Cosatu an­gry but youth wage sub­sidy kicks in from Jan­uary

Weekend Argus (Saturday Edition) - - NEWS -

“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.

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