Youth subsidy a 'no-brainer': DA

By Drum Digital
14 October 2013

The introduction of a youth wage subsidy in South Africa is a "no-brainer", the DA said.

The introduction of a youth wage subsidy in South Africa is a "no-brainer", the DA said on Monday.

Briefing the media at Parliament a day ahead of public hearings on the recently Cabinet-approved Employment Tax Incentive Bill, Democratic Alliance MP Tim Harris warned that the measure faced significant obstacles.

"The problem is, we have one of the world's highest rates of youth unemployment. We've had this idea on the table for three years that is accepted across the ideological spectrum.

"This is a no-brainer, and it's been blocked for three years... because of internal issues in the tripartite alliance, and, effectively, Cosatu's filibustering."

Harris said his party would support a bill that introduced "a real, strong youth wage subsidy".

The bill, set for scrutiny by Parliament's finance standing committee on Tuesday, offers an employment tax incentive to registered employers with the aim of encouraging them to take on more young people.

It applies to youths in the age group 19 to 29 years who earn less than R6000 a month.

The draft legislation is opposed by the Congress of SA Trade Unions, which has equated it with a youth wage subsidy.

The union has said it fears such a subsidy could lead to employers replacing older, more highly-paid workers with less-costly younger ones.

Responding to a question on this concern, Harris said there were two reasons this would not happen. One was labour law, which would make such a practice illegal.

"The second is, it's lousy business to fire good workers. There's no incentive for firms to fire workers who are working well."

In a statement on Monday, the DA listed eight "obstacles" to the bill's passage.

Among these was that the National Economic Development and Labour Council (Nedlac) had not yet finalised consideration of national Treasury's 2010 discussion paper on a youth wage subsidy.

It was confirmed last year by Deputy President Kgalema Motlanthe that a final decision on such a subsidy could be made only once Nedlac had completed its deliberations.

Harris said he would write to Nedlac director Alistair Smith "requesting an urgent meeting with him on the status of discussions".

He said another significant obstacle was the government's Youth Employment Accord, introduced by Economic Development Minister Ebrahim Patel in April.

"If this accord has any status in government, it would effectively prevent the [finance] minister moving forward with this bill, unless all the constituencies have agreed to it," Harris said.

The accord specifically commits the government, labour and business to "avoid youth employment schemes that simply displace older workers".

-by Sapa

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