At the launch of the Capita call centre in Cape Town in April this year, the Province’s MEC for Finance, Economic Development and Tourism Alan Winde said, “this sector is delivering a massive boost to growth and jobs, especially for our youth which is the demographic with the highest rate of unemployment. We are focusing on this sector, which has an average entry level salary of R6 500, because it is labour intensive and has a relatively low barrier to entry. Indeed, 70% of all employees are between the ages of 18 and 35 and carry only a matric. Creating opportunities for our youth to become employed is my top priority”.
The province has moved quickly to support the BPO industry as much as possible, since, in the opinion of most experts, BPO is very uniquely capable of tackling South Africa’ endemic youth unemployment and, some would argue, unemployability. The particular problem of South Africa’s long-term unemployment, and particularly youth unemployment, stems from the country’s ‘two economies’ – the emerging economy, which is under extreme pressure as opportunities for unskilled work in the formal economy continue to fall sharply, and the developed economy formerly reserved for white labour, where severe skilled-labour shortages have persisted and deepened in recent years. The simple fact is that South Africa has largely failed in adequately skilling its youth.
The call-centre industry remains, for the moment, something like a silver bullet against youth unemployment because of its low barriers to entry and ample opportunity for learning-by-doing and advancement inside the company. To this end, the Western Cape Province and the City of Cape Town – both run by the DA, official opposition to the ruling party in parliament – have rallied around BPO in the form of financial and policy support in the form of funding and White Papers.
“I am pleased to announce that in recognition of our growing attractiveness as a leading call centre hub, South Africa recently scooped the European Outsourcing Association Destination of the Year Award at a ceremony in Amsterdam, an achievement in which the Western Cape played a major role. This award follows shortly after the country earned the National Outsourcing Association’s United Kingdom Destination of the Year Award. The traction we are gaining in this sector and the industry’s achievements will further position the Western Cape and South Africa as a leading call centre destination,” said Minister Winde, who added that the Province would be supporting BPO investments worth R300 million in financial 2013.
“These projects will create 2 500 jobs in the industry over the next few months. Currently the sector is worth an estimated R8 billion to our economy and employs 38 000 people. I also recently learned of another exciting deal in the pipeline which will make a significant impact on growth and jobs in our region. If this deal goes ahead, it will be the biggest secured by the province to date,” said the Minister.
For this reason, the London School of Economics’ 2012 report called national, provincial and city-level government support for BPO in South Africa ‘highly positive, [and] active’. There are a wealth of support structures in place across all three tiers of government. At National level, government introduced a Government Assistance and Support (GAS) programme of incentives in 2007, designed to reduce the cost of bringing new BPO business to South Africa by 20%. National incentives are in the form of a base tax exemption with a once-off bonus for every job created above the 400 and 800-employee marks.