Minister is firm on youth wage subsidy

2013-10-27 10:00

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Alongside the general whip-cracking on state employment and the excesses of government officials, Pravin Gordhan this week finally tabled the revised Employment Tax Incentive Bill in Parliament.

And it will not be renegotiated at Nedlac, he told Parliament’s standing committee on finance during a report-back hearing on the several responses received since the bill was published for comment last month.

There will be a few tweaks, but Treasury is adamant that it will not let unions dictate any more changes.

“The bill will not affect currently employed persons and their vested rights are protected. Hence it will not have a negative socioeconomic effect on labour,” reads Treasury’s formal response to Cosatu’s plea that Nedlac have another go at the subsidy.

The bill aims to institute the youth wage subsidy promised since 2010, and a general wage subsidy for all ages in special economic zones, by the beginning of next year.

The subsidy targets the unemployed between the ages of 18 and 29 who earn less than R6?000 a month. The maximum subsidy is R1?000 per month, which applies to people earning between R2?000 and R4?000 a month.

In its response document before the parliamentary committee, Treasury also calls the fears around the displacement of older workers “a critique based on false assumptions”.

Treasury says a stronger mandatory link to training programmes would have been good, but extra “conditionalities” should only be added in later phases of the subsidy programme.

A Cosatu press release calls the incentive a “profit subsidy for employers that will depress wages, displace existing workers and industries, and further entrench exploitative practices”.

The bill has to pass Parliament.

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