Patel (1), Gordhan (0)

2013-04-21 10:00

Slap in the face for finance minister as youth wage subsidy doesn’t feature in new accord

The contested youth wage subsidy was conspicuously absent from the eagerly anticipated youth employment accord, which was signed at a ceremony in Soweto this week.

This despite Finance Minister Pravin Gordhan’s undertaking in his February budget review to have the rebranded “employment incentive” put before Parliament this year.

The accord, the fifth from Economic Development Minister Ebrahim Patel’s department, doesn’t even mention it by name, but makes references to it by committing government, business and labour to “avoid youth employment schemes that simply displace older workers”.

After a long and torturous path through Nedlac – the body comprising government, business, labour and civic?organisations – the original 2011 proposal for R5?billion worth of tax incentives to employ people under the age of 29 remains deeply unpopular with union federation Cosatu.

Apart from practical objections such displacement, the scheme would explicitly acknowledge that union-negotiated wages keep people out of jobs.

Patel’s youth accord for the time being relies almost entirely on existing or already planned public works programmes to absorb unemployed young people.

Although warning against the displacement of older workers, the accord’s major concrete targets involve setting aside a larger share of existing programmes for the youth.

As per the accord, young people must now take up 80% of expanded public works programme job opportunities as opposed to the recent 50%.

City Press calculates that this would require expanding the scheme to two-and-a-half times its current size to avoid diminishing the substantial amount of older people who benefit from it.

The programme’s last published statistics showed 577?575 job opportunities created in the six months to the end of September last year, of which half went to older people.

The accord repeats the prior green economy accord’s promise to have 80% of government-funded “green jobs”, mostly the installation of solar geysers, go to the youth.

This is augmented by a commitment to have 60% of jobs “in the rest of the green economy” as well as 60% of jobs on infra-structure projects also go to the youth.

Young people are also to be given 80% of jobs in call centres.

This is the fifth accord produced by Patel’s department to flesh out the New Growth Path. Since 2010, there have been the skills accord, the basic education accord, the local procurement accord and the green economy accord.

Above all else, the new accord commits government, labour and business to come up with a bigger and better accord next year and “build trust between the parties”.

As it stands, the accord makes modest changes to existing commitments, while the private sector is given until June to contribute new plans when all the parties will reconvene to craft an action plan.

The accord also repeats major points from the skills accord, especially on opening state departments to more interns while getting more technical FET students places at parastatal and private workplaces to complete the practical part of their studies.

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