Rainbow economics: A model to match youth skills development with a future-fit economy

The reflections and recommendations of founder and impact economy advisor Reana Rossouw centre around how we can prepare for an unpredictable future by focusing on building capacity for adaptability and flexibility. The 2025 Research Report will be launched in May in Johannesburg and Cape Town.

Youth development is crucial to South Africa’s future economic prosperity

South Africa has its fair share of challenges. Some of the biggest ones relate to the economy and labour market: a) growing the economy, b) focusing on the future of work and c) preparing the youth to take advantage of new employment opportunities, whether for informal, formal or self-employment or entrepreneurship. On this last point, unemployment of youth (aged 15 to 35) remains a significant burden on the economy and currently takes up more than 50% of all funds allocated to socioeconomic development.

Improving youth employment requires a new approach targeted at sectors with the biggest growth potential

In this context, social impact investors and organisations are discovering the power of using an economic sector-focused development model to solve the persistent challenges of low job placement and absorption numbers. This new approach aims to align youth employment programmes with the economic sectors that offer the biggest potential for economic growth, diversification and job creation. In other words, the focus is on future skills and future sunrise sectors, as opposed to the arbitrary skills development, employment readiness and work experience programmes of the past.

This is however not a straightforward process. The boundaries between economic sectors are becoming increasingly blurred due to ongoing technological developments, ever-increasing globalisation, a sharper focus on sustainable development as well as the urgency to grow and diversify South Africa’s economy. The world of work is also undergoing significant transformation – jobs are changing, new skills are in demand and intersectoral collaboration is becoming crucial.

This has resulted in a strategic shift in focus from providing opportunities for the economic activation, inclusion and empowerment of youth to, for example:

• Aligning with the labour market evolution
  
• Exploring the implications of technological advancements such as AI
  
• Focusing on new sunrise economic sectors that offer the potential of large-scale work and entrepreneurship opportunities as well as economic diversification
  
• Adapting to evolving workplace conditions

An effective sector-focused development model requires an innovative approach to analysing these evolving and interrelated economies and the ever-changing labour landscape so that we can have a better understanding of how different sectors adapt and converge in response to technological advances and global market shifts. This is where the rainbow economics trend is invaluable.

A structured yet flexible approach to cater to interrelated economies

A technicolour framework helps makes it possible to understand and explore the complex interrelationships between economic sectors in support of a more strategic approach to tackling youth unemployment:

• The white economy (care economy) encompasses an array of key social issues that improve everyone’s quality of life. It includes care activities and services (e.g. education and healthcare) and champions the interests of vulnerable groups.

• The purple economy (focusing on diversity and cultural good) emphasises rights like maternity leave, flexible work arrangements and fair pay, and supports moving away from traditional wealth measures (e.g. growth and GDP) in favour of measures such as livelihood.

• The grey economy (informal economy) represents economic activities, enterprises, jobs and workers that are not regulated, monitored, taxed or protected by the state. These activities are not necessarily included in a country’s GNP or GDP.

• The green economy (focusing on environmental protection and natural resources) is all about economic production that minimises pollution and reduces resource consumption, recycling waste, and using cleantech and innovative technologies that optimise the use of finite resources. There is a strong focus on renewable energy and the just energy transition.

• The blue economy (focusing on water and oceans) identifies examples in nature where organic recycling or upcycling occurs and mimics these processes to reuse waste in water and ocean-related sectors, e.g. sanitation, fishing, and water tourism.

• The gold economy (digital economy) refers to economic activities that emerge from connecting individuals, businesses, devices, data and operations through digital technology and innovations.

• The silver economy (focusing on the ageing population) is about strategies to address challenges relating to an ageing population, especially regarding technology services for wellbeing and health monitoring, electrical mobility and support for technology enhanced assistive devices.

• The orange economy (creative economy) is based on the potential of creative assets to contribute to economic growth and development, with economic, cultural and social aspects interacting with technology, intellectual property and tourism objectives.

