Young deserve a shot at work
Two more years of job incentive is good news
ARECENT World Bank study of southern Africa’s young population talks about the “demographic window of opportunity” in which the proportion of working-age people reaches its peak.
Ideally, countries whose working-age young people are becoming an ever-larger proportion of the adult population should be in a position to reap the benefits as more youngsters enter the workforce and start earning and saving and contributing to GDP. But reaping that demographic dividend depends on having the right policies in place to educate and hire all those new workers, drawing them into the workforce so that they become more productive over time.
SA, with its bulge in the 1830 age group, should, in theory, be in a position to reap that dividend. In practice, it is creating demographic disaster with ever more young people not simply unemployed, but never employed, with little chance they ever will be.
The statistics on youth unemployment are disturbing. A recent Treasury study notes that unemployment in the 18-30 age group rose to more than 42% by March 2015.
All the evidence is that breaking into the workforce, in almost any shape or form, is key. The longer school leavers remain without work, the less likely it is they will be able to join the ranks of the employed.
That is why it is an absolute priority for SA to pursue initiatives that will get young people into the workforce, even for just a first taste of work.
The Employment Tax Incentive was just such a scheme. The Treasury’s announcement this week that it would extend it by another two years is most welcome.
The scheme, which allows employers to claim a tax concession if they employ young workers who have never been employed, has been taken up more strongly by employers each year. The Treasury reports that R6.3bn was claimed between January 2014 and February 2016, two-thirds of this in the second of the two years, with take-up accelerating late in 2016. The job numbers are impressive, with the scheme supporting about 15% of all jobs in the entire cohort of 18- to 29-year-olds, and almost a third counting only the youngest age group in the cohort.
Altogether, the incentive was claimed for more than 130,000 jobs in 2014 and almost 670,000 in 2015. It reached its target, with 57% of those hired having no experience.
The Treasury seems wellsatisfied that it has exceeded projections. And, although the much-maligned labour brokers have been among those who have taken advantage, they have not been the main factor behind the claims, with Treasury finding labour brokers made up only 9% of the total claim amount (11% of the jobs).
The big question is how many of the jobs created are genuinely new, rather than posts that employers were going to create anyway. Some research suggests many of these jobs would have been created anyway, although it is
The longer school leavers remain without work, the less likely it is they will be able to join the ranks of the employed
hard to tell in an environment of private sector job shedding, and the incentive may help to save some.
There’s also the question of whether the incentive is genuinely helping exactly those kinds of entrepreneurial smaller businesses that most need some assistance to enable them to hire more people. The jury seems to be out on this one, with more large firms claiming than small firms — only 5% of firms with 10 workers or less claimed the incentive. That needs to be attended to.
At a time when the fiscus is under pressure, the government should not be committing to any spending without good reason. No doubt there is much that must be tweaked to make the incentive scheme better. But spending R4bn or more annually to get hundreds of thousands of young people into the workforce, even briefly, and to give them a chance in life, seems a fair price to pay.