Graduate unemployment rate on the rise: Five key things that need to change

South Africa’s unemployment rate, at 32.9% in the first quarter of 2025, is among the highest in the world, and the problem is only getting worse, with the rate having increased from 31.9% in the previous quarter.

While unemployment among graduates is significantly lower, at 11.7% in 2025, this has surged from 8.7% in the previous year, raising serious concerns about the mismatch between formal qualifications and job availability.

Nkosinathi Mahlangu, Youth Employment Portfolio Head at Momentum Group, says the widening skills mismatch is one of the most overlooked problems facing the economy today.

“Alignment between institutions of higher learning and the economic drivers is key to getting young people to acquire skills that are in demand,” Mahlangu told IOL. To that end, critical and scarce skills should also be listed and tracked.

Dr Linda Meyer, MD at IIE Rosebank College, says the growing disconnect between tertiary education and employability demands urgent attention.

Meyer highlights six clear barriers to employment for graduates, which could be addressed through partnerships between educational institutions, industry and government.

Skills to create opportunities

The primary barrier to youth employment is South Africa’s stagnant economic growth.

Ideally the economy would need to grow by 3% per year to absorb graduates effectively, Dr Meyer said. But the solution doesn’t lie in waiting for the economy to improve, but rather in proactively equipping graduates with the skills to create their own opportunities.

Bringing curricula up to date

Another key constraint to workplace readiness is the outdated design of university curricula.

“The degrees our parents studied are largely the same as those offered today, which is absurd on its face,” Meyer exclaimed.

Institutions need to align their programmes with fields where more opportunities currently exist, especially in high-growth areas like AI, information and communications technology. and cybersecurity, she adds.

Furthermore, digital fluency should be prioritised, along with soft skills and entrepreneurial competencies that prepare graduates not just to become employees, but also potential employers

Real-world work experience

Incorporating work-integrated learning into curricula should be non-negotiable, Meyer says.

“Internships and simulated work environments are game-changers. A graduate with just one year of experience sees their employability increase exponentially.”

To that end, tertiary institutions should prioritise partnerships with companies for internships, create on-campus labs, and develop ecosystems that mimic real-world work settings.

The government can also play an instrumental role in encouraging hands-on work experience.

“In the vocational sector, tax incentives drive collaboration, but this is absent in universities,” says Dr Meyer.

“Many companies run bridging programmes to retrain graduates, indicating a skills mismatch that could be addressed earlier through formalised partnerships. Statutory bodies in key sectors, such as mining, ICT, and healthcare, should work closely with universities to ensure graduates’ skills are fit for purpose.”

Micro-credentialling

Universities can further partner with businesses to provide incubation funding and mentorship, allowing graduates to launch ventures. For instance, social entrepreneurship offers opportunities to address societal challenges while also building sustainable businesses.

Graduates can also set themselves apart through micro-credentialing, Meyer adds.

“When employers screen 400 CVs, micro-credentials highlight unique skills and drive. These certifications, combined with an entrepreneurial mindset, equip graduates to identify and solve specific problems, creating businesses that address real-world needs.”

Renewed focus on small business development

Dr Meyer sees huge untapped potential in small, medium and micro enterprises (SMME).

“We often focus on big businesses, but SMMEs offer significant opportunities. However, access to funding remains a barrier. Many graduates lack the collateral for bank loans, and government processes for micro-loans must be made fairer and more accessible.

“Sometimes, it doesn’t take huge capital - just enough to buy stock and start pursuing dreams,” Meyer concluded.

IOL Business