Unlocking Infrastructure’s Employment Elasticity for Inclusive Economic Participation

Originally written: 26 September 2025

1. Introduction and Contextual Background

Infrastructure investment is consistently framed across South Africa’s policy landscape as a cornerstone for inclusive growth, employment creation, and spatial transformation. The Medium Term Development Plan (MTDP) 2024–2029, issued by the Department of Planning, Monitoring and Evaluation (DPME), identifies infrastructure as a priority intervention to drive labour absorption and economic inclusion. Under Strategic Priority 1, the plan commits to increasing infrastructure investment, improving delivery efficiency, and expanding access to economic opportunity (DPME, 2024).

Crucially, the MTDP foregrounds the economic inclusion of women, youth, and persons with disabilities (WYPD) as a national imperative. It calls for deliberate efforts to increase WYPD participation through employment, sustainable livelihoods, and access to finance, markets, and public procurement opportunities. These inclusion targets are embedded within broader goals aligned to the National Development Plan (NDP), which envisions reducing unemployment to 6% by 2030, alongside poverty eradication and greater equity (DPME, 2024).

Infrastructure South Africa (ISA) reinforces this framing in its 2025 report, stating that “one of the easiest ways to achieve [employment reduction] is through infrastructure investment,” which has been shown to increase productivity and generate a multiplier effect on economic growth. ISA cites evidence that for every percentage increase in infrastructure investment, South Africa’s economy can grow by up to 1.5%, creating thousands of new jobs (ISA, 2025). This catalytic potential is central to the Government of National Unity’s overarching goal to reduce unemployment through sustained economic growth. The ISA report further affirms the seventh administration’s mission to attract an additional R100 billion in infrastructure investment, recognising its transformative power (ISA, 2025).

The National Infrastructure Plan 2050, also published by ISA, situates infrastructure as a “non-negotiable foundation of transformation and inclusive growth.” It emphasises that public infrastructure investment is central to achieving full employment, poverty eradication, and greater equity. The construction of infrastructure is highlighted as a generator of employment and broad-based black economic empowerment, directly contributing to the goals of the NDP (ISA, 2022).

This strategic framing positions infrastructure not merely as a technical or capital-intensive domain, but as a delivery mechanism for inclusive economic participation, especially when targeted toward sectors with high employment elasticity and localised delivery potential.

2. Labour Market Dynamics and Employment Pressures

South Africa’s labour market continues to reflect deep structural challenges. According to the Quarterly Labour Force Survey (QLFS) for Q2 2025, the official unemployment rate rose to 33.2%, while the youth unemployment rate remained elevated at 46.1% (Stats SA, 2025a). These figures underscore the urgency of identifying sectors with high employment elasticity and scalable delivery potential.

While graduate-specific data is not disaggregated in the QLFS 2025 series, longitudinal analysis shows that graduate unemployment more than doubled between 2008 and 2023 from 5.8% to 11.8%, highlighting a growing disconnect between higher education outcomes and labour market absorption (BusinessTech, 2023). This trend is particularly concerning given the technical expertise graduates bring to infrastructure delivery. Although they may lack direct project experience, their capabilities in design, data analysis, digital tools, and systems thinking can be leveraged to strengthen planning, oversight, and innovation, especially in a sector facing persistent execution challenges.

3. Construction Sector: A Labour-Intensive Infrastructure Lever to Tackle Unemployment

In response to South Africa’s persistently high unemployment, particularly among youth and graduates, the construction sector stands out as a labour-intensive infrastructure domain with immediate potential to absorb new entrants. It is one of the few sectors where investment directly translates into job creation, and where inclusive participation can be scaled through targeted procurement, skills development, and enterprise support.

The strategic importance of construction is embedded in South Africa’s long-term infrastructure planning. The National Infrastructure Plan 2050 (ISA, 2022) framed the sector as a key delivery mechanism for inclusive growth, committing to support emerging construction and supplier businesses, empower historically disadvantaged entrepreneurs, and improve the integrity of preferential procurement systems. These commitments are now being operationalised through the Construction Book 2025, which outlines over 250 fully funded infrastructure projects valued at R230 billion, scheduled for market release within the next 18 months (ISA, 2025). The publication serves as a national reference point for contractors, investors, and communities, confirming that South Africa is actively pursuing a “country under construction” agenda.

The sector currently contributes just over 2% to GDP, yet employs approximately 1.36 million people, making it the fifth-largest employer nationally. It offers work across a broad skills spectrum and is embedded in both public and private delivery systems. With R1 trillion allocated to public infrastructure over the Medium-Term Expenditure Framework, and construction-intensive sectors such as transport, energy, and water prioritised, the sector is well-positioned to deliver inclusive employment outcomes at scale.