The development stars of the rainbow economies

Certain sectors of the rainbow economy naturally offer more promise for providing large-scale employment and entrepreneurship opportunities and supporting economic growth and diversification. Overall, the gold, green and orange economies offer the highest potential of making a tangible contribution to developmental and economic goals. The scalability, accessibility and alignment with global trends of the digital economy, the importance of the green economy to sustainable development and its alignment with South Africa’s renewable energy transition, and the rapid growth of creative industries, coupled with global demand for African cultural products, mean these sectors offer immense potential for youth employment and entrepreneurship.

The gold (digital) economy

• Alignment with national priorities: The digital economy is expanding rapidly, driven by global trends and local demand for ICT services, e-commerce, digital marketing, app development and remote work.

• Linkages with other local/global initiatives: Coding bootcamps, tech hubs and e-learning platforms are empowering young people with digital skills.

• Employment prospects: Remote work and freelance opportunities make this sector accessible to youth in both urban and rural areas.

• Potential challenges: Reliable internet access and digital literacy are essential, which can be barriers in underserved communities.

The green economy

• Alignment with national priorities: South Africa is committed to a just energy transition, opening up opportunities in renewable energy, waste management, water conservation and climate-resilient agriculture.

• Linkages with other local/global initiatives: Programmes such as the Presidential Climate Commission and international partnerships focus on green infrastructure and climate adaptation.

• Employment prospects: High in renewable energy installations, retrofitting and sustainable farming.

• Potential challenges: Employment in certain areas of the green economy requires specialised skills and training and acquiring funding for green ventures can be difficult.

The orange (creative) economy

• Alignment with national priorities: South Africa’s rich cultural heritage, vibrant arts scene and growing entertainment industry create opportunities in music, film, fashion, design and digital content creation.

• Employment prospects: There is global demand for African cultural products, providing creative youth with access to international markets.

• Potential challenges: Youth don’t have equal access to funding, skills development and market exposure. A reliance on informal or freelance work also makes it less stable.

In a close second place is the white or care economy, in terms of offering critical jobs in a labour-intensive sector and addressing pressing social needs.

The white (care) economy

• Alignment with national priorities: South Africa’s ageing population and social challenges create a demand for healthcare, early childhood development and elderly care services.

• Linkages with other local/global initiatives: The sector aligns well with ubuntu values.

• Employment prospects: There is youth employment potential in nursing, community health work, childcare and support for people with disabilities.

• Potential challenges: Funding for public care initiatives is limited and the stigma associated with care roles may deter some youth.

The informal and blue economies will require targeted investments in providing youth with skills training, infrastructure and access to markets to realise their potential.

The grey (informal) economy

• Alignment with national priorities: The informal sector already employs a significant portion of South Africa’s population in small-scale trade, crafts, services and transport.

• Employment/labour prospects: Low entry barriers make this sector accessible to youth without formal qualifications.

• Potential challenges: The informal sector is often associated with precarious working conditions, lack of social protection and limited scalability.

The blue economy

• Alignment with national priorities: South Africa’s vast coastline and strategic position along key maritime routes mean sectors such as aquaculture, shipping, port management and marine tourism are ripe for development.

• Linkages with other local/global initiatives: Government initiatives such as Operation Phakisa promote ocean economy activities, including marine protection and fisheries.

• Employment prospects: Job opportunities for youth in the fishing, eco-tourism and maritime industries.

• Potential challenges: Substantial capital investment is required, regulation is vital to prevent overexploitation of marine resources and accessibility for inland communities is limited.

Rainbow economics is key to a more resilient rainbow nation

Youth economic development in South Africa represents significant potential for driving economic growth, social change and innovation. But for youth employment and entrepreneurship development to be effective and sustainable, it is vital that it is linked to growing and diversifying the economy, to build momentum for future competitiveness as well as the ongoing creation of job and business opportunities. The rainbow economics trend provides vital guidelines for focusing our social investment and development efforts to ensure this link.

The 2025 Research Report will be launched on 6 May in Johannesburg and 12 May in Cape Town, whereafter it will be available for download on the website.

Interested parties can attend the launch event by booking at these links: Johannesburg event: 6 May | Cape Town event: 12 May.