Cosatu angry but youth wage subsidy kicks in from January

“We’re still convinced this bill will not create jobs.

“It’s just a pretence to make it look as if the government is serious about creating jobs when in fact all it does is hand over a huge amount of taxpayers’ money to businesses, who in many cases would have employed the young workers entitled to the subsidy anyway,” Cosatu spokesman Patrick Craven said yesterday.

The bill should have been discussed at the National Economic Development and Labour Council, which is supposed to seek consensus among the government, employers, labour and community organisations on any legislation affecting socio-economic policy, Craven said.

The subsidy would also encourage employers to replace existing higher- paid workers with subsidised, lowerpaid ones, he argued.

While there were measures in the bill intended to prevent this, they were “totally inadequate because it’s virtually impossible to prove that workers have been retrenched in order for the employer to get in other workers who will be subsidised”.

Because there was no requirement for employers to offer training and further education to subsidised workers, they would be replaced as soon as the subsidy period ended.

“Also, it will lead to a lowering of wages,” Craven said.

By subsidising their wages by as much as 50 percent, the government hopes to encourage bosses to take a chance on young workers.

Studies show people without employment records, by the time they turn 30, have little chance of ever finding work.

The subsidy was first mooted by President Jacob Zuma in his 2010 State of the Nation address.

Finance Minister Pravin Gordhan tabled a draft of the tax incentive last month as Treasury officials indicated they were desperate to have it passed in time for this year’s matrics to benefit.

From January, employers who hire people between the ages of 20 and 29 will be entitled to a tax saving on their PAYE bill equal to 50 percent of the wages of those earning less than R2 000, R1 000 for those earning between R2 000 and R4 000, tapering to zero between R4 000 and R6 000.

In the second year, the incentive is worth half the value of the first year, and it expires for workers who have made use of it for two years.

Employers found to have retrenched workers unfairly in order to replace them with subsidised workers face a penalty of R30 000 per worker and may be disqualified from receiving the subsidy in future.

craig.dodds@inl.co.za