4. Performance Trends in the Construction Sector

South Africa’s construction sector continues to face persistent structural and economic headwinds, despite its recognised potential for labour absorption and inclusive growth. According to GTAC (2025), the sector contracted by 5.1% in 2024, marking its eighth consecutive year of decline. Its contribution to GDP fell from 3.5% in 2014 to 2.2% in 2024, confirming a long-term erosion of its economic footprint.

Investment flows have weakened significantly. Gross Fixed Capital Formation (GFCF) declined by 3.7%, with a R25.3 billion drop in total fixed investment. Public sector investment in construction works fell by 6.1%, while residential and non-residential buildings declined by 8.1% and 3.8%, respectively. Total investment reached only 14.1% of GDP in 2024, reflecting a deepening gap between actual performance and national development ambitions. Both public and private sector contributions remain below expected thresholds, undermining the sector’s potential to absorb labour and stimulate inclusive growth (GTAC, 2025).

Industry sentiment remains subdued. The FNB/BER Building Confidence Index averaged 36 points in 2024, reflecting low confidence among subcontractors, architects, and quantity surveyors. The decline in building plans passed down 3.3% in Q4 2024 signals a weakening pipeline and limited visibility of future work.

Employment trends reinforce this volatility. According to Stats SA (2025b), the sector shed 119,000 jobs between Q4 2024 and Q1 2025, erasing gains made in the previous quarter. However, Q2 2025 saw a modest recovery, with 20,000 jobs added, making construction one of the few industries to register positive growth in formal employment (Stats SA, 2025a). This fluctuation highlights the sector’s sensitivity to investment cycles and its dependence on stable project flow.

5. Repositioning Construction: Institutional Challenges and Strategic Imperatives

South Africa’s infrastructure ambitions, as outlined in the NDP, target a 30% investment-to-GDP ratio, with one-third of this delivered by the state—primarily through provincial and local government and state-owned enterprises (SOEs). The National Infrastructure Plan 2050 estimates that achieving these development objectives will require over R6 trillion in infrastructure investment between 2016 and 2040, with energy and transport accounting for more than 72% of this spend (ISA, 2022).

Yet, as the CIBD Annual Report 2023/2024 confirms, the construction sector faces deep-rooted institutional and operational challenges that must be addressed to unlock its full employment and inclusion potential.

⚠️ Key Challenges in the Construction Sector (CIDB, 2024)

5.1. Governance and Procurement Integrity

Corruption, extortion, and construction site invasions continue to undermine infrastructure delivery. The report highlights the need for stronger social facilitation mechanisms to protect project sites and communities, and for improved procurement governance to ensure transparency, fairness, and accountability across the value chain.

5.2. Limited Technical Capacity in Client Departments

A recurring constraint is the lack of technical capacity within client departments, particularly at the municipal level. This impedes project planning, implementation, and oversight—compromising value for money and delaying infrastructure rollout.

5.3. Economic Pressures and Fiscal Constraints

South Africa’s high debt servicing costs reduce the fiscal space available for infrastructure investment. Within this constrained environment, the CIDB must operate leanly while still fulfilling its mandate to drive inclusive sector development.

5.4. Shortage of Infrastructure Work and Project Flow

The report notes a shortage of active infrastructure projects, leading to pricing wars, delivery uncertainty, and poor-quality outcomes. Built environment professionals face increasing difficulty in sustaining participation, especially in the absence of predictable project pipelines.

5.5. Fragmented Contractor Development and Enterprise Support

Progression of contractors, especially those in Grades 1–4, remains limited. The state of enterprise mentorship is weak, and support instruments, such as the Register of Contractors and the Standard for Indirect Targeting, are underutilised. The implications of the Procurement Bill for contractor development remain unclear and require strategic alignment.

5.6. Weak Inclusion of Youth and Women-Owned Enterprises

Despite longstanding policy commitments, the participation of youth and women-owned businesses in construction remains disproportionately low, particularly in higher CIDB grades. Only 12% of registered contractors are youth-owned, with just 7% in Grade 9. Women-owned firms face similar barriers. The cidb highlights the need for enforceable inclusion mechanisms and targeted support to improve access, progression, and participation.

5.7. Skills Development Fragmentation and Regulatory Misalignment

The cidb identified persistent fragmentation in skills development across the construction sector. Training quality and outputs remain uneven, with limited coordination among regulatory bodies responsible for streamlining and aligning skills pipelines. This misalignment weakens the sector’s ability to respond to active infrastructure demands and undermines broader transformation efforts. The National Stakeholder Forum calls for improved oversight, clearer institutional roles, and better integration between training systems and delivery programmes.

