How SMEs are closing jobs gap as youth unemployment soars

SMEs are stepping in to make a difference, as statistics indicate that South Africa’s unemployment rate dropped slightly in the last quarter, even though millions of people are still looking for employment.

SMEs have played a key role in the country’s slight improvement in employment. Statistics South Africa (Stats SA) reported that the national jobless rate fell from 33.2% in April–June 2025 to 31.9% in July–September, with the SME sector absorbing 248,000 newly employed people.

The SME sector contributes between 34% to 40% of South Africa’s GDP, though experts note it could be higher.

Randburg Chamber of Commerce and Industry CEO Richard Ntjana said SMEs are critical for job creation “Small businesses are vital for innovation, driving local economic growth, and fostering competition. In South Africa, despite the high unemployment rate, small businesses remain the backbone of our economy.”

How entrepreneur is making a difference

Cedric Pato, who owns 10 student housing buildings in Soshanguve, north of Pretoria, is one of the entrepreneurs who are making a difference in the job market.

This year, he expanded his facilities and is also overseeing the construction of 2,020 new beds as part of a project near the Soshanguve Crossing Mall.

In the process, he has hired eight additional staff members so far this year, including security personnel, cleaners, caretakers, residence managers, accounting staff, and drivers.

The construction of the beds has also created jobs for local builders, carpenters, and installers, demonstrating how SME-led projects can generate multiple layers of employment.

Pato’s operation now directly supports 16 families and 10 young employees, while many others benefit from part-time or rotational work across the 10 buildings.

“Our main focus is on the students themselves,” Pato said. “By expanding and hiring more staff, we are creating jobs for local people. The business is growing, and that growth benefits the whole community.”

He also emphasised the importance of SMEs for South Africa’s broader employment picture.

“Competition is part of running a business. Investors from Stellenbosch recently entered the area, which created serious competition. While this is challenging, it also encourages development and better services. Proper planning is key to managing it.”

Entrepreneurship creates opportunities

Experts continue to point to entrepreneurship as a key solution to structural unemployment. Williams, a specialist in skills and entrepreneurial development, notes that SMEs, from local barbers and artisanal producers to small food businesses, play a pivotal role in creating jobs and supporting larger economic ecosystems.

Chef Kelly Ann Osborn, South Africa’s youngest Eat Out Rising Star, highlighted how her culinary school in Pennington, KwaZulu-Natal, trains young chefs and encourages them to start home-based or artisanal ventures, such as baked goods, sourdough, cheeses, chocolates, and ready meals. These businesses are affordable, easy to start, and can scale quickly, providing income while building practical skills.

“About 50% of your chef trade course is done through in-service training. If the standard of the restaurant is not great, then that’s what you’re learning,” Osborn said. “I think it’s important that we continue small-scale artisanal food products because there is a lack of good and well-made products for the public.”

Her work shows how SMEs can empower youth, create jobs, and strengthen local economies, complementing larger employment trends in sectors like student housing.

Challenges remain for young workers

Despite the positive trends, challenges persist. Stats SA reports that young people aged 15–24 still face an unemployment rate of 58.5%, with 25–34-year-olds at 38.4%. Black Africans remain the hardest hit, at 35.8%, above the national average.

Experts say SMEs need consistent support through finance, infrastructure, and skills development to sustain growth and continue absorbing workers.

As South Africa’s unemployment rate slowly drops, stories like Cedric Pato’s student housing expansion and Kelly Ann Osborn’s culinary school demonstrate how SMEs are essential for creating jobs, empowering youth, and supporting local communities.