where young entrepreneurs are actively empowered, South Africa is content to make incremental tweaks. The result is stagnation in a sector that could otherwise be teeming with opportunity.

The absence of mental health from the speech is particularly worrying. Suicide is now the second leading cause of death among young South Africans aged 15 to 24. More than 20% of adolescents have contemplated ending their lives. Unemployment, poverty, violence and educational failure are all risk factors. Yet mental health receives just 5% of the health budget and none of the announced allocations suggest an expansion of services. No investment in clinics, school-based counselors, or public awareness campaigns. The consequence is predictable: Growing despair among a generation that already sees itself as left behind.

Housing for young people is another neglected priority. The March budget allocated R58 billion to human settlements and housing, continuing long-standing programmes aimed at the poorest. However, young adults, especially those earning too little for bonds but too much for RDP houses, remain without support. The average age of first-time homebuyers has now climbed to 36. Homeownership is slipping out of reach and renting in the formal market is unaffordable for many. Rental subsidies or low-deposit loan guarantees for youth could help bridge this gap, but no such mechanisms are on offer. Instead, the housing budget maintains a one-size-fits-all approach.

What ties these shortcomings together is a budget philosophy that focuses on managing decline rather than driving renewal. Debt will reach 77,4% of GDP this year and we are now spending R1,2 billion per day just to service our national debt. The speech claims that 61 cents of every rand goes toward the “social wage,” yet there is no guarantee that this spending delivers results. Most provinces have not published measurable outcomes linked to their budget allocations. The Treasury, itself, has identified R37,5 billion in potential waste across departments. In a fiscally constrained environment, it is not more spending we need, but better priorities and sharper incentives.

Other countries offer credible alternatives. Germany’s dual vocational training system ties education directly to private-sector apprenticeships, producing one of the lowest youth unemployment rates in the world. Brazil mandates that companies of a certain size employ youth apprentices, using legislation to ensure entry points into the economy. India’s Skill India Mission has trained over 14 million young people with a focus on industry relevance. Canada combines job placement programmes with targeted mental health and housing support. South Africa can adapt these strategies without compromising its fiscal path. What is missing is the will to reallocate and reform.

A more serious youth budget would be grounded in measurable returns. It would expand funding for Technical and Vocational Education and Training (“TVET”), offer tax incentives to firms hiring apprentices and consolidate youth employment programmes under a single delivery mechanism with performance benchmarks. Additionally, it would double funding for youth mental health and assign targets for school-based interventions. It would introduce a rental support scheme for low-income youth in urban areas, financed through reallocations within the human settlements budget. Most importantly, it would treat youth advancement not as a social obligation, but as a national economic strategy.

These solutions do not require a revolution in public finance. Rather, they require strategic reallocations and private-sector partnerships that reward innovation and productivity. For instance, the government could seed a Youth Venture Capital Fund to co-finance startups with high growth potential, with the private sector matching contributions rand-for-rand. Tax credits could be introduced for companies that offer paid internships and apprenticeships to youth under 30. An employment-linked education bond system could allow graduates to repay subsidised training costs only once they earn above a threshold, easing upfront pressure on both state and student. Additionally, deregulating micro-enterprise zones in township areas could allow young people to start businesses with fewer compliance burdens, encouraging formalisation and job creation. These reforms would not only empower the private sector to do what it does best (create value), but also build pathways for youth to earn, save and invest in their futures.

The 2025 budget is not devoid of good intentions. It affirms fiscal discipline and modestly increases education and health spending. It avoids harmful tax increases. It recommits to infrastructure. But none of these measures amount to a long-term solution for South Africa’s greatest untapped asset: Its youth. We need more than social grants and public sympathy. We need a roadmap that brings young South Africans into the workforce, into housing, into ownership and into self-reliance. That is how we grow the economy. That is how we restore confidence. And that is how we build a future that does not require a fourth budget speech to fix the same problems.