5.8. Misuse of Emergency Procurement and Panels

The use and abuse of emergency procurement and panel systems have distorted fair competition and weakened accountability. The cidb calls for greater oversight of client and consultant roles in project successes and failures, with clearer performance metrics and delivery standards.

6. Institutional Recommendations for Capacitating Youth, Women, and Emerging Enterprises in Construction

South Africa’s infrastructure reform agenda is supported by a growing ecosystem of public institutions and development partners, including the CIDB, ISA, and National Treasury. These entities have introduced frameworks and programmes aimed at embedding inclusive development into infrastructure delivery.

The CIDB’s B.U.I.L.D Programme establishes a national fund to support development initiatives aimed at increasing delivery capacity in the construction sector. Under this programme, contractors awarded projects valued at over R20 million will be required to contribute at least 5% of the project value toward the development of people and enterprises. This contribution is intended to uplift the construction industry through investments in skills development, mentorship, and the wider participation of emerging contractors, including women and youth

Despite these advances, implementation remains uneven. Many initiatives lack enforceable mechanisms, local absorption capacity, and integrated monitoring systems. The recommendations below build on existing commitments and propose refinements to improve delivery coherence, scalability, and measurable impact.

6.1 Inclusive Procurement and Partnership-Based Delivery

To unlock infrastructure’s full potential as a platform for inclusion, procurement systems must be restructured to accommodate emerging enterprises and crowd in private sector expertise.

• Enforce participation thresholds for youth- and women-owned contractors in public infrastructure tenders, with transparent reporting and accountability mechanisms.
• Support the operationalisation of the proposed 5% contractor contribution into a national development fund, ringfenced for enterprise support, mentorship, and training
• Embed inclusive clauses into PPP agreements, requiring private partners to subcontract emerging SMMEs and support work-integrated learning and technical mentorship.
• Simplify compliance and payment terms to reduce entry barriers for small contractors, including streamlined registration and flexible documentation requirements.
• Align procurement platforms with SETA frameworks, ensuring that labour market insights inform supplier onboarding and enterprise development.

These measures build on the revised PPP Regulations (National Treasury, 2025), the SIPDM framework, and digital procurement innovations introduced by ISA and DPWI. They also reflect the governance priorities outlined in the World Bank’s QII.6 principle, which emphasises transparent procurement, robust anti-corruption safeguards, and accessible infrastructure data as foundations for inclusive, accountable infrastructure delivery.

6.2 Capacity Building Across the Education and Delivery Pipeline

Inclusive infrastructure delivery requires a coordinated approach to skills development, enterprise formation, and spatial targeting.

• Introduce infrastructure-related career pathways into the Life Orientation curriculum for Grades 10–12, supported by infrastructure labs in schools.
• Strengthen partnerships between TVET colleges, universities of technology, and implementing agencies to align curricula with real-world delivery needs.
• Embed workplace-based learning into funded infrastructure programmes, with structured pathways for certification, placement, and enterprise formation.
• Disaggregate infrastructure data by gender, age, and enterprise grade to inform targeted support and monitor inclusion outcomes.
• Map project pipelines geospatially to identify underserved regions and match local SMMEs to opportunities.

These recommendations are supported by the Department of Higher Education and Training’s Skills Supply and Demand Report, which identifies widespread skills shortages across occupations linked to Strategic Integrated Projects (SIPs)—a government-defined infrastructure pipeline. This underscores the need for coordinated skills development, curriculum alignment, and workplace-based learning to support infrastructure delivery and inclusive economic participation.

6.3 Spatial Targeting and Localised Delivery Platforms

The South African Cities Network (SACN, 2025) Practice Guideline on SMME Inclusion highlights the importance of embedding inclusion from the design stage through to implementation. To localise delivery and expand participation:

• Micro-package project scopes to enable participation by small contractors and maximise local labour integration.
• Establish municipal support hubs linked to infrastructure corridors and catalytic zones, with mandates for SMME onboarding and mentorship.
• Allocate project budgets for SMME capacity-building, including training on subcontract management, tender navigation, and business development.

These spatially targeted interventions complement national reforms and ensure that infrastructure investment translates into tangible economic opportunities for communities.

7. Graduate Capacity Building: Unlocking the Multiplier Effect in Construction

As outlined in Sections 1 through 6, South Africa’s infrastructure sector is characterised by high employment elasticity, spatial reach, and procurement leverage. These sections also highlight persistent challenges, such as uneven absorption capacity, fragmented support systems, and limited enterprise readiness among youth and graduates. This article confirms that while infrastructure is a powerful platform for inclusive growth, its transformative potential depends on the ability to activate capable actors and institutionalise support mechanisms.

