Johannesburg - The two opposing sides in the youth wage subsidy debate, the DA and the trade unions, have made it clear they are not prepared to find a point of compromise. Yesterday they drew their last battle lines ahead of today’s public hearings on the recently cabinet-approved Employment Tax Incentive Bill.
The DA pledged to implement the youth wage subsidy in all regions where it would be elected to power next year.
The party said it was determined to steer the policy through Parliament despite Cosatu’s opposition and would support the National Treasury’s “reworked” Employment Tax Incentive Bill proposals.
“The Development Bank of Southern Africa, through the jobs fund, has recognised the value of our programme. We will be able to do [implement the subsidy] from day one when we are in Gauteng,” DA finance spokesman Tim Harris said.
The Development Bank of Southern Africa has contributed R67 million for the DA to expand the programme over the next three years. After piloting the subsidy in the Western Cape, the DA claimed that 4 000 young people had benefited and that more than half of those had secured full-time employment.
Companies that took part in the Western Cape pilot programme include Prestige Clothing, Radisson Blu Hotels, Shoprite and the Cape Town International Convention Centre.
The DA said it would write to government, labour and business negotiating chamber Nedlac, Economic Development Minister Ebrahim Patel and Deputy President Kgalema Motlanthe, among others, in its efforts to “fix” the current proposals and remove the “obstacles” in the implementation of the subsidy policy.
The National Treasury published a tweaked version of the youth wage subsidy policy, the Employment Tax Incentive Bill, for comment last month.
When the bill was released, it did not please either Cosatu or the DA.
The DA despised it because it excluded existing workers and because its cost had been cut from R5 billion to between R1bn and R2.3bn.
From the beginning, Cosatu has been opposed to any legislation that incentivises businesses to employ young people. Among the trade federation’s concerns is that businesses would replace older workers with subsidised workers.
At the weekend, Cosatu president Sdumo Dlamini said the federation was “angry” at the proposals.
Yesterday, the National Union of Metalworkers of SA said it believed that tax concessions as proposed in the bill would result in a big cut in tax revenue, and therefore would leave less to spend on essential services.
Neil Rankin, an associate professor at Stellenbosch University and a former director of the research umbrella that carried outa three-year experiment on wage subsidies at Wits University, said that when his team did their experiment, they did not find any instances where employers replaced their workforce with subsidised workers.
“Our experiment was different to what Treasury is planning, our results do not give an exact indication because it was not a test of the policy itself. But we interviewed a number of companies asking if they would replace their workers if this policy came into effect. Very few said they would,” Rankin said.
He said once companies had a relationship with their workers, no incentive seemed big enough to let them go. Given this, the exclusion of existing workers from the incentive made sense.
“The intention is to create new jobs, so the bill’s proposal makes sense,” Rankin said.
On the DA’s pilot programme, he said that because it was not the same as what the bill had proposed, one could not expect the same outcomes from the two.
The National Treasury said that since the commenting period ended on Friday it was already working towards tabling a final bill at the end of next week ,which would take into account public comments submitted by different parties during the comment period.
Gary van Staden, a political analyst at NKC Independent Economists, said that given the unemployment levels in South Africa, the country should be doing anything possible to boost job creation and should be open to testing such a policy.
“Cosatu has a point, the DA has a point but we can’t just sit and do nothing,” he said. - Business Report