Package replaces youth wage subsidy

The jury is out on whether the government is going to introduce a youth wage subsidy after President Jacob Zuma skirted the issue in his State of the Nation speech, but at least one labour federation has reported that a carefully crafted and monitored incentive system – for businesses that take youth on board – will be part of a labour accord that will be signed off within two weeks.

Federation of Unions of SA (Fedusa) general secretary Dennis George, who represents the union at business, labour and government negotiating forum Nedlac, said Economic Development Minister Ebrahim Patel had held discussions with labour representatives – including Cosatu’s deputy general secretary, Bheki Ntshalintshali, and Fedusa’s deputy general secretary, Krister van Rensburg – last week. There had been agreement that a subsidy could be introduced so long as chief executives of companies pledged they would not retrench existing workers to accommodate new staff.

DA leader Helen Zille and a group of 423 DA supporters representing the unemployed youth gathered at the Union Buildings last September to hand over of a memorandum to the presidency calling for implementation of a youth wage subsidy.Photo: Thobile Mathonsi. Credit: Independent Newspapers

Confirming Cosatu president Sdumo Dlamini’s reported statement that the business “incentive” would be linked to strict training obligations by the companies, George said: “Chief executives must make the undertaking not to retrench.” He believed the president had been careful about the wording in his speech as “he has to walk a [political] tightrope”.

While Nedlac chief executive Allistair Smith was not available for comment, George said it was envisaged that the subsidy system – which the government now preferred to dub a youth employment incentive system – would be carefully policed. Applications would need to be made by businesses to a “super” committee of elders drawn from Nedlac, which would oversee the system’s implementation.

The president’s spokesman, Mac Maharaj, confirmed that a youth employment accord had been negotiated at Nedlac.

“The process is complete. What is left is the signing by all the parties”, that is, government, labour, business and community constituencies.

Maharaj said the word “youth subsidy” had become emotionally charged. The president had referred to “a package of measures” that included incentives.

But he emphasised that these would not be “across the board”, but were likely to be “sector specific”. These were seen as a way of addressing the youth unemployment problem rather than a “generalised silver bullet… that is why it is a package”.

Saleem Mowzer, a special adviser to Patel, confirmed that the incentives would only be directed at new industries such as green industries, including solar geyser manufacturing and installation. This would avoid the potential problem of displacing existing workers. “The term used is incentive.”

Cosatu has remained adamant that the labour accord would not include the “the discredited youth wage subsidy”.

Last year, the DA and Cosatu clashed in the streets of Johannesburg over the trade union’s opposition to the subsidy – first announced by the president three years ago.

Cosatu said it applauded the president’s “clear statement” that the government’s measures to tackle “the massive crisis of youth unemployment will be those agreed between constituencies at Nedlac, on which discussions have been concluded and agreement reached on key principles, which do not include the discredited youth wage subsidy”.

The president said in his speech: “Last May, I asked constituencies at Nedlac to discuss youth employment incentives. I am pleased that discussions have been concluded and that agreement has been reached on key principles. The parties will sign the accord later this month.”

Tim Harris, the DA’s finance spokesman, said that although the youth subsidy was supported by all the opposition parties, economists across the ideological spectrum and Fedusa, “the second-largest trade union federation”, it had been held up by Cosatu’s opposition “since 2010”.