Graduates represent a high-leverage cohort within this ecosystem. They are formally trained, often technically literate, and strategically positioned to contribute to infrastructure delivery. Yet, despite the ambitious recommendations outlined above, graduates are not ready-made entrepreneurs. Most exit the education system without exposure to procurement systems, enterprise formation, leadership development, or delivery cycles. To transition from qualification to contribution, they require structured coaching—not only in compliance and technical skills, but also as innovators, changemakers, and enterprise leaders.

7.1 The Readiness Gap: Why Graduates Struggle to Enter the Infrastructure Economy

The gap between graduate potential and enterprise readiness is systemic. It stems from:

• Procurement exclusion: Limited exposure to public procurement systems and contract administration.
• Administrative complexity: Burdensome compliance, registration, and payment processes.
• Lack of mentorship: Absence of structured enterprise incubation and technical guidance.
• Training misalignment: Weak links between academic curricula and infrastructure delivery platforms.
• Leadership and management gaps: Insufficient business and operational skills to lead or scale enterprises.
• Financial constraints: Restricted access to start-up capital, credit, and bridging finance.

Without structured support, graduates risk being sidelined—unable to transition from qualification to contribution, and unable to lead or scale MSMEs in the infrastructure economy.

7.2 Reframing Graduate Integration: From Placement to Enterprise Activation

To address this, graduate integration must be reframed—not as passive placement, but as active enterprise participation. This requires:

• Embedding graduates into procurement pipelines as formal contributors.
• Supporting them to register, comply, and compete as micro and small enterprises.
• Providing structured exposure to planning, monitoring, and community engagement within infrastructure projects.
• Equipping them with leadership, financial literacy, and strategic management skills to run sustainable businesses.
• Linking them to finance, mentorship, and technical support through accelerators and innovation labs.

This reframing aligns with the institutional logic outlined in Section 6, where inclusive procurement, spatial targeting, and capacity-building platforms converge to create a delivery ecosystem.

7.3 The GRIT-FIT and IPMS: Institutional Mechanisms for Graduate Enterprise Activation

Two innovative systems, the GRIT-FIT and the Inclusive Procurement Management System (IPMS), offer practical mechanisms for bridging the readiness gap and embedding graduates into the infrastructure economy. These systems are designed by ZNP Solutions, a strategic partner to Goshen Business and Career Advisory Services, and reflect a shared commitment to transformation, inclusion, and delivery excellence.

The GRIT-FIT is a structured capability-building model that equips graduates with the resilience, technical skills, and leadership mindset required for infrastructure participation. It focuses on:

• Resilience training for navigating complex delivery environments.
• Industry alignment to ensure graduates are “fit” for infrastructure roles.
• Mentorship and exposure through partnerships with universities, municipalities, and private contractors.
• Leadership coaching to prepare graduates as enterprise founders and project leads.

IPMS complements this by operationalising inclusive procurement. It provides:

• Compliance tracking and onboarding for graduate-owned MSMEs.
• Real-time dashboards to monitor participation, milestones, and performance.
• Feedback and escalation systems to resolve procurement bottlenecks.
• Monitoring and evaluation tools aligned with national development goals and SIPDM standards.

The GRIT-FIT and IPMS form a cohesive ecosystem—one that moves graduates from the margins of infrastructure delivery to the centre of enterprise activation. They do not replace existing programmes; they enhance them by providing the operational scaffolding needed to translate graduate potential into measurable impact.

7.4 Strategic Fit with National Infrastructure Goals and Global Data Imperatives

These systems align with:

• The National Infrastructure Plan 2050, which calls for human capital renewal, spatial targeting, and delivery reform.
• The B.U.I.L.D. Programme, which mandates enterprise development contributions from large contractors and promotes youth and women-owned MSMEs.
• The PPP reform agenda which seeks to crowd in private capital and embed inclusive development goals through streamlined approvals and risk governance.
• The World Bank’s QII framework which emphasises transparent procurement, robust monitoring, and inclusive governance as drivers of infrastructure impact.
• The G20 Practice Guide on Infrastructure Data highlights the need for standardised project-level data, digital pipeline planning tools, and integrated data governance to enhance investment readiness, delivery transparency, and alignment with national development goals.

The GRIT-FIT and IPMS complement these global priorities by embedding data-driven enterprise tracking, performance monitoring, and adaptive learning into infrastructure delivery systems. They strengthen institutional capacity not only to deliver projects, but to measure inclusion, refine strategy, and attract investment.