‘Wage subsidy’ starts in January

The bitterly contested Employment Tax Incentive Bill " otherwise known as the youth wage subsidy " will take effect from January. AFP PHOTO / RAJESH JANTILAL

The bitterly contested Employment Tax Incentive Bill " otherwise known as the youth wage subsidy " will take effect from January. AFP PHOTO / RAJESH JANTILAL

Published Nov 2, 2013

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Johannesburg - Matrics writing their final exams before beginning the often hopeless search for work may be comforted by the passing of the bitterly contested Employment Tax Incentive Bill – otherwise known as the youth wage subsidy – which will take effect from January.

Parliament adopted the bill on Thursday, but Cosatu remains fiercely opposed to it.

“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 on Friday.

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

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

“Also, it will lead to a lowering of wages because the subsidy is higher for the lowest-paid workers,” 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.

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.

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

Saturday Star

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