Generations at a crossroads: Youth employment and retirement security in South Africa

High youth unemployment, inadequate retirement savings and a growing elderly population converge in South Africa to create an intergenerational dilemma, threatening both economic stability and social cohesion.

Youth unemployment stands at 46.1% for ages 15–34, rising to 62.4% for those aged 15–24, while only 10% of South Africans have adequate retirement savings to maintain pre-retirement living standards. At the same time, 38% of those over 60 live below the poverty line and the population aged 60 and above accounts for 9.2%, projected to reach 15% by 2050.

Many older workers remain in the labour market out of necessity, sometimes competing with youth for scarce jobs, while younger generations often support elderly relatives financially. These intergenerational pressures are visible not only in unemployment and poverty statistics but in the daily realities of households and communities.

Regional disparities amplify the challenge: youth unemployment peaks at 58.8% in the North West and 54.3% in the Eastern Cape, while urban centres like the Western Cape report rates as low as 25%. Young South Africans with workplace experience are four times more likely to secure employment than those without, highlighting the urgent need for skills development and experiential pathways that expand opportunities rather than crowd them out for the next generation.

The structural skills gap further complicates the challenge. Only 9.8% of employed youth have a tertiary education, while vocational and technical pathways remain underdeveloped, leaving many young people in low-skill, precarious employment. Apprenticeships, on-the-job training and labour-absorbing sectors such as manufacturing, agro-processing and green energy could mitigate these challenges if effectively coordinated with national policy and private sector support. Without targeted interventions, the combination of low growth and high unemployment risks creates a persistent generation of economically marginalised youth.

Some countries, such as South Korea, have experimented with reducing senior wages to create more opportunities for youth. While the policy aimed to balance the needs of older workers with youth employment, it failed to significantly reduce elderly poverty or boost youth employment due to structural labour market rigidities, limited social safety nets and insufficient skills development. This demonstrates that interventions must address underlying economic and social structures rather than rely on simple wage redistribution.

South Korea’s example underscores that balancing generational needs requires systemic solutions that maintain dignity for older workers while genuinely expanding opportunities for youth. South Africa’s retirement system reflects a two-pillar structure. The public pillar, represented by the noncontributory Old Age Grant, supports about 3.8 million recipients. The private pillar comprises occupational and individual retirement funds regulated by the National Treasury and the Financial Sector Conduct Authority, primarily serving formal sector workers.

Currently, around 60–70% of retirement assets are in private funds, leaving the informal workforce largely excluded. The system is partially privatised by design, but the state maintains a key role reflecting a hybrid model rather than a full retreat from public responsibility. Replacement ratios, the percentage of pre-retirement income replaced by pensions, are low. Only 10% of South Africans have savings sufficient to maintain their pre-retirement standard of living, while informal sector workers, comprising over 30% of the workforce, have minimal access to formal retirement schemes.

These inadequacies force older workers to remain in low-wage employment, placing additional pressure on youth seeking entry-level positions. Strengthening replacement ratios is essential for reducing reliance on social grants and alleviating intergenerational strain.

The Two-Pot Retirement System, introduced in 2024, allows limited access to retirement savings for short-term household needs. While it provides temporary relief for families and can support economic activity, it does not address the long-term inadequacy of retirement savings. Its significance lies in exposing the intergenerational pressures South Africa faces: older workers often rely on retirement savings to support younger family members, while youth struggle to enter the labour market. Any meaningful approach to retirement and workforce planning must therefore balance the needs of both generations, ensuring older workers can retire with dignity while freeing opportunities for youth employment. Evidence from digital micro-savings, phased exit strategies and structured skills-matching programmes demonstrates that South Africa has the tools to strengthen its existing system without introducing impractical or ideologically driven policies.

Expanding access for informal workers, improving replacement ratios and linking retirement planning with workforce transitions can reduce intergenerational tension while supporting economic stability. Practical interventions could include digital platforms for matching older workers to mentorship roles and youth to entry-level positions, as well as mobile-based savings schemes that integrate informal workers into the retirement system. Flexible retirement pathways informed by international examples such as Germany illustrate how phased exit strategies can maintain older workers’ incomes while freeing opportunities for younger entrants.

Germany’s system has implemented phased retirements alongside part-time work opportunities and mentorship programmes, allowing older employees to gradually reduce working hours while transferring knowledge to younger staff. This approach supports skill continuity and ensures older workers maintain financial stability while simultaneously creating openings for younger employees to gain experience and employment.

Digital literacy and community engagement initiatives further enhance the capacity of seniors to participate productively without crowding out youth, providing a practical blueprint for South Africa’s context. Linking retirement adequacy with workforce transitions enables policymakers to view retirement and youth employment as interconnected levers. Enhancing replacement ratios and widening access to retirement funds for informal workers reduces older workers’ financial pressure, freeing youth from taking up informal or lowwage roles solely to support household survival. This systemic view highlights that strengthening South Africa’s retirement system is not only a matter of social protection but a strategic lever to stimulate inclusive growth, mitigate intergenerational tensions and reduce poverty.

The challenge South Africa faces is not a choice between youth and seniors but how to structure opportunity and security so that both generations thrive. Evidence from retirement savings gaps, informal labour dynamics and regional disparities shows that addressing one group in isolation is insufficient. Expanding access to retirement provisions, improving replacement ratios and linking workforce transitions with skills development can reduce intergenerational tension while supporting economic stability.

By designing policies and programmes that reflect the lived realities of households across the country, South Africa can create a system where older workers retire with dignity and younger workers gain the experience and opportunity to build sustainable livelihoods. The task is complex, but the tools, social grants, retirement funds and data-driven labour integration exist. What is required is coordination, insight and commitment to long-term societal benefit.

Nomvula Zeldah Mabuza is a Risk Governance and Compliance Specialist with extensive experience in strategic risk and industrial operations. She holds a Diploma in Business Management (Accounting) from Brunel University, UK, and is an MBA candidate at Henley Business School, South Africa.

*** The views expressed here do not necessarily represent those of Independent Media or IOL.

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