Wage sub­sidy is ‘not free money’

CityPress - - Business - DEWALD VAN RENS­BURG dewald.vrens­burg@city­press.co.za

The gov­ern­ment con­tin­ues to prop up the labour bro­ker­ing in­dus­try even while new labour laws take their toll on the in­dus­try.

Work­force Hold­ings, the largest listed labour bro­ker af­ter Ad­corp, re­vealed this week the still-ris­ing im­por­tance of the Em­ploy­ment Tax In­cen­tive to its fi­nances.

The group re­ceived R30.8 mil­lion from the in­cen­tive in a half year in which it de­clared profit of R29.4 mil­lion.

How­ever, chief fi­nan­cial of­fi­cer Wil­lie van Wyk said the “net ben­e­fit” was prob­a­bly closer to R11 mil­lion be­cause the in­cen­tive had un­leashed a com­pet­i­tive ad­just­ment across the sec­tor.

“It’s ba­sic eco­nom­ics. Ev­ery­one else also gets the Em­ploy­ment Tax In­cen­tive, so there was a lot of un­der­cut­ting. It’s not free. You need to em­ploy the youth, which in­volves more work. So there are di­rect costs as well.”

As the max­i­mum Em­ploy­ment Tax In­cen­tive ben­e­fit per worker is R1 000, the six-month fig­ure im­plies Work­force has, at the very least, one-fifth of the roughly 25 000 placed work­ers on the sub­sidy. Smaller sub­sidy amounts for some work­ers could mean this pro­por­tion is higher.

The group, ma­jor­ity owned by the fam­ily of its chair­man, Ronny Katz, re­leased fi­nan­cial re­sults show­ing bet­ter Em­ploy­ment Tax In­cen­tive-fu­elled earn­ings for the first half of the year, one char­ac­terised by apoc­a­lyp­tic claims of the in­dus­try’s demise.

Amend­ments to the Labour Re­la­tions Act also kicked in this year. They “deem” con­tract work­ers per­ma­nent af­ter three months in a place­ment, un­less the job is tied to some fixed­du­ra­tion ac­tiv­ity. Clients were “stalling” de­ci­sions un­til there was a court in­ter­pre­ta­tion of what ex­actly that meant, Work­force told share­hold­ers.

Such an in­ter­pre­ta­tion will prob­a­bly come from a labour court ap­peal against two re­cent rul­ings – one at the CCMA and one in a bar­gain­ing coun­cil – which gave the “deem­ing” pro­vi­sion a much stricter in­ter­pre­ta­tion than labour bro­kers had ex­pected.

Work­force’s rev­enue grew 4% to R905 mil­lion com­pared with the first half of 2014, with staffing and re­cruit­ment pro­vid­ing the bulk at R772 mil­lion.

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